Economic Theory:
Demand Side vs. Supply Side
By now I hope that we can all agree that to solve the debt crisis, we are going to need to cut spending dramatically. Hiking taxes on the rich just isn't going to be enough to put a dent in our current and long term fiscal imbalances. However, it is also imperative that we raise revenues as much as we can without impeding economic growth. In fact, not harming the economy is not nearly enough. We must actually grow it. We need a recovery, damn it!
As we discussed when we examined the Laffer Curve, it is essential that our nation finds the magic elixir of the perfect economic policy that we can feed the goose so she will lay as many golden eggs as possible consistent with providing for the maximum possible tax revenue so that we can afford to pay for the baby boom retirement. For years economists and politicians have argued about how to do this. In fact, the debate has been going on for so long and that many Americans like my buddy "Fred" don't believe anyone anymore. When I attempted to explain how it was possible that supply side economics could grow the economy in a way that would help to fix our structural deficit problem, he wrote back dismissively:
It's why everybody keeps rehashing the same arguments about the New Deal for 80 years. It's why Republicans keep pushing the "trickle-down"
theory. Have any of these philosphies worked yet? Does anybody know for sure? Whose statistics can you believe? On and on. It will never end
My response to "Fred's" statement was to shrug my head in sadness and lament that the level of economic ignorance in this country is not to be underestimated. Even the so called "experts" say things that boggle the mind. As Ronald Reagan once said: "An economist is someone who sees something that works in practice and wonders if it would work in theory". However, it is one thing to be a learned but deluded ivory tower theoretician. It is another to display the type of utter cluelessness evident in some of our most prominent political leaders. After regaling us with her keen insight when she said that we had to pass Obamacare in order to find out what was in it, Speaker of the House Nancy Pelosi let go with this whopper:
As we discussed when we examined the Laffer Curve, it is essential that our nation finds the magic elixir of the perfect economic policy that we can feed the goose so she will lay as many golden eggs as possible consistent with providing for the maximum possible tax revenue so that we can afford to pay for the baby boom retirement. For years economists and politicians have argued about how to do this. In fact, the debate has been going on for so long and that many Americans like my buddy "Fred" don't believe anyone anymore. When I attempted to explain how it was possible that supply side economics could grow the economy in a way that would help to fix our structural deficit problem, he wrote back dismissively:
It's why everybody keeps rehashing the same arguments about the New Deal for 80 years. It's why Republicans keep pushing the "trickle-down"
theory. Have any of these philosphies worked yet? Does anybody know for sure? Whose statistics can you believe? On and on. It will never end
My response to "Fred's" statement was to shrug my head in sadness and lament that the level of economic ignorance in this country is not to be underestimated. Even the so called "experts" say things that boggle the mind. As Ronald Reagan once said: "An economist is someone who sees something that works in practice and wonders if it would work in theory". However, it is one thing to be a learned but deluded ivory tower theoretician. It is another to display the type of utter cluelessness evident in some of our most prominent political leaders. After regaling us with her keen insight when she said that we had to pass Obamacare in order to find out what was in it, Speaker of the House Nancy Pelosi let go with this whopper:
That's an actual quote and in her own voice. Here is one of the most powerful politicians in the country, who was instrumental in writing and passing a Keynesian stimulus plan through congress, and in one simple statement reveals that she has absolutely zero clue about basic economics whatsoever. When you think about it, this is without a doubt one of the most ridiculous and ignorant statements on economics ever uttered. And they say Sarah Palin is stupid.
If this is the level of economic literacy among the leaders of our country, you can imagine what it is for those stuck in the Matrix. My buddy's statement about "trickle-down" shows that he is as absolutely ill informed about basic economics as Madame Speaker. But, at least, "Fred" isn't alone. Unfortunately, the stupidity and downright ignorance of most people about economics is legion.
2=====================================================================================================
Trickle-down is not a philosophy, or a theory. It is the way the world works. If ever this country would actually teach some real economic theory, we’d not be in the mess we are in today. If someone want to talk about supply side economics as being a theory pushed by Republicans that relies on the principle stated by the Democratic saint John F. Kennedy that "a rising tide lifts all boats" and say it is both ridiculous and unproven, that’s fine. I would say the evidence is in, but I am enough of an intellectual to say that there is not enough data to be 100% certain. Just very likely. For me, four times in a hundred years is enough, but many others think differently.
However, "trickle-down" is simply how economics works. Capital (be it intellectual, physical or monetary) is invested> a venture is created>jobs may be created to achieve the venture's goals> wealth is created>shareholders, owners, employees, and the government get paid. This is the way capitalism works. It is the way socialism works. It is even the way communism works. In socialism and communism, it is the government, not private entities, that supply the capital, the direction and then enlist the employees and pay them. But, even here, decision making and capital are planned and sourced from up high and the benefits trickle down to those below.
The only difference between the -isms is how the wealth created actually trickles down to those on the bottom. Supposedly, in more "enlightened" leftist economies more of the wealth trickles down to the the worker than in Capitalist economies, but at the same time, the opportunity for someone lower down on the economic food chain to actually become a "rainmaker" themselves through their own ideas or ingenuity is inversely limited by how much government controls economic capital. Also, the evidence of the past century shows that while the rich do far better than the poor in capitalist countries as compared to their socialist and quasi-socialist counterparts, the greater amount of wealth creation leaves the average citizen much better off. Regardless of how wealth is spread throughout a society, the truth is that everything is trickle-down. Either an individual or group of individuals provide the capital or the government provides the capital, but the money and direction still flows from on high and “trickles” down to everyone else to a greater or lesser extent.
In fact, this is a reality so self-evident that even the lefties at the Huffington Post get it as evidenced in this headline:
If this is the level of economic literacy among the leaders of our country, you can imagine what it is for those stuck in the Matrix. My buddy's statement about "trickle-down" shows that he is as absolutely ill informed about basic economics as Madame Speaker. But, at least, "Fred" isn't alone. Unfortunately, the stupidity and downright ignorance of most people about economics is legion.
2=====================================================================================================
Trickle-down is not a philosophy, or a theory. It is the way the world works. If ever this country would actually teach some real economic theory, we’d not be in the mess we are in today. If someone want to talk about supply side economics as being a theory pushed by Republicans that relies on the principle stated by the Democratic saint John F. Kennedy that "a rising tide lifts all boats" and say it is both ridiculous and unproven, that’s fine. I would say the evidence is in, but I am enough of an intellectual to say that there is not enough data to be 100% certain. Just very likely. For me, four times in a hundred years is enough, but many others think differently.
However, "trickle-down" is simply how economics works. Capital (be it intellectual, physical or monetary) is invested> a venture is created>jobs may be created to achieve the venture's goals> wealth is created>shareholders, owners, employees, and the government get paid. This is the way capitalism works. It is the way socialism works. It is even the way communism works. In socialism and communism, it is the government, not private entities, that supply the capital, the direction and then enlist the employees and pay them. But, even here, decision making and capital are planned and sourced from up high and the benefits trickle down to those below.
The only difference between the -isms is how the wealth created actually trickles down to those on the bottom. Supposedly, in more "enlightened" leftist economies more of the wealth trickles down to the the worker than in Capitalist economies, but at the same time, the opportunity for someone lower down on the economic food chain to actually become a "rainmaker" themselves through their own ideas or ingenuity is inversely limited by how much government controls economic capital. Also, the evidence of the past century shows that while the rich do far better than the poor in capitalist countries as compared to their socialist and quasi-socialist counterparts, the greater amount of wealth creation leaves the average citizen much better off. Regardless of how wealth is spread throughout a society, the truth is that everything is trickle-down. Either an individual or group of individuals provide the capital or the government provides the capital, but the money and direction still flows from on high and “trickles” down to everyone else to a greater or lesser extent.
In fact, this is a reality so self-evident that even the lefties at the Huffington Post get it as evidenced in this headline:
That I feel I in necessary to even have to write about this basic and simple fact of basic economics is just another example of the absolute and total
ignorance fostered by the left in this country. Most people on the
left use the words “trickle-down” with a tone of dripping
condescension because they are ignorantly thinking that this refers to
Reagan’s supply side tax cuts and Herbert Hoover's (actually Calving
Coolidge but Hoover always made for a better foil) economic policies
which they believe led to the Great Depression. This fallacy has become
accepted liberal dogma because Democratic politicians, like the
sainted Teddy Kennedy, use it effectively as a rhetorical device against
Republicans all the while knowing that the average person ("Fred") doesn't know
enough economics to understand they are full of it. I always thought
it truly ironic that Teddy was able to totally disavow his older
brother's economic policy so completely and that no one ever called him
on it. But, those who persist in using the term trickle-down economics
in a snarky and derisive way are only proving that they have no clue what
they are talking about. All economics is trickle-down, look it up.
But let's put that aside. We need to dispense with the ignorance (and Nancy Pelosi) and see if we can come up with an economic policy that can promote the most growth and the most prosperity so that we can begin the process of fixing our country. After all, when the economy booms, we not only increase revenues to the treasury, but we also reduce payouts on the spending side because less people need government assistance. A real economic recovery will do wonders in terms of fixing our deficit problem. We'll still have to reform entitlements, but the faster the economy grows the less painful the cuts will have to be.
3=====================================================================================================
In our country, there are two basic schools on how to create wealth. Republicans, Libertarians and Conservatives believe that the individual or groups of individuals working in a free market economy will make better decisions about how to allocate capital better than government planners can. Therefore, the more wealth that the private sector has in its control, the more wealth will be created which will, in turn, create more revenue over the long term for government to spend on its programs. Even at a lower tax rate, the bigger the economic pie the more government's slice can be. The only question is how do we maximize the size of the pie through an effective use of the tax code.
Take a look at this chart:_
But let's put that aside. We need to dispense with the ignorance (and Nancy Pelosi) and see if we can come up with an economic policy that can promote the most growth and the most prosperity so that we can begin the process of fixing our country. After all, when the economy booms, we not only increase revenues to the treasury, but we also reduce payouts on the spending side because less people need government assistance. A real economic recovery will do wonders in terms of fixing our deficit problem. We'll still have to reform entitlements, but the faster the economy grows the less painful the cuts will have to be.
3=====================================================================================================
In our country, there are two basic schools on how to create wealth. Republicans, Libertarians and Conservatives believe that the individual or groups of individuals working in a free market economy will make better decisions about how to allocate capital better than government planners can. Therefore, the more wealth that the private sector has in its control, the more wealth will be created which will, in turn, create more revenue over the long term for government to spend on its programs. Even at a lower tax rate, the bigger the economic pie the more government's slice can be. The only question is how do we maximize the size of the pie through an effective use of the tax code.
Take a look at this chart:_
Note that when the top marginal tax rate was 91% and the bottom was 20% during the fifties, personal income tax revenues as a percentage of GDP was lower than when the top rate was 28% and the bottom rate was 15%. Also, note that when the Gingrich tax cuts on capital gains and investments were enacted in the late Nineties,there was a huge increase in revenue. I know that the concept of the Laffer curve is counter-intuitive to most people, but it really is true that lower tax rates can bring in more revenue. It is both true as a percentage of GDP and with gross revenue. You may be wondering, why is this so?
It is self evident to a Supply Sider that the way the current tax system is structured, the higher the marginal rate, the more people will employ machinations to avoid paying them. Common sense will tell you that the richer you are, the better the accountants and lawyers you can afford and the more income you would be able to shield from the prying hands of the IRS. This is why, as we learned in the preceding chapter, regardless of what the top rate is, whether it is 90% or 28%, total tax revenues remain pretty stable at around 18% of GDP. As long as rates remain high, people will shelter their money and those shelters are usually unproductive uses of capital as far as the economy is concerned. When tax rates are lowered, it becomes profitable once again to reveal this wealth to the light of day and to use it in a way that tends to be more productive to the economy. The higher GDP growth that results from this then leads to higher revenues.
I can attest to this from personal experience. When I was growing up, my dad got a job as Human Resources Director in one of the Big 8 accounting firms (I think there are now only 3). In the days before Reagan's tax cuts, my dad would come home and talk about the amazing schemes that his partners in the firm would concoct to hide his income so he would pay less in taxes. The thing that blew my mind was that my dad and his partners were totally cool with taking a loss on this income as long as the loss was less than what it would have cost them to pay the government in tax. It seemed rather stupid and self defeating to me then and I couldn't quite understand how that made sense. But, now, as an adult and a taxpayer, I understand completely.
On a side note, my dad was a liberal Democrat and I was also confused by his desire for the Federal government to spend massively on social programs while at the same time scheming to deprive the Federal Government of his full portion of the contribution to fund it. My dad was not a hypocrite by nature or by intellect, but I never did quite figure out how he could reconcile that contradiction. It kind of reminds me of all of the millionaires and billionaires like Warren Buffet and our own Barry O who say they "don't need another tax cut". Vice President Biden actually had the gall to tell us it is our patriotic duty to pay more in taxes:
It is self evident to a Supply Sider that the way the current tax system is structured, the higher the marginal rate, the more people will employ machinations to avoid paying them. Common sense will tell you that the richer you are, the better the accountants and lawyers you can afford and the more income you would be able to shield from the prying hands of the IRS. This is why, as we learned in the preceding chapter, regardless of what the top rate is, whether it is 90% or 28%, total tax revenues remain pretty stable at around 18% of GDP. As long as rates remain high, people will shelter their money and those shelters are usually unproductive uses of capital as far as the economy is concerned. When tax rates are lowered, it becomes profitable once again to reveal this wealth to the light of day and to use it in a way that tends to be more productive to the economy. The higher GDP growth that results from this then leads to higher revenues.
I can attest to this from personal experience. When I was growing up, my dad got a job as Human Resources Director in one of the Big 8 accounting firms (I think there are now only 3). In the days before Reagan's tax cuts, my dad would come home and talk about the amazing schemes that his partners in the firm would concoct to hide his income so he would pay less in taxes. The thing that blew my mind was that my dad and his partners were totally cool with taking a loss on this income as long as the loss was less than what it would have cost them to pay the government in tax. It seemed rather stupid and self defeating to me then and I couldn't quite understand how that made sense. But, now, as an adult and a taxpayer, I understand completely.
On a side note, my dad was a liberal Democrat and I was also confused by his desire for the Federal government to spend massively on social programs while at the same time scheming to deprive the Federal Government of his full portion of the contribution to fund it. My dad was not a hypocrite by nature or by intellect, but I never did quite figure out how he could reconcile that contradiction. It kind of reminds me of all of the millionaires and billionaires like Warren Buffet and our own Barry O who say they "don't need another tax cut". Vice President Biden actually had the gall to tell us it is our patriotic duty to pay more in taxes:
4=====================================================================================================
Well you know what? All you people who are wealthy and think we should all pay more in taxes to finance the redistributionist policies you support? I am talking to all of the Millionaires and Billionaires like you, Barry, who claim you want your taxes raised:
Well you know what? All you people who are wealthy and think we should all pay more in taxes to finance the redistributionist policies you support? I am talking to all of the Millionaires and Billionaires like you, Barry, who claim you want your taxes raised:
Well if you don't need the money, oh exalted one, why don't you just leave the rest of us the heck alone and go here and pay your fair share why don't ya:
So far this year, all you high minded liberals and compassionate do-gooders who want to raise taxes on the rest of us have contributed a whopping $7,629,043.57 . How many times have we heard the President say that Warren Buffett thinks that he should pay more in taxes? Even old Warren says it publicly himself. Yet, the same guy Barry holds up as evidence that the rich think their taxes should be raised does his level best to avoid paying the taxes he owes at current rates:
Chris Christie nails Warren Buffett, and by extension Barack Obama on their absolute hypocrisy:
And what about the other prominent corporate bigwig that Barack likes to trot out to show that he has the support of the business community? You know, that guy Jefferey Immelt who Obama made the head of his "Jobs Council" (LMAO ROTF!!!)? Well, his company pays no taxes at all:
5=====================================================================================================
Well, if the President's business buddies don't think they should pay the taxes they owe, but think that rates should rise for the rest of us, what about our dear leaders? Hey! Joe Biden, how come you didn't step up and do your "patriotic duty" and show the rest of us greedy misers how its done? You could have gone to that Treasury Department website and paid more. But, you didn't did you Joe? Nah, I didn't think so!
As I recall, you, President Obama, made 1.7 million dollars last year that you claim you don't need, yet you contributed not a penny more than you actually owed in taxes to help pay for government services for all those "deserving" people you claim to care about so much. Despite this, you think its an outrage that people like me aren't being forced to pay more.
Well, why don't you lead by example, eh Barry? Why don't you just unilaterally raise your own taxes and pay that money to the government? Why don't you show the world that you'll gladly chip in extra to help those who you say need more help from wealthy folk like you? Your silence and, thus, your hypocrisy on this is glaring. You don't voluntarily contribute what you say publicly should be your "fair share" and yet you want to confiscate my money? Don't just talk the talk, walk the freaking walk! It isn't even as if you and Joe were ever big on the charity thing either:
Well, if the President's business buddies don't think they should pay the taxes they owe, but think that rates should rise for the rest of us, what about our dear leaders? Hey! Joe Biden, how come you didn't step up and do your "patriotic duty" and show the rest of us greedy misers how its done? You could have gone to that Treasury Department website and paid more. But, you didn't did you Joe? Nah, I didn't think so!
As I recall, you, President Obama, made 1.7 million dollars last year that you claim you don't need, yet you contributed not a penny more than you actually owed in taxes to help pay for government services for all those "deserving" people you claim to care about so much. Despite this, you think its an outrage that people like me aren't being forced to pay more.
Well, why don't you lead by example, eh Barry? Why don't you just unilaterally raise your own taxes and pay that money to the government? Why don't you show the world that you'll gladly chip in extra to help those who you say need more help from wealthy folk like you? Your silence and, thus, your hypocrisy on this is glaring. You don't voluntarily contribute what you say publicly should be your "fair share" and yet you want to confiscate my money? Don't just talk the talk, walk the freaking walk! It isn't even as if you and Joe were ever big on the charity thing either:
So come on, and dig a little deeper into those book royalties of yours show us lesser mortals how it's done. Not gonna do it? Didn't think so. It's a lot easier to spend someone else's money than spend your own, huh? Typical limousine liberals.
And this makes my point. No one in their right minds pays a dime more in taxes than they absolutely have to. Part of the purpose of lowering marginal tax rates is to encourage people to remove their money from unproductive hiding places and bring the cash back out into the light of day where it can do some good for the economy. The idea being that let's say you tax at a 70% rate and because of all the shelters and the slower growth that this unproductive money creates, you can raise the same revenue with a tax rate of 30%. Certainly, you would choose the lower rate so that you could create more economic wealth and and a better utilization of economic capital. That is the whole point of the Laffer curve and it has been validated in actual fact as we saw from the tax/GDP tables in the last chapter: Rich Bastards! Reagan cut the top rate from 70% to 28% and tax revenues scarcely skipped a beat. In fact, they doubled. The only reason you wouldn't do this is because you have some type of irrational emotional attachment to the concept of "fairness" and you want to use class warfare arguments to stick it to the "rich".
6=====================================================================================================
And this makes my point. No one in their right minds pays a dime more in taxes than they absolutely have to. Part of the purpose of lowering marginal tax rates is to encourage people to remove their money from unproductive hiding places and bring the cash back out into the light of day where it can do some good for the economy. The idea being that let's say you tax at a 70% rate and because of all the shelters and the slower growth that this unproductive money creates, you can raise the same revenue with a tax rate of 30%. Certainly, you would choose the lower rate so that you could create more economic wealth and and a better utilization of economic capital. That is the whole point of the Laffer curve and it has been validated in actual fact as we saw from the tax/GDP tables in the last chapter: Rich Bastards! Reagan cut the top rate from 70% to 28% and tax revenues scarcely skipped a beat. In fact, they doubled. The only reason you wouldn't do this is because you have some type of irrational emotional attachment to the concept of "fairness" and you want to use class warfare arguments to stick it to the "rich".
6=====================================================================================================
To a supply sider, it is self-evident that the smaller the percentage of capital taken out of the private sector to pay for government the more wealth will be created by individuals engaging in free enterprise in a free market. This new lower level of taxation creates a different formula for risk taking as well. Many might not think that a tax cut of 25% could have such an impact on investment decisions, but business people and investors are bottom line kinds of people. Even a tiny difference in the potential upside of a venture can make a huge difference in the bottom line and whether a risk is worth taking or the idea is shelved. In every level of economic activity, the more money in the hands of businesses large and small, the greater the likelihood that this money will be used to expand, hire, purchase capital goods, do more R &D and generally invest in the future growth of the enterprise.
The salutary effects of lower marginal tax rates in promoting a growing economy cannot be denied. Later on, in Outcomes, I will show evidence that every time marginal rates are cut, the economy responds positively. Thus, the relationship between economic growth and tax rates are taken as gospel in the Supply Side community. The evidence supports the premise so we embrace the theory. I would argue that the evidence of Obama's latest excursion in Keynesian economics similarly tends to invalidate that theory as well, but we'll get to that later on.
I would also like to emphasize that there is clearly a tradeoff between the optimal level of taxation vis a vis economic growth and the amount that government has available to spend. Because our politicians from both parties have refused to accept the political implications of these tradeoffs, our country has run deficits for most of our lifetimes. The problem with both parties is that they do not have the courage to either reduce government expenditure to match optimal rates of government revenue or advocate the increases in taxes to pay for them. If true supply side theory were applied for our current situation, the optimal rate of taxation to produce maximum revenues would come first and government expenditures would then be matched to that level.
I believe that there is another truth about economics that I will expand upon later and that is this: lowering tax rates sends an implicit signal to the business community and investors that government is four square behind the concept of economic growth. In other words, we are open for business! The whole point of supply side economics is to incentivize risk taking and entrepreneurship by making it more profitable due to the lessening of government's take on profits and the greater availability of capital for investment. The old expression is true: enthusiasm is contagious.
Despite what F.A. Hayek has said, there is no question in my mind that a huge part of economics does come from "animal spirits". When our leaders have faith in the private sector and their policies reflect that, it promotes an optimistic view of the future. When our leaders either have a negative view of the private sector (like Obama) or even evidence panic (like W), people do react in to that in deleterious ways to the economy. A last thought on this... Reflect on the differences between the way Bill Clinton talked about the private sector and how he governed versus the way that Barack Obama does. They are both Democrats, but they couldn't be more opposite in how they come across to businesses and investors. Think about how much influence that has on where we stand today in the economy.
7=====================================================================================================
Finally, supply siders understand that every time we hire a new employee in the federal government we must recognize that this person must be subsidized by someone actually creating wealth in the private sector. These government workers are basically a leech on the wealth of the country. It is true that some employees provide a useful service to the economy by, say, maintaining the air traffic system in the country, building roads or maintaining a court system that adjudicates the rule of law and property rights. These employees are not a total net loss to the economy, but necessary for its smooth functioning. Still, all of their salaries have to be paid for by those working in the private sector and creating actual wealth.
That said, there are many employees of the government whose sole responsibility is to "manage" the redistribution of wealth and their cost is a complete drain on the efforts of those who are in the productive private sector. In addition, every time we hand out benefits to people, that money is subsidized by someone who is busy creating wealth and value. The more people we put in the "wagon" of government expenditures, the harder it is for those creating the wealth to pull the wagon. Between the taxes and the regulations, to paraphrase former presidential candidate Tim Pawlenty, it's like asking someone to go climb a mountain and then making them wear a backpack full of rocks:
The salutary effects of lower marginal tax rates in promoting a growing economy cannot be denied. Later on, in Outcomes, I will show evidence that every time marginal rates are cut, the economy responds positively. Thus, the relationship between economic growth and tax rates are taken as gospel in the Supply Side community. The evidence supports the premise so we embrace the theory. I would argue that the evidence of Obama's latest excursion in Keynesian economics similarly tends to invalidate that theory as well, but we'll get to that later on.
I would also like to emphasize that there is clearly a tradeoff between the optimal level of taxation vis a vis economic growth and the amount that government has available to spend. Because our politicians from both parties have refused to accept the political implications of these tradeoffs, our country has run deficits for most of our lifetimes. The problem with both parties is that they do not have the courage to either reduce government expenditure to match optimal rates of government revenue or advocate the increases in taxes to pay for them. If true supply side theory were applied for our current situation, the optimal rate of taxation to produce maximum revenues would come first and government expenditures would then be matched to that level.
I believe that there is another truth about economics that I will expand upon later and that is this: lowering tax rates sends an implicit signal to the business community and investors that government is four square behind the concept of economic growth. In other words, we are open for business! The whole point of supply side economics is to incentivize risk taking and entrepreneurship by making it more profitable due to the lessening of government's take on profits and the greater availability of capital for investment. The old expression is true: enthusiasm is contagious.
Despite what F.A. Hayek has said, there is no question in my mind that a huge part of economics does come from "animal spirits". When our leaders have faith in the private sector and their policies reflect that, it promotes an optimistic view of the future. When our leaders either have a negative view of the private sector (like Obama) or even evidence panic (like W), people do react in to that in deleterious ways to the economy. A last thought on this... Reflect on the differences between the way Bill Clinton talked about the private sector and how he governed versus the way that Barack Obama does. They are both Democrats, but they couldn't be more opposite in how they come across to businesses and investors. Think about how much influence that has on where we stand today in the economy.
7=====================================================================================================
Finally, supply siders understand that every time we hire a new employee in the federal government we must recognize that this person must be subsidized by someone actually creating wealth in the private sector. These government workers are basically a leech on the wealth of the country. It is true that some employees provide a useful service to the economy by, say, maintaining the air traffic system in the country, building roads or maintaining a court system that adjudicates the rule of law and property rights. These employees are not a total net loss to the economy, but necessary for its smooth functioning. Still, all of their salaries have to be paid for by those working in the private sector and creating actual wealth.
That said, there are many employees of the government whose sole responsibility is to "manage" the redistribution of wealth and their cost is a complete drain on the efforts of those who are in the productive private sector. In addition, every time we hand out benefits to people, that money is subsidized by someone who is busy creating wealth and value. The more people we put in the "wagon" of government expenditures, the harder it is for those creating the wealth to pull the wagon. Between the taxes and the regulations, to paraphrase former presidential candidate Tim Pawlenty, it's like asking someone to go climb a mountain and then making them wear a backpack full of rocks:
The more capital that is siphoned by government to be redistributed minus the government's management fee, the less capital is available for investments necessary for the creation of the wealth that pays for these things. This accounts for the near universal desire among Republican politicians for a formula of lower taxes, fewer regulations and less government spending in order to promote economic growth.
This basic and essential concept seems pretty obvious and logical to us, even to the more emotional among us:
This basic and essential concept seems pretty obvious and logical to us, even to the more emotional among us:
It also seems pretty obvious for the more level headed and reasoned among us as well:
8=====================================================================================================
Now, while our mission is to fix the American economy and promote the type of sustained growth that will produce the revenue that we need to pay for the massive obligations we have incurred for the future, we currently find ourselves mired in an anemic recovery from a deep recession. Both Keynesian and Supply side theories tell us that during times like these, it is helpful to infuse money into the system in order to "spark" or encourage economic growth. I suppose that a pure supply side theory based on sound money and financial practices would dictate that the proper course would be to cut government spending and transfer those savings into pro-growth changes in the tax code and a more business friendly regulatory climate. For the moment, however, let's deal with what is actually politically feasible. Now, I realize that the very idea of maxing out the government credit card to fix a crisis caused by excess debt seems ridiculous on its face. Yet, it is the conventional wisdom on how this situation should be handled.
Therefore, let's discuss what a successful supply side "stimulus" package to right the economic ship and also promote future growth would look like. Let's take a moment to actually conceptualize what all this means for a second shall we? Let's make our stimulus an even $1 trillion (which is a little less than its total cost of the Obama plan given the spending plus the interest for borrowing it). A supply sider, such as myself, might say let's cut all income tax rates by x% across the board until we come up with a percentage that maxes out that trillion dollars over say two years at which time we think the extra revenues from the economic expansion will begin to pay for the amount we borrowed. Because this is an across the board reduction, most of the tax cut will go to the wealthiest segment of the population even though rates are being reduced evenly for everyone. We have seen how this works from the video in Rich Bastards! on "bar stool economics" . Here is another version for those of you who skipped ahead to this page or just happen to like Pink Floyd like me:
Now, while our mission is to fix the American economy and promote the type of sustained growth that will produce the revenue that we need to pay for the massive obligations we have incurred for the future, we currently find ourselves mired in an anemic recovery from a deep recession. Both Keynesian and Supply side theories tell us that during times like these, it is helpful to infuse money into the system in order to "spark" or encourage economic growth. I suppose that a pure supply side theory based on sound money and financial practices would dictate that the proper course would be to cut government spending and transfer those savings into pro-growth changes in the tax code and a more business friendly regulatory climate. For the moment, however, let's deal with what is actually politically feasible. Now, I realize that the very idea of maxing out the government credit card to fix a crisis caused by excess debt seems ridiculous on its face. Yet, it is the conventional wisdom on how this situation should be handled.
Therefore, let's discuss what a successful supply side "stimulus" package to right the economic ship and also promote future growth would look like. Let's take a moment to actually conceptualize what all this means for a second shall we? Let's make our stimulus an even $1 trillion (which is a little less than its total cost of the Obama plan given the spending plus the interest for borrowing it). A supply sider, such as myself, might say let's cut all income tax rates by x% across the board until we come up with a percentage that maxes out that trillion dollars over say two years at which time we think the extra revenues from the economic expansion will begin to pay for the amount we borrowed. Because this is an across the board reduction, most of the tax cut will go to the wealthiest segment of the population even though rates are being reduced evenly for everyone. We have seen how this works from the video in Rich Bastards! on "bar stool economics" . Here is another version for those of you who skipped ahead to this page or just happen to like Pink Floyd like me:
As you can see, this type of across the board cut is usually politically unpopular because, at first glance, it seems that the rich are making out like bandits. However, part of rationale behind supply side theory is to boost the amount of capital available for savings and investments and wealthy people are more likely to choose this path than those in lower income classes. Therefore, the theory goes, you simultaneously have immediate economic stimulus and at the same time you foster the savings and investments that promote long term growth so that the recovery can have long lasting "legs". We could also achieve this same goal by reducing Corporate taxes and capital gains taxes by $1 Trillion to spur investment which is what I would do if I were running the show. But, no one ever asks me. Though apparently, they sometimes ask Adolf:
Language Warning!
9=====================================================================================================
I do find it incredibly sad that the media Matrix has so disposed people against corporations that the idea of eliminating or vastly reducing corporate taxes could never become law in modern America. If people would just learn a little about economics, they'd realize that in the modern world we live in, a zero or minimal corporate tax located in a country with an educated workforce, the best universities, the best infrastructure system etc. etc., would make the United States the go to destination for corporate headquarters, factories and investment. Whatever revenue we'd lose from the tax cut, we'd gain from all the investment, jobs and salaries that the cut created. If you ask me, it is the single best thing we could do to grow our economy right now. But, as Adolf says, Americans are too ignorant and stuck inside the Matrix to ever make something like that happen.
But I digress... I want to point out something very important. At the very end of the bar stool economics video, the producers make a very important point about the rich man that gets beat up by the other beer drinkers. Like John Galt in Atlas Shrugged, he can simply take his money and stop participating in the game if it becomes too onerous. In Ayn Rand's book, they actually disappear to their own hidden hideaway, but in the new global economy they can just take their money and leave for other places where they and their property are treated more sanely. Never forget my fundamental truth about money: Money, like water, flows in the path of least resistance. Had New Jersey treated me and my property in a more reasonable and less profligate manner, I'd still be living there today. After all, it is my home state. It is where I am from. Now, I live in income tax free Florida. So long suckers! Say bye bye to my taxes forever.
Those of you who have seen the new census and the new job numbers can see that I am just one of many who feel this way. The high tax states and union shop states are losing people and businesses to low tax states like Texas, North Carolina and Florida in incredible numbers. Take the example of Maryland, who recently enacted a special tax on millionaires:
I do find it incredibly sad that the media Matrix has so disposed people against corporations that the idea of eliminating or vastly reducing corporate taxes could never become law in modern America. If people would just learn a little about economics, they'd realize that in the modern world we live in, a zero or minimal corporate tax located in a country with an educated workforce, the best universities, the best infrastructure system etc. etc., would make the United States the go to destination for corporate headquarters, factories and investment. Whatever revenue we'd lose from the tax cut, we'd gain from all the investment, jobs and salaries that the cut created. If you ask me, it is the single best thing we could do to grow our economy right now. But, as Adolf says, Americans are too ignorant and stuck inside the Matrix to ever make something like that happen.
But I digress... I want to point out something very important. At the very end of the bar stool economics video, the producers make a very important point about the rich man that gets beat up by the other beer drinkers. Like John Galt in Atlas Shrugged, he can simply take his money and stop participating in the game if it becomes too onerous. In Ayn Rand's book, they actually disappear to their own hidden hideaway, but in the new global economy they can just take their money and leave for other places where they and their property are treated more sanely. Never forget my fundamental truth about money: Money, like water, flows in the path of least resistance. Had New Jersey treated me and my property in a more reasonable and less profligate manner, I'd still be living there today. After all, it is my home state. It is where I am from. Now, I live in income tax free Florida. So long suckers! Say bye bye to my taxes forever.
Those of you who have seen the new census and the new job numbers can see that I am just one of many who feel this way. The high tax states and union shop states are losing people and businesses to low tax states like Texas, North Carolina and Florida in incredible numbers. Take the example of Maryland, who recently enacted a special tax on millionaires:
Oops! That didn't work out so well did it? For the same reason, the high corporate taxes, high labor costs and insane regulations nationally have caused manufacturing to flee the country for more hospitable climes. The more we ask of the "rich" and the "wealthy" , the more we make life difficult for business with regulations and red tape, the greater the magnitude of this trend continuing. In addition, those with assets to invest can choose to invest their money in companies that operate in countries that have a more business friendly tax and regulatory climate. This is currently happening now:
As you can see, John Galt is alive and well in the United States and in the world. Those of you who think Ayn Rand was some kind of nut, might want to ponder at the ruins of Detroit and Cleveland next time you think such thoughts.
10====================================================================================================
Getting back to discussing how a supply side stimulus works, when I was growing up during the early years of the Reagan administration, I'd conceptualize what would happen to that trillion bucks by thinking of my dad and my best friend's dad. My father was a saver and an investor. When Reagan decreased his tax burden, my father just increased how much he was saving and investing. In other words, he was allowing his money to be used by banks and companies which would use his cash to make even more money. The idea being, for say a bank, that they could create more wealth from my dad's money than they were paying him in interest by lending to consumers to buy things and businesses to create things. And my dad was happily enjoying the miracle of compound interest. Everybody wins. The same is true for the money my dad had invested in stocks. Every single dollar my dad wasn't forced to send to the Treasury because of the Reagan tax cut was used in a manner that was conducive to long term economic growth. In my father's case, the tax cut added capital to the investment pool that creates wealth. This is a real world capitalist "multiplier" that has stood the test of time throughout history.
My best friend's father, on the other hand, was a spender. Whatever extra income he was able to keep because of Reagan's tax cut went immediately out the door again. He was a wealthy guy, but the more money he made the more he spent it. Whether it was a new Lincoln or his first BMW, a fancy vacation or just eating in a better class of restaurants, whatever extra income he kept would be spent and enjoyed. My friend's dad was responsible for increasing short term economic activity because every dollar the government was no longer confiscating immediately went back into the economy to create jobs at the car companies and restaurants he frequented.
From the story of the two dads it is easy to infer the macro economic consequences of allowing people to keep more of their money to spend and invest as they see fit. There would be an immediate boost to the economy because of the windfall created by folks spending the extra cash that had been liberated from Uncle Sam's clutches, but there would also be a greater pool of capital available for businesses to start, grow and expand. This does not even begin to discuss the salutary effects on entrepreneurs and small and large companies of having more of their income available to engage in all levels of spending and expansion. Finally, an additional benefit of supply side theory is that there is no "extraction" fee from the government in administrative costs or waste. The money passes directly and efficiently through the economy. There is no Big Louie coming along and asking to "wet his beak" like the government does when they spend your money for you.
Another important thing to note is that the new marginal tax rate reductions are permanent changes and not a one or two year here today, gone tomorrow occurrence like W's and Obama's tax rebates. This is important because the permanent nature of the reduction in taxes allows people and businesses to plan long term for the future with the new tax realities in mind. This is critical when it comes to investing. It is not a coincidence that the Reagan years were the very time that money became available to seed start ups like Microsoft, Apple and Intel which then paved the way for the technology revolution that peaked in the 90's.
The bottom line is this. We conservatives believe:
10====================================================================================================
Getting back to discussing how a supply side stimulus works, when I was growing up during the early years of the Reagan administration, I'd conceptualize what would happen to that trillion bucks by thinking of my dad and my best friend's dad. My father was a saver and an investor. When Reagan decreased his tax burden, my father just increased how much he was saving and investing. In other words, he was allowing his money to be used by banks and companies which would use his cash to make even more money. The idea being, for say a bank, that they could create more wealth from my dad's money than they were paying him in interest by lending to consumers to buy things and businesses to create things. And my dad was happily enjoying the miracle of compound interest. Everybody wins. The same is true for the money my dad had invested in stocks. Every single dollar my dad wasn't forced to send to the Treasury because of the Reagan tax cut was used in a manner that was conducive to long term economic growth. In my father's case, the tax cut added capital to the investment pool that creates wealth. This is a real world capitalist "multiplier" that has stood the test of time throughout history.
My best friend's father, on the other hand, was a spender. Whatever extra income he was able to keep because of Reagan's tax cut went immediately out the door again. He was a wealthy guy, but the more money he made the more he spent it. Whether it was a new Lincoln or his first BMW, a fancy vacation or just eating in a better class of restaurants, whatever extra income he kept would be spent and enjoyed. My friend's dad was responsible for increasing short term economic activity because every dollar the government was no longer confiscating immediately went back into the economy to create jobs at the car companies and restaurants he frequented.
From the story of the two dads it is easy to infer the macro economic consequences of allowing people to keep more of their money to spend and invest as they see fit. There would be an immediate boost to the economy because of the windfall created by folks spending the extra cash that had been liberated from Uncle Sam's clutches, but there would also be a greater pool of capital available for businesses to start, grow and expand. This does not even begin to discuss the salutary effects on entrepreneurs and small and large companies of having more of their income available to engage in all levels of spending and expansion. Finally, an additional benefit of supply side theory is that there is no "extraction" fee from the government in administrative costs or waste. The money passes directly and efficiently through the economy. There is no Big Louie coming along and asking to "wet his beak" like the government does when they spend your money for you.
Another important thing to note is that the new marginal tax rate reductions are permanent changes and not a one or two year here today, gone tomorrow occurrence like W's and Obama's tax rebates. This is important because the permanent nature of the reduction in taxes allows people and businesses to plan long term for the future with the new tax realities in mind. This is critical when it comes to investing. It is not a coincidence that the Reagan years were the very time that money became available to seed start ups like Microsoft, Apple and Intel which then paved the way for the technology revolution that peaked in the 90's.
The bottom line is this. We conservatives believe:
We believe that each and every single American in a free market and a free society can choose how to spend his or her own money better than the smartest Ivy League educated bureaucrats in a far distant capital ever could. And in so doing, we believe that this will create untold wealth for all of the people. All we want is for government to do the job it is constitutionally authorized to perform and then get out of the way and watch us prosper!
11====================================================================================================
On the other hand, the Democrats have an entirely different take on economics. They are acolytes of an economist that they love as if he were a deity and whose nostrums are gospel to them. And, no, I am not talking about Karl Marx. It is the theories of a British chap named John Maynard Keynes. Now, obviously, I cannot go into chapter and verse on Keynes' theories, that would be a disservice to him. However, in brief, I can say that he was an economist who was particularly focused on the concept of ending the boom and bust of the business cycle and the economic dislocations they caused. He believed that an economy could be "managed" in such a way as to prevent massive fluctuations in economic activity. Central to his theory was the belief that during times of recession, the government should borrow or print money and inject it into the economy to reignite aggregate demand (this is where we get the expression demand side...demand sider... supply sider... get it?) and thus, spark the economy back to life. Interestingly enough, it was also Keynes' belief that stimulus and deficit spending should only last as long as the recession and must be paid back during better times because it was dangerous to run permanent deficits, but that part has been conveniently forgotten by Democrat politicians and stowed down in the basement with the crazy aunt.
Anyhow, as Brian Reidl relates in NRO:
According to this theory, government spending adds money to the economy, taxes remove money, and the budget deficit represents net new dollars injected. Therefore, it scarcely matters how the dollars are spent. John Maynard Keynes famously asserted that a government program paying people to dig and then refill ditches would provide new income for those workers to spend and circulate through the economy, creating even more jobs and income. Today, lawmakers cling to estimates by Mark Zandi of Economy.com that on average, $1 in new deficit spending expands the economy by roughly $1.50.
This ratio of $1.50 of wealth created for each dollar that government spends is known as the Keynesian "multiplier" and belief in this effect is the foundation for almost all left wing thought about government spending. To wit, they actually believe that government spending creates wealth. Not only that, they believe that it can create more wealth than the private sector can on its own. Thus, their antipathy for marginal rate reductions in taxes during a recession and support for massive new government spending instead.
Here is the actual quote from Lord Keynes book General Theory that elaborates on this "multiplier" effect:
If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing
The great economist, Milton Friedman, had a great rejoinder for Keynes' theory. He famously recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: 'You don't understand. This is a jobs program.' To which Milton replied: 'Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels.'"
The idea that government could create wealth out of thin air and that government spending alone could create wealth was debunked in the 19th century by the French economist Frederic Bastiat who coined it the broken windows fallacy:
11====================================================================================================
On the other hand, the Democrats have an entirely different take on economics. They are acolytes of an economist that they love as if he were a deity and whose nostrums are gospel to them. And, no, I am not talking about Karl Marx. It is the theories of a British chap named John Maynard Keynes. Now, obviously, I cannot go into chapter and verse on Keynes' theories, that would be a disservice to him. However, in brief, I can say that he was an economist who was particularly focused on the concept of ending the boom and bust of the business cycle and the economic dislocations they caused. He believed that an economy could be "managed" in such a way as to prevent massive fluctuations in economic activity. Central to his theory was the belief that during times of recession, the government should borrow or print money and inject it into the economy to reignite aggregate demand (this is where we get the expression demand side...demand sider... supply sider... get it?) and thus, spark the economy back to life. Interestingly enough, it was also Keynes' belief that stimulus and deficit spending should only last as long as the recession and must be paid back during better times because it was dangerous to run permanent deficits, but that part has been conveniently forgotten by Democrat politicians and stowed down in the basement with the crazy aunt.
Anyhow, as Brian Reidl relates in NRO:
According to this theory, government spending adds money to the economy, taxes remove money, and the budget deficit represents net new dollars injected. Therefore, it scarcely matters how the dollars are spent. John Maynard Keynes famously asserted that a government program paying people to dig and then refill ditches would provide new income for those workers to spend and circulate through the economy, creating even more jobs and income. Today, lawmakers cling to estimates by Mark Zandi of Economy.com that on average, $1 in new deficit spending expands the economy by roughly $1.50.
This ratio of $1.50 of wealth created for each dollar that government spends is known as the Keynesian "multiplier" and belief in this effect is the foundation for almost all left wing thought about government spending. To wit, they actually believe that government spending creates wealth. Not only that, they believe that it can create more wealth than the private sector can on its own. Thus, their antipathy for marginal rate reductions in taxes during a recession and support for massive new government spending instead.
Here is the actual quote from Lord Keynes book General Theory that elaborates on this "multiplier" effect:
If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing
The great economist, Milton Friedman, had a great rejoinder for Keynes' theory. He famously recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: 'You don't understand. This is a jobs program.' To which Milton replied: 'Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels.'"
The idea that government could create wealth out of thin air and that government spending alone could create wealth was debunked in the 19th century by the French economist Frederic Bastiat who coined it the broken windows fallacy:
12====================================================================================================
Now, I obviously have a bias and I don't believe that government is very effective in spending money and I definitely don't believe that government spending actually creates real wealth very often. However, most importantly, I really don't believe that government bureaucrats, no matter how intelligent or well educated they are, can make better decisions on something as complex as the economy as can hundreds of millions of individual citizens pursuing their own personal self interest. I don't believe that an intellectual elite in Washington can plan our lives better than we the people can:
Now, I obviously have a bias and I don't believe that government is very effective in spending money and I definitely don't believe that government spending actually creates real wealth very often. However, most importantly, I really don't believe that government bureaucrats, no matter how intelligent or well educated they are, can make better decisions on something as complex as the economy as can hundreds of millions of individual citizens pursuing their own personal self interest. I don't believe that an intellectual elite in Washington can plan our lives better than we the people can:
Now, I came of intellectual age in the 1970's when Keynesianism fell into disrepute and this might have much to do with my skepticism of it. You see, those who argue for the benefits of Keynesian economic planning like to point to the period between 1940 and 1970 when Keynesianism held sway and the economy boomed. I will admit that this is so. It would be dishonest intellectually to say otherwise and I do prize my intellectual integrity. However, I would also postulate that this boom was more a result of our victory in WW2 and our resultant economic preeminence in the world rather than the skill of Keynesian practitioners. Also, and this is key, the economic performance of the 1960's was boosted by JFK's supply side tax cuts. That said, however, the results do speak for themselves.... until the 1970's. This is when the pointy headed elites in the government and the Federal Reserve, filled with their Keynesian notions, really began to believe that they were so smart that they could play god with the US economy:
The moment the United States went off of the gold standard, we surrendered control of our economy to the Crooks and Thieves. These Keynesian elitist pointy heads were given complete control over the money supply irrespective of its value towards a fixed commodity. In this new universe, a dollar was no longer redeemable for it's value in gold or silver, but worth whatever the new "Einsteins" said it was on any given day. In other words, we created a fiat currency.
13====================================================================================================
So what is a fiat currency? Well, note that under the "ONE DOLLAR" mark on the greenback below that the bearer of this bill could redeem it on demand to the US government for its equivalent value in silver, an actual commodity that is has real intrinsic value:
13====================================================================================================
So what is a fiat currency? Well, note that under the "ONE DOLLAR" mark on the greenback below that the bearer of this bill could redeem it on demand to the US government for its equivalent value in silver, an actual commodity that is has real intrinsic value:
It was replaced with the note below which, as you can see, only says that it is legal tender and good for all debts public and private. In other words, it is worth whatever the government says it is on any given day depending on how many of these fine bills it chooses to print. If the US government, in its infinite wisdom, decides to embark on Quantitative Easing #25, it won't even be worth the paper its printed on:
Always remember that any day the Crooks and Thieves who run our government can decide that the way out of our debt crisis is just to print up the 1.3 trillion dollars we owe in deficits for the year, or better yet, why not the whole 16 trillion simolians of the national debt. After all, its not like it hasn't been done before. Remember the Wiemar Republic? Here's a guy making a transaction for a loaf of bread:
My point in bringing this up is to highlight the massive amount of power that over our lives and our money that we entrusted to a bunch of economists in the Treasury department and the Federal Reserve. Not to worry though, these Keynesians assured us they had the whole thing figured out. Kind of like Greenspan and Clinton assuring us that they had defeated the business cycle in the 90's. Uh huh. Yeah, right.
14====================================================================================================
The arrogance and hubris of these "experts" knows no bounds and the damage they can do, like Greenspan's easy money policy which led to the internet bubble and then the real estate bubble can be catastrophic. To believe that a single man, or an entire board filled with the brightest men and women are so smart that they can "run" an economy is the ultimate intellectual conceit. Unfortunately, we are stuck with them for the time being, so let's keep a careful eye on them that they don't bollix things up even more:
14====================================================================================================
The arrogance and hubris of these "experts" knows no bounds and the damage they can do, like Greenspan's easy money policy which led to the internet bubble and then the real estate bubble can be catastrophic. To believe that a single man, or an entire board filled with the brightest men and women are so smart that they can "run" an economy is the ultimate intellectual conceit. Unfortunately, we are stuck with them for the time being, so let's keep a careful eye on them that they don't bollix things up even more:
Note that CBS in this video stands for Columbia Business School
As you can see, I am not a fan of the Federal Reserve or Tricky Dick Nixon's decision to go off of the gold standard. The moment we went off the gold standard, we gave these unelected bureaucrats, pointy heads and know-it-alls, an incredible amount of control over our lives. Given all this power during the Nixon administration, how did our Keynesian boys do? Were they the brightest bulbs in the room and did they keep the economy humming like a well tuned engine? Uh, not so well actually.
You see, the Keynesians had extrapolated John Maynard's ideas into a formula known as the Phillips Curve. Basically, the concept was that when the economy heated up too much and unemployment became dangerously low which had the effect of pushing up wages you'd get high inflation and the remedy was to raise interest rates (the cost of money) to cool down the economy which would lower inflation back down again. Then, when unemployment inevitably rose as the economy cooled, money should be created and injected into the economy through a Keynesian style "easing" or stimulus. According to the theory, with just a little tinkering here to curb inflation and a little tinkering there to prevent too much unemployment, you could permanently prevent the economy from going into the boom and bust cycles that Keynes hated so much. Keynesian economists assured everyone that it was impossible, according to their theories, to have high unemployment and high inflation at the same time
Well, due to multiple factors, one of which was that certain oil producing countries, who had formerly been camel jockeys before the black gold was discovered, not only disliked us because we supported Israel during the 1973 war, but were also not very happy with these now "worth less" non-gold backed dollars which was the only denomination in which oil could be bought and sold. They suddenly decided that they wanted many more dollars for the same oil. Oops! Nothing like unintended consequence to come up and bite you in the ass. And anyone who lived through the oil embargo, the price spikes and the gas lines knows it was a huge bite in the ass to this country.
The truth is that you can't really blame the Muslim oil producing countries for being upset with the idea that these new dollars were backed by nothing other than the good faith and credit of the US government can you? I mean, I would personally much prefer a shiny piece of gold or silver over "good faith" any day. Especially, when the "good faith" is guaranteed by Crooks and Thieves. Between the rising prices caused by oil and the trial and error of trying to figure out exactly how much money to print on any given day, you can see how this might have been a greater problem than the pointy headed Keynesian "experts" had expected, eh? As a result, the seventies became a decade of economic tumult and eventually "malaise".
15====================================================================================================
However, the most insidious thing about the 1970's was something that most Keynesian theorists never really expected, but that the rest of us who believe that just about every politician is either a crook or a thief (or both) could have easily predicted. By the mid seventies, the high muckety mucks in government realized that they were beginning to have a major problem. You see, all of those Great Society programs that were enacted during the sixties and early seventies? Well, they were more expensive than was originally projected. A lot more expensive! That and running a war too! And when you threw in the higher costs of running the government associated with higher oil prices, well this was not good for the accounting ledgers. Not good at all.
From a balanced budget during the Nixon administration in 1969, the government began running huge deficits. It is interesting to note, that the US went off the Gold standard starting in 1968 and permanently in 1971, at the last point in time the economy was producing enough wealth to run a war in Vietnam and a war on poverty and still produce a balanced budget, but that's another story. The point is that by the mid-seventies the federal government was going deeply into the red and something had to be done to fix it.
Now, at that time, the top tax rate was 70% so taxing the "rich" was really not an option, at least not in terms of marginal rates. And honestly, raising taxes on anyone is never really popular. So, what were they to do? Well, these guys had an ace up their sleeves. In those days, there weren't three or four tax brackets there were thirty and they weren't indexed to inflation. Therefore, the more money you were paid in wages to keep up with inflation the higher tax rate you would pay. This was known as bracket creep. The beautiful part for the tricksters in the government was that they could print some money to immediately pay the bills that caused the nation to be in the red (Deficit? What deficit?) and then when the inevitable inflation caused by too much new money chasing a finite number of goods hit, the workers demanded higher wages which put them into higher tax brackets. Voila! Two for one! Free money to pay the bills and a stealth tax increase to boot and no one was the wiser. Gotta just love the ingenuity of Crooks and Thieves when they put their minds to something, don't ya?
How did they get away with such shenanigans? Why, they came up with a serious sounding and a seemingly common sense theory called the wage/price spiral. They claimed that we were caught up in an ugly chicken/egg type conundrum. Prices would rise, so wages would rise to match them and then the new cost of labor would increase the cost of production which would necessitate an increased price to match which meant workers would demand higher wages and on and on it would go in a vicious cycle. So, you see everyone? Inflation isn't our fault! It's that damn wage/price spiral. Keep those printing presses running!
Now, deep in the backrooms of the highest corridors of power in Washington, the boys were beginning to get a little bit worried. You see, it seems that they miscalculated on how much of an effect printing all that new money would have and inflation was rising much faster than they expected. Now, I am a skeptical guy by nature and all of this seems a bit shady to me. For those of you who believe that government is good and it is run by well meaning people who would never do something so sinister and craven, don't you think it's just a wee bit "convenient" that this whole wage/price spiral nonsense allowed politicians to spend tons of money and run up deficits that magically disappeared and that created tax rates that kept going up and up and up because of bracket creep without a single risky vote needing to be taken to raise them? I can only come up with one theory that would innocently explain government policy in those days. Perhaps, Nixon, Ford and Carter and their minions were so economically ignorant or so willfully blind that they actually believed their own propaganda about the wage/price spiral when they promoted wage and price control laws (some of the dumbest policies ever tried). If this is true, it is all the more reason why we should never give Crooks and Thieves that much power over the economy. As far as I am concerned however, the more likely explanation is that they were cynically pulling the wool over all our eyes with campaigns like this:
You see, the Keynesians had extrapolated John Maynard's ideas into a formula known as the Phillips Curve. Basically, the concept was that when the economy heated up too much and unemployment became dangerously low which had the effect of pushing up wages you'd get high inflation and the remedy was to raise interest rates (the cost of money) to cool down the economy which would lower inflation back down again. Then, when unemployment inevitably rose as the economy cooled, money should be created and injected into the economy through a Keynesian style "easing" or stimulus. According to the theory, with just a little tinkering here to curb inflation and a little tinkering there to prevent too much unemployment, you could permanently prevent the economy from going into the boom and bust cycles that Keynes hated so much. Keynesian economists assured everyone that it was impossible, according to their theories, to have high unemployment and high inflation at the same time
Well, due to multiple factors, one of which was that certain oil producing countries, who had formerly been camel jockeys before the black gold was discovered, not only disliked us because we supported Israel during the 1973 war, but were also not very happy with these now "worth less" non-gold backed dollars which was the only denomination in which oil could be bought and sold. They suddenly decided that they wanted many more dollars for the same oil. Oops! Nothing like unintended consequence to come up and bite you in the ass. And anyone who lived through the oil embargo, the price spikes and the gas lines knows it was a huge bite in the ass to this country.
The truth is that you can't really blame the Muslim oil producing countries for being upset with the idea that these new dollars were backed by nothing other than the good faith and credit of the US government can you? I mean, I would personally much prefer a shiny piece of gold or silver over "good faith" any day. Especially, when the "good faith" is guaranteed by Crooks and Thieves. Between the rising prices caused by oil and the trial and error of trying to figure out exactly how much money to print on any given day, you can see how this might have been a greater problem than the pointy headed Keynesian "experts" had expected, eh? As a result, the seventies became a decade of economic tumult and eventually "malaise".
15====================================================================================================
However, the most insidious thing about the 1970's was something that most Keynesian theorists never really expected, but that the rest of us who believe that just about every politician is either a crook or a thief (or both) could have easily predicted. By the mid seventies, the high muckety mucks in government realized that they were beginning to have a major problem. You see, all of those Great Society programs that were enacted during the sixties and early seventies? Well, they were more expensive than was originally projected. A lot more expensive! That and running a war too! And when you threw in the higher costs of running the government associated with higher oil prices, well this was not good for the accounting ledgers. Not good at all.
From a balanced budget during the Nixon administration in 1969, the government began running huge deficits. It is interesting to note, that the US went off the Gold standard starting in 1968 and permanently in 1971, at the last point in time the economy was producing enough wealth to run a war in Vietnam and a war on poverty and still produce a balanced budget, but that's another story. The point is that by the mid-seventies the federal government was going deeply into the red and something had to be done to fix it.
Now, at that time, the top tax rate was 70% so taxing the "rich" was really not an option, at least not in terms of marginal rates. And honestly, raising taxes on anyone is never really popular. So, what were they to do? Well, these guys had an ace up their sleeves. In those days, there weren't three or four tax brackets there were thirty and they weren't indexed to inflation. Therefore, the more money you were paid in wages to keep up with inflation the higher tax rate you would pay. This was known as bracket creep. The beautiful part for the tricksters in the government was that they could print some money to immediately pay the bills that caused the nation to be in the red (Deficit? What deficit?) and then when the inevitable inflation caused by too much new money chasing a finite number of goods hit, the workers demanded higher wages which put them into higher tax brackets. Voila! Two for one! Free money to pay the bills and a stealth tax increase to boot and no one was the wiser. Gotta just love the ingenuity of Crooks and Thieves when they put their minds to something, don't ya?
How did they get away with such shenanigans? Why, they came up with a serious sounding and a seemingly common sense theory called the wage/price spiral. They claimed that we were caught up in an ugly chicken/egg type conundrum. Prices would rise, so wages would rise to match them and then the new cost of labor would increase the cost of production which would necessitate an increased price to match which meant workers would demand higher wages and on and on it would go in a vicious cycle. So, you see everyone? Inflation isn't our fault! It's that damn wage/price spiral. Keep those printing presses running!
Now, deep in the backrooms of the highest corridors of power in Washington, the boys were beginning to get a little bit worried. You see, it seems that they miscalculated on how much of an effect printing all that new money would have and inflation was rising much faster than they expected. Now, I am a skeptical guy by nature and all of this seems a bit shady to me. For those of you who believe that government is good and it is run by well meaning people who would never do something so sinister and craven, don't you think it's just a wee bit "convenient" that this whole wage/price spiral nonsense allowed politicians to spend tons of money and run up deficits that magically disappeared and that created tax rates that kept going up and up and up because of bracket creep without a single risky vote needing to be taken to raise them? I can only come up with one theory that would innocently explain government policy in those days. Perhaps, Nixon, Ford and Carter and their minions were so economically ignorant or so willfully blind that they actually believed their own propaganda about the wage/price spiral when they promoted wage and price control laws (some of the dumbest policies ever tried). If this is true, it is all the more reason why we should never give Crooks and Thieves that much power over the economy. As far as I am concerned however, the more likely explanation is that they were cynically pulling the wool over all our eyes with campaigns like this:
The WIN button, what a concept! No wonder Chevy Chase had so much success in making fun of Ford!
16====================================================================================================
Regardless of which theory was true, whether this wage/price spiral nonsense was either a huge ruse or the pointy head Keynesians really were that dumb, inflation once lit, began to burn out of control going well into the double digits by the end of Jimmy the peanut farmer's disastrous Presidency. It was during the time of Jimmy Carter, that a new term was coined: stagflation. This was a word to describe a condition of high unemployment and high inflation coexisting together. Remember, this was something that Keynesians said could not happen. It could not be! But there it was.
We now know that the whole concept of the wage/price spiral was total bunk. After all, a wage is basically a price for labor and you can't really have a price/price spiral. It turned out that the classical economists were right all along. Inflation is caused when the government prints up too much money. It is the result too much money chasing a finite number of goods. Kind of like what we have now after QE2 when we printed boatloads of cash and the Arabs once again want lots more dollars for the same oil. Amazing how history repeats itself isn't it?
Reagan and Paul Volcker proved this conclusively when they shut down the printing presses and funded the profligate deficits the government was still running up by borrowing actual money from actual people. Presto, instant recession to get over the hangover of ten years of Keynesians run amuck and then an end to inflation for nearly thirty five years until now.... oh my... what's the same then as now? You got it. High unemployment and high inflation. Keynesians back in ascendance:
16====================================================================================================
Regardless of which theory was true, whether this wage/price spiral nonsense was either a huge ruse or the pointy head Keynesians really were that dumb, inflation once lit, began to burn out of control going well into the double digits by the end of Jimmy the peanut farmer's disastrous Presidency. It was during the time of Jimmy Carter, that a new term was coined: stagflation. This was a word to describe a condition of high unemployment and high inflation coexisting together. Remember, this was something that Keynesians said could not happen. It could not be! But there it was.
We now know that the whole concept of the wage/price spiral was total bunk. After all, a wage is basically a price for labor and you can't really have a price/price spiral. It turned out that the classical economists were right all along. Inflation is caused when the government prints up too much money. It is the result too much money chasing a finite number of goods. Kind of like what we have now after QE2 when we printed boatloads of cash and the Arabs once again want lots more dollars for the same oil. Amazing how history repeats itself isn't it?
Reagan and Paul Volcker proved this conclusively when they shut down the printing presses and funded the profligate deficits the government was still running up by borrowing actual money from actual people. Presto, instant recession to get over the hangover of ten years of Keynesians run amuck and then an end to inflation for nearly thirty five years until now.... oh my... what's the same then as now? You got it. High unemployment and high inflation. Keynesians back in ascendance:
This sorry performance by Keynesians in the seventies was enough for Milton Friedman and many other economists to say that Keynes whole thesis about how economies work had been debunked. Yet, despite this, Keynes and his theories are still held up as gospel in the left wing community in the US and we are paying a heavy price for that now.
17====================================================================================================
Now that we know a little bit of the economic history of Keynsianism in the US., let's take a look at a traditional Keynesian inspired stimulus whose primary purpose is to stimulate economic growth and conceptualize how it might work in our current economy. What would a successful stimulus of this kind look like? Well, we know, from historical evidence, that the best form of Keynesian spending to stimulate the economy is to spend money on actual products that are produced in the private sector. A huge part of how we emerged from the Depression during WW2, grew so fast in the sixties and the eighties was because we bought a whole lot of tanks, ships, planes and even moon rockets which employed millions of people in the private sector to make them. This type of spending also has the advantage of having an incredibly low amount of government overhead necessary in the decision making and oversight processes.
Now most people who favor Ronald Reagan and his supply side theories won't be fully honest on this point. But the truth is that there is no question that the Reagan military buildup, paid for with deficit spending, was definitely a factor in promoting the incredible economic recovery we experienced in the Eighties. In this case, the government is acting like my friend's dad and is engaged in the same kind of process. They are using a part of the stimulus funds to buy actual products and services from the private sector at market prices. Such spending, like tax rebates, is injected immediately into the economy without much delay, but it is a one shot one time stimulation and the profits made from this may or may not be invested in things that will pay off in the future.
Using this approach, there is a question as to whether this kind of spending will create any long term growth that might make up for the cost to the country and the economy of borrowing that money or the inflation that comes if it is printed. Therefore, once the initial flood of money is injected into the economy there is no guarantee that the economic growth will be anything other than short term. However, with this type of spending, we do have something tangible to show for the money spent. People sometimes forget that it was Reagan's military buildup that enabled our military to have all those M1 tanks, Apache Helicopters, and F18 fighter jets that were instrumental in our victory in both wars against Iraq. Also, the building of new plants and factories may enable the companies to convert them for different uses if the economy picks up and expands as happened after World War Two.
18====================================================================================================
Another type of Government spending is on the infrastructure. By creating new roads, bridges and power grids, the government can inject money into the economy and, hopefully, create something that can provide for better productivity and efficiency in the economy for the future. The same is true about money spent on research and development. While there is some short term gain from this type of spending, there is also some long term gain as well due to the increased productivity of a more efficient infrastructure.
However, in the modern American economy, unless the money is spent on repairs or the expansion of existing roads and bridges, the money might not be spent for quite some time and, thus, is not immediately stimulative. This is because any new project may face issues with property rights, design, legal issues and environmental impact studies that can often take years. This is a major drawback because the purpose of stimulus spending is to get the money out while the economy is in recession so that it will have the greatest impact. Even the left-wing loons on MSNBC have to admit this undeniable truth:
17====================================================================================================
Now that we know a little bit of the economic history of Keynsianism in the US., let's take a look at a traditional Keynesian inspired stimulus whose primary purpose is to stimulate economic growth and conceptualize how it might work in our current economy. What would a successful stimulus of this kind look like? Well, we know, from historical evidence, that the best form of Keynesian spending to stimulate the economy is to spend money on actual products that are produced in the private sector. A huge part of how we emerged from the Depression during WW2, grew so fast in the sixties and the eighties was because we bought a whole lot of tanks, ships, planes and even moon rockets which employed millions of people in the private sector to make them. This type of spending also has the advantage of having an incredibly low amount of government overhead necessary in the decision making and oversight processes.
Now most people who favor Ronald Reagan and his supply side theories won't be fully honest on this point. But the truth is that there is no question that the Reagan military buildup, paid for with deficit spending, was definitely a factor in promoting the incredible economic recovery we experienced in the Eighties. In this case, the government is acting like my friend's dad and is engaged in the same kind of process. They are using a part of the stimulus funds to buy actual products and services from the private sector at market prices. Such spending, like tax rebates, is injected immediately into the economy without much delay, but it is a one shot one time stimulation and the profits made from this may or may not be invested in things that will pay off in the future.
Using this approach, there is a question as to whether this kind of spending will create any long term growth that might make up for the cost to the country and the economy of borrowing that money or the inflation that comes if it is printed. Therefore, once the initial flood of money is injected into the economy there is no guarantee that the economic growth will be anything other than short term. However, with this type of spending, we do have something tangible to show for the money spent. People sometimes forget that it was Reagan's military buildup that enabled our military to have all those M1 tanks, Apache Helicopters, and F18 fighter jets that were instrumental in our victory in both wars against Iraq. Also, the building of new plants and factories may enable the companies to convert them for different uses if the economy picks up and expands as happened after World War Two.
18====================================================================================================
Another type of Government spending is on the infrastructure. By creating new roads, bridges and power grids, the government can inject money into the economy and, hopefully, create something that can provide for better productivity and efficiency in the economy for the future. The same is true about money spent on research and development. While there is some short term gain from this type of spending, there is also some long term gain as well due to the increased productivity of a more efficient infrastructure.
However, in the modern American economy, unless the money is spent on repairs or the expansion of existing roads and bridges, the money might not be spent for quite some time and, thus, is not immediately stimulative. This is because any new project may face issues with property rights, design, legal issues and environmental impact studies that can often take years. This is a major drawback because the purpose of stimulus spending is to get the money out while the economy is in recession so that it will have the greatest impact. Even the left-wing loons on MSNBC have to admit this undeniable truth:
The final type of government spending is redistributive. In this case, money is transferred from one section of the economy to another minus whatever percentage of that money the government takes out to administer it. This type of spending is done less to stimulate the economy then it is to ameliorate the pain that an economic downturn might cause. Spending of this nature can go out to states in the form of aid or to individuals in the form of things like health care subsidies, food stamps or unemployment checks. Despite what Nancy Pelosi says about unemployment insurance being the best form of stimulus, the redistribution of wealth is a net drain on the economy because it doesn't foster the emergence of new industries and factories or create new demand because most of this money goes for basic staples. This isn't to say that there is no positive benefit to the economy or that there is no benefit in helping those who have lost their jobs. However, it is to say that it is the least beneficial form of stimulus spending there is. To argue otherwise is ...
Ah I can't help it, let's hear those words of wisdom from Speaker Pelosi one more time:
Ah I can't help it, let's hear those words of wisdom from Speaker Pelosi one more time:
19====================================================================================================
Now, for the sake of this discussion, I am going to ignore that this dim bulb was actually instrumental in writing the stimulus bill, and assume that some brighter bulbs can make a much better case for a Keynesian plan of action. I can absolutely accept that if the government spent the money wisely, that there could be a positive economic outcome. If, for example, we spent the trillion dollars to exploit all of the massive new natural gas and oil fields we've recently discovered and then offered tax credits or direct subsidies to trucking and railroad firms to buy new vehicles and Locomotives or retrofit their existing assets to be able to run on natural gas and then seeded the money to create a natural gas infrastructure on all the interstate highways and railways in the US, we could see huge economic gains for the country as a whole in the future. As the infrastructure became more widespread, it would become sensible and logical for the auto companies to start producing cars that run on natural gas like they do in other countries. A massive program such as this would put millions of people back to work creating and retrofitting engines, creating the machinery needed to drill for the gas and do the exploring and drilling itself. Embarking on a program such as this could have the mulitiple benefits of stimulating the economy, reducing a huge percentage of our dependence on foreign oil and create tax revenue and royalties from the gas for the government. In addition, all the money we currently send to countries that mean us harm in exchange for their oil would remain here in the US and do wonders for our balance of trade around the world.
Likewise, improving the power grid or researching something like fusion might also pay off both in the near and the long term. The same would be true of building new nuclear power plants or subsidizing new energy pipelines or drilling. Many types of government spending can be both stimulative and effective for creating greater productivity in the long term. Also, we could speed up our military spending and buy the next ten years worth of military materiel that we would normally need in the next three years. All of this kind of spending could be beneficial for the economy in both the short and the long term. However, all such programs requires a careful and thoughtful cost/benefit analysis and an assessment that borrowing the money to fund it will be made up for by the great benefit to the nation and the economy.
In contrast, the benefits of most infrastructure spending on "shovel ready" jobs is not as great as advertised in a modern highly developed country, such as the United States. It is one thing for China to be investing in highways to areas that have no roads in order to open up that part of the country to exploitation, trade and commerce. That has a much higher level of benefit than, say, fixing a currently existing bridge or expanding a highway by another lane in a country in which very few parts of it are inaccessible and undeveloped. It isn't that fixing potholes or expediting traffic isn't useful in terms of increasing economic productivity, but not nearly to the same degree as creating entirely brand new infrastructure that is both needed and currently non-existent.
20====================================================================================================
Part of the problem that we have here in the US is the Davis-Bacon law that forces all government contracts to pay the prevailing union wage. We end up paying a boatload of cash for projects that cost too much and take way too long to complete given union wages and "work rules". Whatever gains are made for the economy by the increased efficiency of the infrastructure are lost due to the cost of things like environmental analysis and court cases, administrative overhead and the high cost and low productivity of the labor.
Take for example one of President Obama's favorite stimulus projects, high speed rail. Now, personally, I think this money losing boondoggle has more to do with little Barry wanting to play with his new train set than anything that makes any kind of economic sense. However, President Obama does actually think this is a great use of taxpayer money. Perhaps that might be so in China (or maybe not) where labor is cheap, no one needs to get an environmental analysis and there aren't as many other cost competitive ways to go from one place to another. But of all the high speed trains that have ever been built, only two are profitable and they are located in very dense population areas. But here in the US? It is a tragicomedy:
Now, for the sake of this discussion, I am going to ignore that this dim bulb was actually instrumental in writing the stimulus bill, and assume that some brighter bulbs can make a much better case for a Keynesian plan of action. I can absolutely accept that if the government spent the money wisely, that there could be a positive economic outcome. If, for example, we spent the trillion dollars to exploit all of the massive new natural gas and oil fields we've recently discovered and then offered tax credits or direct subsidies to trucking and railroad firms to buy new vehicles and Locomotives or retrofit their existing assets to be able to run on natural gas and then seeded the money to create a natural gas infrastructure on all the interstate highways and railways in the US, we could see huge economic gains for the country as a whole in the future. As the infrastructure became more widespread, it would become sensible and logical for the auto companies to start producing cars that run on natural gas like they do in other countries. A massive program such as this would put millions of people back to work creating and retrofitting engines, creating the machinery needed to drill for the gas and do the exploring and drilling itself. Embarking on a program such as this could have the mulitiple benefits of stimulating the economy, reducing a huge percentage of our dependence on foreign oil and create tax revenue and royalties from the gas for the government. In addition, all the money we currently send to countries that mean us harm in exchange for their oil would remain here in the US and do wonders for our balance of trade around the world.
Likewise, improving the power grid or researching something like fusion might also pay off both in the near and the long term. The same would be true of building new nuclear power plants or subsidizing new energy pipelines or drilling. Many types of government spending can be both stimulative and effective for creating greater productivity in the long term. Also, we could speed up our military spending and buy the next ten years worth of military materiel that we would normally need in the next three years. All of this kind of spending could be beneficial for the economy in both the short and the long term. However, all such programs requires a careful and thoughtful cost/benefit analysis and an assessment that borrowing the money to fund it will be made up for by the great benefit to the nation and the economy.
In contrast, the benefits of most infrastructure spending on "shovel ready" jobs is not as great as advertised in a modern highly developed country, such as the United States. It is one thing for China to be investing in highways to areas that have no roads in order to open up that part of the country to exploitation, trade and commerce. That has a much higher level of benefit than, say, fixing a currently existing bridge or expanding a highway by another lane in a country in which very few parts of it are inaccessible and undeveloped. It isn't that fixing potholes or expediting traffic isn't useful in terms of increasing economic productivity, but not nearly to the same degree as creating entirely brand new infrastructure that is both needed and currently non-existent.
20====================================================================================================
Part of the problem that we have here in the US is the Davis-Bacon law that forces all government contracts to pay the prevailing union wage. We end up paying a boatload of cash for projects that cost too much and take way too long to complete given union wages and "work rules". Whatever gains are made for the economy by the increased efficiency of the infrastructure are lost due to the cost of things like environmental analysis and court cases, administrative overhead and the high cost and low productivity of the labor.
Take for example one of President Obama's favorite stimulus projects, high speed rail. Now, personally, I think this money losing boondoggle has more to do with little Barry wanting to play with his new train set than anything that makes any kind of economic sense. However, President Obama does actually think this is a great use of taxpayer money. Perhaps that might be so in China (or maybe not) where labor is cheap, no one needs to get an environmental analysis and there aren't as many other cost competitive ways to go from one place to another. But of all the high speed trains that have ever been built, only two are profitable and they are located in very dense population areas. But here in the US? It is a tragicomedy:
Imagine that! After an environmental impact study, the cost estimate has nearly doubled to unimaginable and unaffordable heights. Who'd have thought that would happen? Apparently not the Obama administration or the California politicians. According to the article: "The decision to start construction in the Central Valley, linking relatively small towns, also has generated criticism that the project could become a high-priced "train to nowhere." Good Lord, was nobody in government using their thinking caps?
Apparently not, it seems. Why, just the other day, the state in the nation with the highest debt, worst bond ratings and a fifteen billion dollar budget deficit gave this boondoggle the go ahead:
Apparently not, it seems. Why, just the other day, the state in the nation with the highest debt, worst bond ratings and a fifteen billion dollar budget deficit gave this boondoggle the go ahead:
Did you hear that? The President and Governor "Moonbeam" Brown are delighted! Yay! They get to play with a brand new train set! Fortunately, California is alone in its belief that ObamaRail is a good idea. Apparently Democrats who run massive deficits are all for wasting billions of taxpayer dollars on this kind of insanity, but the Republican governors of Florida, Ohio and Wisconsin have returned billions in Federal grants for high speed rail citing its massive up front economic cost and doubts about its future profitability. Can you believe that this is Obama's favorite stimulus project? The one he touted in his State of the Union address as part of his plan for "winning the future"? The only positive thing to come out of this high priced lemon is that it serves as a perfect example of the kinds of issues that make many types stimulative infrastructure spending take so long and cost so much. It also shows that very often government planners don't think things through very well.
21====================================================================================================
If one was looking at the best apples vs. the best apples of supply side vs. demand side economics to determine which course should be taken in the future, a decent case could be made that both could be effective in fostering an immediate infusion of money into the economy as well as promoting long term economic growth. There is no question given the inexorable rise of the equities markets over time, that the private sector can create wealth at a historical rate of around 7% per year. The more capital that is available, the more wealth that can be created. That said, an argument could also be made, that the best and the brightest government planners could use that same money in a way that was more productive than individuals choosing to spend that money all over the world in a willy nilly fashion with no plan or direction. To transform the trucking and/or railroad industry to locally and plentifully available natural gas is but one example of how a massive investment by government into the private economy can pay dividends in spades.
Unfortunately, we don't live in a perfect world. Because this particular downturn has made made so many investors skittish, a lot of the capital from a tax cut might go to an investment like gold, which does little economic good for the economy. The effect of investing in gold is like hiding money under your mattress or burying it in a hole in your back yard as far as the economy is concerned. That doesn't mean it might not be the smartest thing you could do in a time of high inflation or high uncertainty, but that the capital basically "disappears" from the economy. Also, in the modern global economy, huge percentages of a tax cut might go into buying goods from or investing in and capitalizing companies in other parts of the world and, therefore, the benefits of that spending and investing would impact our own country in a less immediately positive way. That this is also an argument for making our country more competitive from a tax and regulatory standpoint is obvious, but moot for the point of this discussion.
But, while allowing individuals in a free market to choose to spend and invest their own money might not create the same magnitude of benefits as they would have in the Twenties, Sixties and Eighties, the same is true for government spending the money. In our modern system of government, bureaucracy, and politics, how wisely can this trillion dollars be spent? Can it be spent with focus and long term planning in mind, or will it be subject to the whims of ideology, lobbyists, crony capitalism and the political needs of 535 Crooks and Thieves in the US capitol?
For me, this is where the pedal meets the metal so to speak. All of my logic and common sense tells me that democratic government rarely spends money with focus and clarity and that special interests almost always rule the day and cancel out with waste and inefficiency whatever long term benefits the spending may have had. Therefore, in my opinion, allowing the private sector to spend and invest the trillion dollars will have a much more salutary effect on the economy than allowing the Crooks and Thieves to spend it. It just seems common sense to me on a purely intellectual basis. Money in the hands of the people beats money in the hands of Crooks and Thieves every time.
21====================================================================================================
If one was looking at the best apples vs. the best apples of supply side vs. demand side economics to determine which course should be taken in the future, a decent case could be made that both could be effective in fostering an immediate infusion of money into the economy as well as promoting long term economic growth. There is no question given the inexorable rise of the equities markets over time, that the private sector can create wealth at a historical rate of around 7% per year. The more capital that is available, the more wealth that can be created. That said, an argument could also be made, that the best and the brightest government planners could use that same money in a way that was more productive than individuals choosing to spend that money all over the world in a willy nilly fashion with no plan or direction. To transform the trucking and/or railroad industry to locally and plentifully available natural gas is but one example of how a massive investment by government into the private economy can pay dividends in spades.
Unfortunately, we don't live in a perfect world. Because this particular downturn has made made so many investors skittish, a lot of the capital from a tax cut might go to an investment like gold, which does little economic good for the economy. The effect of investing in gold is like hiding money under your mattress or burying it in a hole in your back yard as far as the economy is concerned. That doesn't mean it might not be the smartest thing you could do in a time of high inflation or high uncertainty, but that the capital basically "disappears" from the economy. Also, in the modern global economy, huge percentages of a tax cut might go into buying goods from or investing in and capitalizing companies in other parts of the world and, therefore, the benefits of that spending and investing would impact our own country in a less immediately positive way. That this is also an argument for making our country more competitive from a tax and regulatory standpoint is obvious, but moot for the point of this discussion.
But, while allowing individuals in a free market to choose to spend and invest their own money might not create the same magnitude of benefits as they would have in the Twenties, Sixties and Eighties, the same is true for government spending the money. In our modern system of government, bureaucracy, and politics, how wisely can this trillion dollars be spent? Can it be spent with focus and long term planning in mind, or will it be subject to the whims of ideology, lobbyists, crony capitalism and the political needs of 535 Crooks and Thieves in the US capitol?
For me, this is where the pedal meets the metal so to speak. All of my logic and common sense tells me that democratic government rarely spends money with focus and clarity and that special interests almost always rule the day and cancel out with waste and inefficiency whatever long term benefits the spending may have had. Therefore, in my opinion, allowing the private sector to spend and invest the trillion dollars will have a much more salutary effect on the economy than allowing the Crooks and Thieves to spend it. It just seems common sense to me on a purely intellectual basis. Money in the hands of the people beats money in the hands of Crooks and Thieves every time.
Annienomics:
The Story Of Luddites
Even though I have personally come to the conclusion that free markets and free individuals can do a much better job creating prosperity than the Crooks and Thieves in government, I do understand that well meaning leftists, even those who claim to believe in the capitalist system, actually have faith that the opposite is true. They think that government spends money more wisely than the American people do:
As you can see, journalist wunderkind and uber-leftist Ezra Klein thinks that "intelligent" people like the Federal Reserve can move money around more "fairly" and wisely than individual investors. Rick Santelli is quick to point out that despite his supposed "brilliance", Klein doesn't know what the bleep he's talking about. Most people, particularly investors, are under no illusions about how "well" or "wisely" government bureaucrats spend their tax dollars.
2=====================================================================================================
Therefore, realizing that we are basically a center/right country that believes in the free market, most leftist politicians in America will not be completely open about these beliefs. However during a time of economic disruption, when all eyes are turned to the government for a solution, they are eagerly prepared to step in to offer to "help" people and "save and create" jobs. At times like these, John Maynard Keynes' nostrums are always trotted out as the panacea for what ails us. Cynically, Rahm Emmannuel let that particular cat out of the bag when he urged Democrats to go on a super spending spree and think "big" while they had the chance because they "should never let a good crisis go to waste."
However, in normal economic times, for politicians to propose massive spending of this magnitude would be akin to saying that government can spend us into prosperity and most Americans wouldn't buy that concept for a second despite whatever fantasy Keynesian multiplier effect nonsense the Crooks and Thieves might be trying to sell an ignorant public. Most people, deep down realize that if that were indeed so, places like North Korea and Cuba would be at the top of the economic heap today instead of poor backwards nations that can't even feed their own people. This kind of obvious evidence is why, despite almost 100 years of progressivism in our politics, academe and media, we are still a center right country.
Because of this political reality, the left has always had to be very clever in being able to come up with some "new" theory or evidence that shows how the government confiscating more of the available capital from the private sector and "investing" it in new government programs can be better for the economy. A great example of this was in the late 1980's. At that time, it was very popular among the left to promote Japan and Germany as nations in which government intervention and direction in the private sector could create prosperous societies. In fact, during the '92 campaign, Bill Clinton was a proponent of this argument and said that the government should "direct" investment towards certain industries and ideas and pick winners and losers rather than let the free market decide. Government planning of this nature was essential, Clinton said, in order to corner the market on what the "experts" predicted would be the technologies of the future. Clinton stated that:
Germany and Japan have productivity growth rates three and four times ours because they educate their people better, invest more in their future, and organize their economies to compete in the world, and we don't. For 11 years, we've had no economic vision, no economic leadership, no national economic strategy.
As you will recall, leftists back then said that the stock market financing companies in America made its CEO's only concerned with short term gain and quarterly profit reports whereas the fact that German and Japanese companies were subsidized by big government dominated banks enabled them to think and plan in the longer term. This was especially true, they said, when government was willing to steer money and influence in their direction by way of subsidies and other boons. Of course this whole idea of government control and direction of the economy faded when Japan went into a tailspin from which they still haven't recovered and Germany went years with minimal to no growth while the US free market system flourished during the 90's.
3=====================================================================================================
Undaunted by the failure of the Japanese model or the reality of Germany's mixed record since reunification, the left has never tired of the idea that government could successfully plan the direction the private economy should go. When you hear Barack Obama and the Democrats talking about "green" jobs, realize this is just the next generation of this type of wishful thinking by the left:
2=====================================================================================================
Therefore, realizing that we are basically a center/right country that believes in the free market, most leftist politicians in America will not be completely open about these beliefs. However during a time of economic disruption, when all eyes are turned to the government for a solution, they are eagerly prepared to step in to offer to "help" people and "save and create" jobs. At times like these, John Maynard Keynes' nostrums are always trotted out as the panacea for what ails us. Cynically, Rahm Emmannuel let that particular cat out of the bag when he urged Democrats to go on a super spending spree and think "big" while they had the chance because they "should never let a good crisis go to waste."
However, in normal economic times, for politicians to propose massive spending of this magnitude would be akin to saying that government can spend us into prosperity and most Americans wouldn't buy that concept for a second despite whatever fantasy Keynesian multiplier effect nonsense the Crooks and Thieves might be trying to sell an ignorant public. Most people, deep down realize that if that were indeed so, places like North Korea and Cuba would be at the top of the economic heap today instead of poor backwards nations that can't even feed their own people. This kind of obvious evidence is why, despite almost 100 years of progressivism in our politics, academe and media, we are still a center right country.
Because of this political reality, the left has always had to be very clever in being able to come up with some "new" theory or evidence that shows how the government confiscating more of the available capital from the private sector and "investing" it in new government programs can be better for the economy. A great example of this was in the late 1980's. At that time, it was very popular among the left to promote Japan and Germany as nations in which government intervention and direction in the private sector could create prosperous societies. In fact, during the '92 campaign, Bill Clinton was a proponent of this argument and said that the government should "direct" investment towards certain industries and ideas and pick winners and losers rather than let the free market decide. Government planning of this nature was essential, Clinton said, in order to corner the market on what the "experts" predicted would be the technologies of the future. Clinton stated that:
Germany and Japan have productivity growth rates three and four times ours because they educate their people better, invest more in their future, and organize their economies to compete in the world, and we don't. For 11 years, we've had no economic vision, no economic leadership, no national economic strategy.
As you will recall, leftists back then said that the stock market financing companies in America made its CEO's only concerned with short term gain and quarterly profit reports whereas the fact that German and Japanese companies were subsidized by big government dominated banks enabled them to think and plan in the longer term. This was especially true, they said, when government was willing to steer money and influence in their direction by way of subsidies and other boons. Of course this whole idea of government control and direction of the economy faded when Japan went into a tailspin from which they still haven't recovered and Germany went years with minimal to no growth while the US free market system flourished during the 90's.
3=====================================================================================================
Undaunted by the failure of the Japanese model or the reality of Germany's mixed record since reunification, the left has never tired of the idea that government could successfully plan the direction the private economy should go. When you hear Barack Obama and the Democrats talking about "green" jobs, realize this is just the next generation of this type of wishful thinking by the left:
You'd think that the experience of the Carter years and the billions wasted on renewable energy programs that were utter failures, might have caused Obama and the Democrats to reconsider the wisdom of this idea. But, then maybe you don't know Democrats well enough. No grand idea full of noble purpose that, as a side benefits, allows you to hook up your cronies with free taxpayer cash and increases government power can ever be sidetracked by real world evidence. In Green Energy, Democrats had found the new holy grail: a program they could tout as a prime example of how government could spend your money more wisely than you can and, better yet, it was for the good of the planet. After all, only a climate change denying meanie would object to the concept of transforming our economy into the 21st century with high paying new "green" jobs. Green was in! All their buddies in the media and Hollywood Matrix said so! Therefore, it's full speed ahead to the new green future! It was the moment that the rise of the oceans began to slow and the planet began to heal. It was the time for Hope and Change!
4=====================================================================================================
Well, that was 2008. The Obama administration is still trying to push the fictitious meme of greening the economy, but those of who have swallowed the red pill know better. The evidence from around the world is in and we now know for certain, the whole green jobs thing is a mirage in places where it has actually been tried:
4=====================================================================================================
Well, that was 2008. The Obama administration is still trying to push the fictitious meme of greening the economy, but those of who have swallowed the red pill know better. The evidence from around the world is in and we now know for certain, the whole green jobs thing is a mirage in places where it has actually been tried:
The American Enterprise Institute says that since 2000, Spanish taxpayers have spent $771,000 per job for each green job created which was purchased at the cost of 2.2 jobs lost in other areas of the economy. Insane, eh? Well Spain eventually woke up and smelled the coffee. Close to insolvency, Spain has been forced to reverse course on the green boondoggle and drastically cut subsidies for wind and solar power. They now have the highest unemployment rate in the industrialized world. That experiment in government planning went well, huh?
During the last presidential campaign, Barack Obama cited Spain as his model to emulate to create the new economy of the future based on "green" jobs and has put that promise into effect as part of the stimulus package. How has the "green jobs" program gone in its implementation so far in the US:
During the last presidential campaign, Barack Obama cited Spain as his model to emulate to create the new economy of the future based on "green" jobs and has put that promise into effect as part of the stimulus package. How has the "green jobs" program gone in its implementation so far in the US:
5=====================================================================================================
Barack Obama was so desperate to tout the success of his "green jobs" program that his administration started cooking the books to make it look like something was being accomplished in the the President's signature initiative. You wouldn't believe how far the flunkies in his administration were willing to go to make the boss look good:
Barack Obama was so desperate to tout the success of his "green jobs" program that his administration started cooking the books to make it look like something was being accomplished in the the President's signature initiative. You wouldn't believe how far the flunkies in his administration were willing to go to make the boss look good:
It's bad enough that so few actual "green jobs" are being created that the Obamabots feel they need to massage the numbers. However, the real crime in this green fiasco is how many billions of taxpayer dollars were "invested" with Obama cronies and to companies that were no better than junk bond status:
I love that! Putting a government bureaucrat (in this case a nobel prize winning mathematician) in charge of billions of dollars worth of investments is like putting the manager of the New York Yankees in charge of US troops in Afghanistan! And, apparently, with the same results! However, talk to any lefty or Obamanaut and you'll hear about what a great idea this "green jobs" nonsense is. In the book The Escape Artists: How Obama’s Team Fumbled the Recovery, is an incredible passage that reveals how "wise" our government is when it spends your money for you:
Energy was a particular obsession of the president-elect’s, and therefore a particular source of frustration. Week after week, [White House economic adviser Christina] Romer would march in with an estimate of the jobs all the investments in clean energy would produce; week after week, Obama would send her back to check the numbers. “I don’t get it,” he’d say. “We make these large-scale investments in infrastructure. What do you mean, there are no jobs?” But the numbers rarely budged.
Some people just don't learn.
6=====================================================================================================
Regardless of the questionable effectiveness of Obama's Keynesian stimulus plan or his "green" jobs program, there is no question that he still holds it as an article of faith that the government can spend the nation's wealth more wisely than the private sector can. In his case, it isn't just the wealth we currently have, but the amount of money he can print and borrow as well. I would posit that if we had taken the trillion dollars that the stimulus is going to cost us plus the amount of deficit spending on bailouts, subsides for the banks, auto companies, cash for clunkers, green programs and distressed homeowners since Obama has been President and just divided that up among each and every taxpaying American, we'd have "created and saved" far more jobs. I'd say that putting about ten to thirty thousand bucks into every American's hands would have been a lot more effective than what we actually did , but that's me. I believe in the free market and the power of the individual to better spend his or her own money than a government that thinks "green" jobs and ObamaRail are wise expenditures of the public fisc.
However, allowing Americans to spend the "stimulus" funds themselves was not the course Obama followed was it? No. We decided to let the "experts" spend that money for us. President Obama delegated the writing and formulation of the stimulus package to that dingbat and economic ignoramus Nancy Pelosi and her pal Harry Reid. Instead of a forward thinking, focused and directed Keynesian spending master plan conceived by the fevered mind of the smartest man ever to be President, we got a porkulus bill that could only have come out of the crazed dreams of the Crooks and Thieves of the Democrat party. This nation embarked on a program in which our young President and his advisers (all with zero experience in the private sector) promised that for each dollar of stimulus spent there would be a multiplier effect of 1.5 dollars of economic output. This, they said, would create wealth that would stimulate the economy and get us out of the recession and into a V shaped recovery.
On its surface, this is just the kind of demand side economics that Lord Keynes would have approved of. As sold to the American people, it was supposed to be targeted towards injecting money directly into people's pockets and, thus, the economy through government spending. In this way, following the Keynesian script, this policy would spark demand for new goods and services and get the whole national economy rolling again. At least in theory. Keynesian pump priming theory. But, we know better now don't we?
Basically, their plan to get us out of the fiscal mess of American's borrowing more than they could afford to pay for huge houses was to max out the National Credit card. How has it worked out so far? According to the CBO (the supposed gold standard of these things) just the stimulus alone cost $228,055 per job saved. That doesn't even count the rest of the trillions in other new spending. I'll say it again. $228,055 per job saved!!! Yup, hope and immense buckets full of change seemed to go down that rat hole, eh?!
7=====================================================================================================
As I have pointed out, it is a plain common sense notion in modern America that when our government spends money, a bunch of it gets sucked out in administrative costs and waste as it is analyzed by overpaid unionized government employees and then it trickles down (note how I inserted that word!) to its intended destination where it goes once again to overpaid unionized workers to achieve some intended goal which may or may not be economically productive, like say shovel ready projects... You remember the One selling the Stimulus as putting America back to work with Shovel Ready (don't you just love that focused group term?) projects:
Energy was a particular obsession of the president-elect’s, and therefore a particular source of frustration. Week after week, [White House economic adviser Christina] Romer would march in with an estimate of the jobs all the investments in clean energy would produce; week after week, Obama would send her back to check the numbers. “I don’t get it,” he’d say. “We make these large-scale investments in infrastructure. What do you mean, there are no jobs?” But the numbers rarely budged.
Some people just don't learn.
6=====================================================================================================
Regardless of the questionable effectiveness of Obama's Keynesian stimulus plan or his "green" jobs program, there is no question that he still holds it as an article of faith that the government can spend the nation's wealth more wisely than the private sector can. In his case, it isn't just the wealth we currently have, but the amount of money he can print and borrow as well. I would posit that if we had taken the trillion dollars that the stimulus is going to cost us plus the amount of deficit spending on bailouts, subsides for the banks, auto companies, cash for clunkers, green programs and distressed homeowners since Obama has been President and just divided that up among each and every taxpaying American, we'd have "created and saved" far more jobs. I'd say that putting about ten to thirty thousand bucks into every American's hands would have been a lot more effective than what we actually did , but that's me. I believe in the free market and the power of the individual to better spend his or her own money than a government that thinks "green" jobs and ObamaRail are wise expenditures of the public fisc.
However, allowing Americans to spend the "stimulus" funds themselves was not the course Obama followed was it? No. We decided to let the "experts" spend that money for us. President Obama delegated the writing and formulation of the stimulus package to that dingbat and economic ignoramus Nancy Pelosi and her pal Harry Reid. Instead of a forward thinking, focused and directed Keynesian spending master plan conceived by the fevered mind of the smartest man ever to be President, we got a porkulus bill that could only have come out of the crazed dreams of the Crooks and Thieves of the Democrat party. This nation embarked on a program in which our young President and his advisers (all with zero experience in the private sector) promised that for each dollar of stimulus spent there would be a multiplier effect of 1.5 dollars of economic output. This, they said, would create wealth that would stimulate the economy and get us out of the recession and into a V shaped recovery.
On its surface, this is just the kind of demand side economics that Lord Keynes would have approved of. As sold to the American people, it was supposed to be targeted towards injecting money directly into people's pockets and, thus, the economy through government spending. In this way, following the Keynesian script, this policy would spark demand for new goods and services and get the whole national economy rolling again. At least in theory. Keynesian pump priming theory. But, we know better now don't we?
Basically, their plan to get us out of the fiscal mess of American's borrowing more than they could afford to pay for huge houses was to max out the National Credit card. How has it worked out so far? According to the CBO (the supposed gold standard of these things) just the stimulus alone cost $228,055 per job saved. That doesn't even count the rest of the trillions in other new spending. I'll say it again. $228,055 per job saved!!! Yup, hope and immense buckets full of change seemed to go down that rat hole, eh?!
7=====================================================================================================
As I have pointed out, it is a plain common sense notion in modern America that when our government spends money, a bunch of it gets sucked out in administrative costs and waste as it is analyzed by overpaid unionized government employees and then it trickles down (note how I inserted that word!) to its intended destination where it goes once again to overpaid unionized workers to achieve some intended goal which may or may not be economically productive, like say shovel ready projects... You remember the One selling the Stimulus as putting America back to work with Shovel Ready (don't you just love that focused group term?) projects:
And sure enough, we spent eight hundred and twenty one BILLION dollars plus interest, and we put people back to work immediately and sparked that economy right back up, right? Right? Uh... no:
And they are laughing? I hardly think that kind of major screwup is a laughing matter. Seems like those overpaid unionized government employees took a lot longer to shuffle the papers than Mr. Empty Suit With No Executive Experience and his Cabinet with not a single business person in it expected. Imagine that! This is what happens when theory meets reality. A 1.5 to 1 multiplier, my ass!
8=====================================================================================================
8=====================================================================================================
How is it that the President could be so clueless about shovel ready jobs? How is it that one of the primary authors of the stimulus bill was a woman that thinks that the most effective form of stimulus is an unemployment check? I mean really. I don't mean to be too repetitive, but people call Sarah Palin dumb and uneducated, but this woman's ignorance and stupidity is truly colossal:
The more you look into how the stimulus dollars were actually spent, the more you realize that we basically threw away a Trillion bucks for nothing:
I couldn't agree with Veronique de Rugy more. The idea that 535 Crooks and Thieves plus the smartest President that ever lived could create jobs through a top down bureaucratic approach by a government that can't even deliver the mail as well as Fedex was always ludicrous. However, this particular plan was so bad precisely because it flew in the face of any economists proper conception about how a true Keynesian plan ought to be implemented.
9=====================================================================================================
But seriously, how is it that instead of spending the money on some game changing projects that only government can accomplish and that might actually create more wealth than the borrowing of the money would cost, we instead used the money on one shot tax rebates, fantasy "green jobs", propping up state governments and their unionized work forces and shovel ready jobs that weren't actually shovel ready?
Well, one could be mean spirited and say that the tax rebates were so they could tell everyone they kept their promise and lowered taxes for 95% of people, the subsidies to the states were payoffs to union buddies and the not quite shovel ready jobs were payoffs to other union buddies and that the whole stimulus was just a huge slush fund and payback vehicle for the Democratic party. Or, we could be charitable, and say that this new breed of Democrats, who believe in the delusion of "green" jobs, obviously don't even really know their Keynes very well and are more schooled in the new leftist drivel that passes for economic theory among progressives like this :
9=====================================================================================================
But seriously, how is it that instead of spending the money on some game changing projects that only government can accomplish and that might actually create more wealth than the borrowing of the money would cost, we instead used the money on one shot tax rebates, fantasy "green jobs", propping up state governments and their unionized work forces and shovel ready jobs that weren't actually shovel ready?
Well, one could be mean spirited and say that the tax rebates were so they could tell everyone they kept their promise and lowered taxes for 95% of people, the subsidies to the states were payoffs to union buddies and the not quite shovel ready jobs were payoffs to other union buddies and that the whole stimulus was just a huge slush fund and payback vehicle for the Democratic party. Or, we could be charitable, and say that this new breed of Democrats, who believe in the delusion of "green" jobs, obviously don't even really know their Keynes very well and are more schooled in the new leftist drivel that passes for economic theory among progressives like this :
Watch only as much of this tripe as you can stomach. You'll soon get the gist of it.
Here is an excellent rebuttal to this utter tripe if you care to delve further into the economically ignorant mind of the "green" progressive:
10====================================================================================================
Full disclosure here, I actually used to know Annie fairly well. She, Barry O and I all went to college together. She and the Obamessiah actually bought into the nonsense spewed by the Marxist professors that Barry mentioned he liked to hang around with in his book Dreams From My Father. I, on the other hand, rejected that commie bilge for the raw sewage it was.
That said, when I knew Annie, she was a total deadhead hippie chick with the peasant garb and the far out spacey ideas of that culture. Nothing against her personally. I always felt she was a bit strident, but that her heart was in the right place even if her mind wasn't. To me, Annie is just another one of those hippie enviro-wackos who engage in lives of total contradiction (kind of like Algore whose lifestyle is at total odds with what he preaches). People like Annie would like us to forget for a moment that everything she has ever done in her life has been augmented by the mining, growing and creating of "stuff" or how many of the earth's precious resources she used in her ten year crusade to find out what happens to our "stuff" or how many people were exploited so that her parents could afford to send her to Barnard College or how the exploitation of the planet to create "stuff" enabled us all to have computers, DVD players and CRT or LCD monitors with which to watch her propaganda. This woman is a poster child for hypocrisy. But, my biggest memory of Annie is a story I was told by a friend of mine who was walking down the street with her one day in New York City outside Columbia U. He says he saw her give money to a homeless man. Then she tells him:
"I am going to give you this five dollars...
but you must promise me...
you won't use it to buy alcohol...
or meat!!!"
I kid you not! According to my buddy, the look on the homeless guys face was classic!
But enough about Annie and me. This "Story of Stuff" nonsense is what many in the left believe about wealth creation. Wealth is stolen and it is better if you keep your old CRT monitor rather than that new flat screen because that big old heavy tube monitor is still functional and buying a new one would be a waste and contribute to the raping of third world countries and their resources and you are only doing it because Madison Avenue and the Mad Men have conned you into believing that you always need more, more and more and the whole thing is, like, unsustainable and we're all going to, like, exploit all the world's resources and pillage its people and eventually all, like, die if we don't cut out all this unsustainable capitalism and, like, we need a global government to, like, police it all and control everything for our own good otherwise we'll destroy ourselves and the planet with our unsustainability!
11====================================================================================================
I often note when talking to leftists that they totally accept the idea of how our consumer driven economy is "unsustainable", as Annie says, but they cannot for one second accept the idea that government spending at current levels could be unsustainable given economic and demographic realities. Aside from the ridiculousness of Annie's basic thesis that progress and innovation are actually bad for the world and that a $4.99 radio has hidden costs like the depletion of resources, pollution and lack of health care coverage by the workers who made them, does she not understand that as the cost of one resource goes up due to scarcity another resource or innovation usually replaces it when they either are invented or become economically viable? Plastic has replaced metal in many things, coal replaced trees in producing heat for homes, oil replaced coal in transportation, natural gas is replacing oil for home heating and coal for electricity generation and perhaps, one day, fusion will replace them all. That is the nature of progress. But, I guess progressives don't understand progress too well.
If we held onto things until they broke and only bought new things at that time we'd still be living in the 19th century or worse. This kind of thinking is not only counterproductive to the whole notion of progress and human evolution, but it is economically illiterate as well. You know what? I liked my big CRT TV and my big CRT monitor and they both still work to this day. However, they have been superseded by a new technology that I like a lot better. Flat screen TV's and monitors have better resolution and a smaller footprint and are also likely to last a very long time until the next technology makes them obsolete. And then, I'll buy something new to replace them!
It is also incumbent on me to point out what absolute and total ignorance Annie displays when she talks about computers. She tries to say that when the chip becomes obsolete, that you need to buy a new computer because the new chip has a different "shape" and that this is purposeful and deceitful on the part of those evil computer manufacturers. Well, in some ways this is true, but not the way Annie would like you to believe. Most new chips are desirable because they are more powerful. To distribute that extra power so that you can utilize it requires a fatter pipeline for more bandwidth and, thus, improved "plumbing" is needed and that usually requires replacing the motherboard. So, I guess if you were an ignorant deadhead babe, you could say that it had a different "shape" and be within a mile of the truth. Now, if you had a certain mechanical aptitude, you could just replace the chip and the motherboard and leave everything else in place. Whether it is worth it to you or not to do that is dependent on your skill, your desire and your cash flow. However, one thing is for sure. It is not some conspiracy by Intel or AMD or Dell or Apple to separate you from your money.
Trying to improve our condition and create new inventions and innovations is a good thing and makes all our lives better. Better computers enable greater productivity. My original PC with it Pentium 1 (!) core and it's 512mb (!) hard drive still works to this day, but with each new computer I've gotten, my life and productivity have expanded exponentially. Perhaps the original stone axes and arrowheads that early man used might still be effective and useful today, but who would choose to hunt with them? Who would choose to drive a perfectly functioning Model T Ford rather than a brand spanking new car or thinks that old tube TV's are better than our new HDTV's? The very notion that a consumer driven economy does anything other than foster progress which directly seeks to improve every material aspect of an individual's life is just patently ridiculous and Luddite. Give me more $4.99 radios, more HDTV's and less of intellects like Annie!
12====================================================================================================
Now, you may not know this, but "The Story Of Stuff" is being used in the public schools to teach economics to over ten million of our young skulls full of mush. This video was designed as a propaganda tool and directed towards children who, by virtue of their very age, are economically illiterate and haven't learned enough about the world to know any better. After all, what Annie says in the video sounds absolutely plausible if you don't have any other reference to compare it to. This is a great problem with most people's understanding of economics. Like Nancy Pelosi and her inanity on matters economic and my buddy "Fred's" misunderstanding of trickle down reality as opposed to what he was really referring to (supply side theory), most people have had little training or education in basic economics. Most of the things they believe come more from their political world view and what they've been told rather than from actually studying theory and facts. Many things sound right and believable until you actually analyze them. A perfect example is this gem of colossal economic ignorance from our President:
Full disclosure here, I actually used to know Annie fairly well. She, Barry O and I all went to college together. She and the Obamessiah actually bought into the nonsense spewed by the Marxist professors that Barry mentioned he liked to hang around with in his book Dreams From My Father. I, on the other hand, rejected that commie bilge for the raw sewage it was.
That said, when I knew Annie, she was a total deadhead hippie chick with the peasant garb and the far out spacey ideas of that culture. Nothing against her personally. I always felt she was a bit strident, but that her heart was in the right place even if her mind wasn't. To me, Annie is just another one of those hippie enviro-wackos who engage in lives of total contradiction (kind of like Algore whose lifestyle is at total odds with what he preaches). People like Annie would like us to forget for a moment that everything she has ever done in her life has been augmented by the mining, growing and creating of "stuff" or how many of the earth's precious resources she used in her ten year crusade to find out what happens to our "stuff" or how many people were exploited so that her parents could afford to send her to Barnard College or how the exploitation of the planet to create "stuff" enabled us all to have computers, DVD players and CRT or LCD monitors with which to watch her propaganda. This woman is a poster child for hypocrisy. But, my biggest memory of Annie is a story I was told by a friend of mine who was walking down the street with her one day in New York City outside Columbia U. He says he saw her give money to a homeless man. Then she tells him:
"I am going to give you this five dollars...
but you must promise me...
you won't use it to buy alcohol...
or meat!!!"
I kid you not! According to my buddy, the look on the homeless guys face was classic!
But enough about Annie and me. This "Story of Stuff" nonsense is what many in the left believe about wealth creation. Wealth is stolen and it is better if you keep your old CRT monitor rather than that new flat screen because that big old heavy tube monitor is still functional and buying a new one would be a waste and contribute to the raping of third world countries and their resources and you are only doing it because Madison Avenue and the Mad Men have conned you into believing that you always need more, more and more and the whole thing is, like, unsustainable and we're all going to, like, exploit all the world's resources and pillage its people and eventually all, like, die if we don't cut out all this unsustainable capitalism and, like, we need a global government to, like, police it all and control everything for our own good otherwise we'll destroy ourselves and the planet with our unsustainability!
11====================================================================================================
I often note when talking to leftists that they totally accept the idea of how our consumer driven economy is "unsustainable", as Annie says, but they cannot for one second accept the idea that government spending at current levels could be unsustainable given economic and demographic realities. Aside from the ridiculousness of Annie's basic thesis that progress and innovation are actually bad for the world and that a $4.99 radio has hidden costs like the depletion of resources, pollution and lack of health care coverage by the workers who made them, does she not understand that as the cost of one resource goes up due to scarcity another resource or innovation usually replaces it when they either are invented or become economically viable? Plastic has replaced metal in many things, coal replaced trees in producing heat for homes, oil replaced coal in transportation, natural gas is replacing oil for home heating and coal for electricity generation and perhaps, one day, fusion will replace them all. That is the nature of progress. But, I guess progressives don't understand progress too well.
If we held onto things until they broke and only bought new things at that time we'd still be living in the 19th century or worse. This kind of thinking is not only counterproductive to the whole notion of progress and human evolution, but it is economically illiterate as well. You know what? I liked my big CRT TV and my big CRT monitor and they both still work to this day. However, they have been superseded by a new technology that I like a lot better. Flat screen TV's and monitors have better resolution and a smaller footprint and are also likely to last a very long time until the next technology makes them obsolete. And then, I'll buy something new to replace them!
It is also incumbent on me to point out what absolute and total ignorance Annie displays when she talks about computers. She tries to say that when the chip becomes obsolete, that you need to buy a new computer because the new chip has a different "shape" and that this is purposeful and deceitful on the part of those evil computer manufacturers. Well, in some ways this is true, but not the way Annie would like you to believe. Most new chips are desirable because they are more powerful. To distribute that extra power so that you can utilize it requires a fatter pipeline for more bandwidth and, thus, improved "plumbing" is needed and that usually requires replacing the motherboard. So, I guess if you were an ignorant deadhead babe, you could say that it had a different "shape" and be within a mile of the truth. Now, if you had a certain mechanical aptitude, you could just replace the chip and the motherboard and leave everything else in place. Whether it is worth it to you or not to do that is dependent on your skill, your desire and your cash flow. However, one thing is for sure. It is not some conspiracy by Intel or AMD or Dell or Apple to separate you from your money.
Trying to improve our condition and create new inventions and innovations is a good thing and makes all our lives better. Better computers enable greater productivity. My original PC with it Pentium 1 (!) core and it's 512mb (!) hard drive still works to this day, but with each new computer I've gotten, my life and productivity have expanded exponentially. Perhaps the original stone axes and arrowheads that early man used might still be effective and useful today, but who would choose to hunt with them? Who would choose to drive a perfectly functioning Model T Ford rather than a brand spanking new car or thinks that old tube TV's are better than our new HDTV's? The very notion that a consumer driven economy does anything other than foster progress which directly seeks to improve every material aspect of an individual's life is just patently ridiculous and Luddite. Give me more $4.99 radios, more HDTV's and less of intellects like Annie!
12====================================================================================================
Now, you may not know this, but "The Story Of Stuff" is being used in the public schools to teach economics to over ten million of our young skulls full of mush. This video was designed as a propaganda tool and directed towards children who, by virtue of their very age, are economically illiterate and haven't learned enough about the world to know any better. After all, what Annie says in the video sounds absolutely plausible if you don't have any other reference to compare it to. This is a great problem with most people's understanding of economics. Like Nancy Pelosi and her inanity on matters economic and my buddy "Fred's" misunderstanding of trickle down reality as opposed to what he was really referring to (supply side theory), most people have had little training or education in basic economics. Most of the things they believe come more from their political world view and what they've been told rather than from actually studying theory and facts. Many things sound right and believable until you actually analyze them. A perfect example is this gem of colossal economic ignorance from our President:
Now, I'll be honest, the first time I heard this, I didn't see what the big deal was. It sounds logical. People are being replaced by machines at a more rapid rate than before, so it would make sense that less people are being hired. Right? Sounds like a reasonable deduction doesn't it? And then, I thought about it and realized that this guy spent waaaay too much time in the ivory towers of academe and not enough time in the real world. When you actually think about it, this statement is nothing more than the same argument that the Luddites used hundreds of years ago. It is perhaps the most economically illiterate statement ever uttered by a President in my lifetime:
This is the exact same kind of nonsense that Annie is spewing in "The Story of Stuff". It comes from the same leftist myth that economics is a zero sum game. If someone gains someone else must lose. If a resource is used it can never be replaced and is gone forever. The pie is only so big and new wealth is only created on the backs of others. The belief in these myths explain how the President of the United States could possibly buy into the theory that the invention of the ATM machine or the loom leads to a reduction of the workforce and unemployment, rather than understanding that the increased efficiency the machine will allow even more wealth and jobs to be created as a result of greater productivity. What Obama and Annie are touting as economic reality is typical leftist bilge and it is absolutely refuted by actual economic history and facts.
13====================================================================================================
So how did our President, who went to the most elite universities become so economically illiterate? Well clearly, he and Annie accepted way too many of the teachings of Professors at Columbia during the Eighties who were still promoting the glories of Marxist and Socialist theory just as Communism was about to collapse. But, perhaps it is more instructive to note who Obama listens to and has been allied with during his political career. When he was running for President, Barack Obama had this to say:
13====================================================================================================
So how did our President, who went to the most elite universities become so economically illiterate? Well clearly, he and Annie accepted way too many of the teachings of Professors at Columbia during the Eighties who were still promoting the glories of Marxist and Socialist theory just as Communism was about to collapse. But, perhaps it is more instructive to note who Obama listens to and has been allied with during his political career. When he was running for President, Barack Obama had this to say:
Imagine having a President whose life's work was your work and whose agenda is your agenda and who then promises to make that agenda into a reality! I think it would be kind of instructive to know what SEIU's agenda actually is, don't you? What do they believe? What does the former head of the SEIU labor union, Andy Stern, think? Here is some insight into the mind of the number one visitor to the White House during Obama's first year:
Workers of the world unite? Persuasion of power? We know where you live? Share the wealth and rebalance the power?... hmmm that's who Obama listens to on economics? Interesting eh? Sounds more like a left wing radical, dare I say a communist, than a Keynesian to me. Like I said, this goes a long way to explaining why this stimulus plan has been such a dud. Keynesianism is one thing, left wing socialist economic theory is something else entirely.
14====================================================================================================
But can this be true? Was not Obama's stimulus conceived with sound Keynesian theories behind it? Well, according to no less an authority than Harry Reid, the stimulus plan was written by the Apollo Alliance headed by former Weatherman terrorist Jeff Jones. Yes that's the same Weather Underground that Jones founded with fellow terrorist and Obama pal Bill Ayers. Interesting, no? But, what's even more interesting is that the Apollo Alliance is closely allied with the Tides foundation which puts out Annie's excuse for economics and they are both funded by none other than George Soros who is known as "the spooky dude" in this house.
14====================================================================================================
But can this be true? Was not Obama's stimulus conceived with sound Keynesian theories behind it? Well, according to no less an authority than Harry Reid, the stimulus plan was written by the Apollo Alliance headed by former Weatherman terrorist Jeff Jones. Yes that's the same Weather Underground that Jones founded with fellow terrorist and Obama pal Bill Ayers. Interesting, no? But, what's even more interesting is that the Apollo Alliance is closely allied with the Tides foundation which puts out Annie's excuse for economics and they are both funded by none other than George Soros who is known as "the spooky dude" in this house.
Now, let's see, Barack Obama, like Annie, purposely chose to hang around Marxist professors at Columbia. He was mentored as a young boy by the radical communist Frank Marshall Davis. He became a "community organizer" in Chicago and was allied to radical groups like Acorn. He taught Saul Alinsky as a law professor. He attended Black Liberation Theology radical Jeremiah Wright's church for twenty years and considered him his mentor. He got his political start in the living room of radical leftist Bill Ayers. While he was writing the stimulus bill and coming up with the Obamacare program, radical leftist Andy Stern was the most frequent visitor to the White House and was then appointed to the President's Council on Competitiveness (need I say more about why the economy is so screwed?). And many of the people in his administration are either allied to or funded by the spooky dude George Soros who has openly stated he wants to knock America down a peg or two so he can get the one world socialist government he so fervently desires. Do you think this is all just a total coincidence and that these people have nothing to do with President Obama's economic world view and, thus, his policies? Do you think that there is possibly, conceivably a connection to be made here? I wonder:
Now you might dismiss this video as mere conspiracy nutjobbery and innuendo that has nothing to do with Obama and what he believes in terms of economics. However, I promise you that every single fact in this video is one hundred percent accurate. Amazing how Obama's administration is purposely restricting oil drilling in the USA, standing in the way of the oil pipeline from the tar sands oil in Canada and basically gumming up the works for drilling for oil in the Gulf which causes rigs to leave for places like... Brazil, while at the same time loaning Brazil $2 Billion smackeroos to drill oil deeper even than the wells in the Gulf that were under his moratorium and now his permitorium and then telling the Brazilian President (who happens to be a former Communist) that the US wants to be their best customer for that oil and all the while our buddy, the Spooky Dude, who financed the Obama campaign, stands to make hundreds of millions of dollars off of it. Ahhh, it's just coincidence right? Crooks and Thieves, I say. Crime Inc.
15====================================================================================================
Now, we know that George Soros funds the Apollo Alliance, the Tides Foundation and John Podesta's Center For American Progress and is big pals with the folks at ACORN and SEIU. So what's the big deal? What's the connection to Obama and his economic policies that matters in this discussion? Well, read for yourself from Time Magazine:
15====================================================================================================
Now, we know that George Soros funds the Apollo Alliance, the Tides Foundation and John Podesta's Center For American Progress and is big pals with the folks at ACORN and SEIU. So what's the big deal? What's the connection to Obama and his economic policies that matters in this discussion? Well, read for yourself from Time Magazine:
There you have it, from the liberal Time magazine, no less. I don't know whether you noticed it, but up above the beginning of the story is a link to a Time article about ideas how a "green" economy might be able to get America out of the red. Admittedly, this was still early in the Obama Presidency before the disastrous results of the Spanish "model" were fully known. But, it is this kind of wishful thinking among the intelligentsia of the left that is behind our current economic strategy. As if a "green" economy can ever create positive net jobs, much less get America out of the red. It's ridiculous. It's preposterous. It's Annie think. It's George Soros think. It's US government policy. Lord help us.
From the article, do you see how closely Obama, the ideas for his policies, his cabinet and his Czars are tied to John Podesta's Center For American Progress, who are funded by George Soros who also funds the Tides foundation, that purposely puts out drivel like the "Story of Stuff" to indoctrinate our youth with misguided notions on economics? My question to you is simple. Is "The Story of Stuff" what these people (including Obama) actually believe in terms of economic theory? Judging from the way Obama has managed the economy so far, I'd say yes. Absolutely. No Doubt.
16====================================================================================================
Do you know what is the icing on the cake proof that Obamanomics is really Annienomics? The very first Youtube video that the Obama campaign put out to let voters know what a great job (ahem!) he's done for the past four years was called... drum roll please.... The Story Of Us:
From the article, do you see how closely Obama, the ideas for his policies, his cabinet and his Czars are tied to John Podesta's Center For American Progress, who are funded by George Soros who also funds the Tides foundation, that purposely puts out drivel like the "Story of Stuff" to indoctrinate our youth with misguided notions on economics? My question to you is simple. Is "The Story of Stuff" what these people (including Obama) actually believe in terms of economic theory? Judging from the way Obama has managed the economy so far, I'd say yes. Absolutely. No Doubt.
16====================================================================================================
Do you know what is the icing on the cake proof that Obamanomics is really Annienomics? The very first Youtube video that the Obama campaign put out to let voters know what a great job (ahem!) he's done for the past four years was called... drum roll please.... The Story Of Us:
Personally, that seals it for me. Obamanomcis is Annienomics. From a purely Keynesian economic perspective, the design of the stimulus makes no sense whatsoever. It has no focus, chooses the worst possible economic means to inject money into the system and wastes billions on a "green" jobs mirage that's already proven to be a total loser. Looks to me, like radicals and kooks like Jeff Jones and Annie have more to do with the Obama administration stimulus and economic policy than his more "mainstream" advisers do. I don't think it's a coincidence that virtually every single economic adviser he had when the stimulus program was designed has now left the administration. The only one that remains is our buddy Little Timmy "tax cheat" Geithner who has never had a real job in his life. Looks to me like rats deserting a sinking ship!
In the final analysis, each of us must use our own common sense and intellect to determine whether we believe that we as individuals living in a nation of laws and private property will produce more wealth choosing what to do with our own money (supply side economics) or whether, to paraphrase Ronald Reagan, a few men and women in a far distant capital can plan the economy better than we can (Keynesian economics):
Each of us must decide whether an organization that has proven a colossal failure in running a company that delivers the mail ($4.7 billion loss as of 5/11 at the USPS) and a dismal failure in running a railroad (Amtrak net loss in of $1.45 billion in 2010) can run the entire economy better than say FedEx can operate a mail delivery company. That really is the choice here.
17====================================================================================================
To give you one final example of what I am trying to get at, consider this. During the long and controversial fight to get Obamacare enacted many benefits of its passage were bandied about to try to convince the public that the plan wasn't the stinker everyone thought it was. You know, like how it was only going to cost $1 Trillion (not true) and how it would reduce the deficit (not true) and how you could keep your plan if you like it (not true), but one of the major whoppers was put forth by none other than that most economically ignorant woman in Washington, our old friend Nancy Pelosi:
17====================================================================================================
To give you one final example of what I am trying to get at, consider this. During the long and controversial fight to get Obamacare enacted many benefits of its passage were bandied about to try to convince the public that the plan wasn't the stinker everyone thought it was. You know, like how it was only going to cost $1 Trillion (not true) and how it would reduce the deficit (not true) and how you could keep your plan if you like it (not true), but one of the major whoppers was put forth by none other than that most economically ignorant woman in Washington, our old friend Nancy Pelosi:
OK, so the geniuses who believe that they can plan the economy better than the private sector and who think they can run the health care system better than the private sector have come up with their plan. And according to their expert analysis, this culmination of all the finest Ivy League minds and elite leftist planners, Obamacare, will create four million jobs total and 400,000 new jobs "almost" immediately. Therefore, based partly on this amazingly excellent statistic, we should trust them to micromanage the economy and the health care system, right? I mean these people must know what they are doing and they really do care about us!
Lot's of people believed that and bought into this proposition. But, guess what, as much as they'd like it to be, it just ain't so. Here's the head of CBO, Douglas Elmendorf to give us the bad news:
Lot's of people believed that and bought into this proposition. But, guess what, as much as they'd like it to be, it just ain't so. Here's the head of CBO, Douglas Elmendorf to give us the bad news:
Let's see, Nancy said that we'd gain four million jobs total and 400,000 jobs immediately and now the "gold standard" of numbers, the head of the CBO, says we are going to lose 800,000 jobs long term. Hmmm, let's see, my third grade math says that's a miscalculation by Nancy and Barry's "experts" of 4.8 million jobs or an error of 600%. The error rate on that is astronomical. As for those 400,000 jobs almost immediately? Never happened. Do you still honestly think that these incompetent boobs can spend your money better than you can? Just asking...
Now, don't get me wrong, there are many people of good intellect and good faith with reasonable and rational arguments that believe that government and its plans can create wealth better and more equitably than the private sector. After all, many highly respected Keynesian economists vouched for the Obama/Reid/Pelosi disaster of a stimulus and the likes of Paul Krugman actually did win the Nobel Prize in Economics. It is possible their theories about the wonders of government planning and income redistribution are right and that Supply Siders like me are totally wrong. But I will say one thing categorically. Theoretically the Keynesians could be right, but not these particular Crooks and Thieves who are practicing Annienomics. After all, they did tell us the stimulus was going to be just boffo! How's all that Hope and Change been working out for ya?
Now, don't get me wrong, there are many people of good intellect and good faith with reasonable and rational arguments that believe that government and its plans can create wealth better and more equitably than the private sector. After all, many highly respected Keynesian economists vouched for the Obama/Reid/Pelosi disaster of a stimulus and the likes of Paul Krugman actually did win the Nobel Prize in Economics. It is possible their theories about the wonders of government planning and income redistribution are right and that Supply Siders like me are totally wrong. But I will say one thing categorically. Theoretically the Keynesians could be right, but not these particular Crooks and Thieves who are practicing Annienomics. After all, they did tell us the stimulus was going to be just boffo! How's all that Hope and Change been working out for ya?