The (US) economy: What should be done?

Great Debates
41

[QUOTE=jayjay]
Ah, there’s your mistake. You seem to be under the impression that Chicago School Friedmanism is supposed to improve EVERYONE’S economy instead of just the people who own the corporations or have them in their pockets. See Chile, Argentina, Brazil, Russia (post-1990)…
[/QUOTE]

And you seem to be under the impression that you know something about Friedman’s work.

I think you give Friedman too much credit. His ideas were important but there are many other economists and political theorists who supported the general move towards less government involvement in the economy.

This illustrates what I view as a major flaw of liberal thinking – “he gave us hope, he meant well, so let’s ignore whether or not his policies actually did anything.” Yes, he gave people hope. So what? If his policies prolonged the Depression (as it seems likely they did – here’s a decent summary of some of the evidence), then the fact that he gave people hope is worthless. Results, not intentions, are the key to evaluating public policy. He may have meant well, but if his actions prolonged the crisis that hurt so many Americans, he deserves nothing but condemnation.

42

One thing about infrastructure work: it builds something, something real, something that will be here when the money has gone to the place the candle flame goes when you blow out the candle.

43

[QUOTE=unconventional]
Didn’t Ronald Reagan worship Milton Friedman? Capitalism and Freedom was Reagan’s economic bible.
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Reagan was a pragmatic politician, not the dogmatic free marketeer that he’s often made out to be. Friedman was a small “l” libertarian who would’ve advised a drastic reduction in the size of government. Did the federal government get smaller or larger during Reagan’s tenure?

I think you mean school vouchers, which really have nothing to do with the federal government, since most of school financing is done at the state and local level. And how many school systems in the US use vouchers? Hint: not many. Congress initiated the 401(k) plan in 1978-- while Jimmy Carter was president. Upwards of 90% of all economists favor free trade. Friedman was one among thousands.

Anything else you need cleared up? :wink:

44

[QUOTE=BobLibDem]
I favor a massive public works program. Rebuild the interstates. Put subway systems in some of our mid size metro areas. Improve airports. If we spent $100 billion on infrastructure, the money doesn’t disappear. The contractors hire workers. Those workers pay taxes and have spending money. The mines and steel mills have to hire more to meet demand for materials. More tax money coming in, more people hired and having money to spend. Do you get back all that you put into it? No. But you create work and stimulate the economy. I think this would be more effective than throwing bones at the taxpayers or even worse, thinking that cutting taxes for the rich is going to help.
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Rebuilding the infrastructure might be a good thing to do, but it would be an ineffective way to address a recession. The average length of a recession in the last 5 decades has been less than a year*, and you don’t know you’re in one until half that time is used up. I suspect you wouldn’t spend one dime of that money by that time.

*The average expansion has lasted 6 years.

45

[QUOTE=Hentor the Barbarian]
I’d suggest, as others have, that we have had a perfectly good trial of this very defining Republican economic strategy for the past seven +/- years, and it has been a dismal failure. Add this on to the failure of this as a strategy in the 1980’s, and the oft-cited (by me, around here) stats that the economy does better on the whole under Democratic leaders, and at some point it should sink in.
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Well, leaving aside your assertion that the Republican economic strategy in the 80’s was some kind of failure (when it can be argued that the boom in the 90’s was pretty much a direct result), I would disagree with you that what Bush has done in the past 7 years defines Republican economic strategy…at least as I understand it. Bush has been the worst of both worlds IMHO, combining an attempt to cut taxes coupled with an huge increase in spending (you know, economic conservatives want to CUT spending, right?). THAT has certainly been a failure…though I’m not sure it can be accurately characterized as a dismal failure. Until fairly recently we DID have quite a robust economy. The housing bubble bursting is comparable to, say, the dot com bust that signaled the end of the previous large scale economic growth period in the US. Unless the economy goes tits up on the scale of, say, the stagflation days of the mid-late 70’s I don’t think your characterization is very accurate. Even so, I don’t think Bush is very representative of conservative economic strategy by any stretch of the imagination.

[QUOTE=unconventional]
This only holds true if corporations actually stimulate the economy by creating jobs, investing in the country, and increasing wages. Unregulated capitalism encourages a Wild Wild West atmosphere on Wall Street and everyone else in the U.S. is supposed to just suck it up when greed encourages high risk behavior and inhibits responsibility.
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Out of curiosity, what exactly do you think rich people and large corporations do with all that capital? Do you suppose they stuff it in mattresses or bury it under marks of X on a beach? Even if they blow it all on fast women and cars that is still injecting that capital back into the economy.

Since ‘unregulated capitalism’ is as much a fantasy as ‘working communism’ I don’t see what the point of your other statement is. I was calling for LESS regulation (or maybe just a re-evaluation of the current regulations)…not NO regulation at all.

[QUOTE=unconventional]
Milton Friedman and his faithful disciples have had their chance.
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Um…in what alternate universe do you live in where you think that Friedman ever had a chance or that unregulated/unbridled capitalism EVER happened in the US? Do you have a cite showing this? Because afaik it NEVER happened in the US…or anywhere else for that matter. Just to be sure we are on the same page, I define unregulated capitalism as ‘the government doesn’t fuck with the market in any way, shape or form’. I don’t really think that this would be such a great idea…but I also don’t think it has ever happened in the US. Which would mean that Friedman never did have his chance. Keynes on the other hand…

[QUOTE=elucidator]
One thing about infrastructure work: it builds something, something real, something that will be here when the money has gone to the place the candle flame goes when you blow out the candle.
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Well that is true. And I’m sure that bridge in Alaska going no-where will be a great comfort when the candle of civilization finally goes out. :slight_smile:

Seriously, I doubt many people dispute that infrastructure is important. The main dispute would probably hinge over if the states should take responsibility or if it should be on the federal government to do so…and who should collect and manage the funds (and exactly how those funds should be acquired, how much should it cost, and maybe a few other points I’m glossing over). I just don’t see how or why pouring money into the infrastructure would help the economy atm (or any time for that matter)…I’m not disputing that it’s necessary.

-XT

46

[QUOTE=xtisme]
Seriously, I doubt many people dispute that infrastructure is important. The main dispute would probably hinge over if the states should take responsibility or if it should be on the federal government to do so…and who should collect and manage the funds (and exactly how those funds should be acquired, how much should it cost, and maybe a few other points I’m glossing over). I just don’t see how or why pouring money into the infrastructure would help the economy atm (or any time for that matter)…I’m not disputing that it’s necessary.
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Rebuilding the infrastructure is a decades long process. It should be done if it needs to be done, not to “stimulate” the economy. That’s just re-allocating resources in a shell game, not generating wealth. To the extent that the infrastructure is impeding the smooth running of the economy and people generally going about their lives, then it needs to be upgraded. I really have no idea to what extent that is true. But it wouldn’t surprise me if two recessions come and go before Congress can decide what needs to be done, allocate the resources, and get the work underway.

47

Exactly.

-XT

48

[QUOTE=John Mace]
Reagan was a pragmatic politician, not the dogmatic free marketeer that he’s often made out to be. Friedman was a small “l” libertarian who would’ve advised a drastic reduction in the size of government. Did the federal government get smaller or larger during Reagan’s tenure?

[/QUOTE]

That’s an interesting question. The Federal Government did expand during Reagan’s administration, but I also believe that tax revenues and regulation decreased. Of course since the laws of arithmetic do apply, this is an inherently unsustainable policy. Reagan did a lot of good things in regards to the economy, but Reagonomics is, in my mind, a failure. I think if we want to follow a model of a past president in regards to the economy it would be Eisenhower. Low regulation, low taxes, and balanced budgets.

49

[QUOTE=xtisme]
Well, leaving aside your assertion that the Republican economic strategy in the 80’s was some kind of failure (when it can be argued that the boom in the 90’s was pretty much a direct result), I would disagree with you that what Bush has done in the past 7 years defines Republican economic strategy…at least as I understand it. Bush has been the worst of both worlds IMHO, combining an attempt to cut taxes coupled with an huge increase in spending (you know, economic conservatives want to CUT spending, right?). THAT has certainly been a failure…though I’m not sure it can be accurately characterized as a dismal failure. Until fairly recently we DID have quite a robust economy. The housing bubble bursting is comparable to, say, the dot com bust that signaled the end of the previous large scale economic growth period in the US. Unless the economy goes tits up on the scale of, say, the stagflation days of the mid-late 70’s I don’t think your characterization is very accurate. Even so, I don’t think Bush is very representative of conservative economic strategy by any stretch of the imagination.

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Much of the spending came from the Republican congress. Perhaps the last seven years indicates that conservative economic strategy is just as much a fantasy as socialism’s belief that a state can micromanage an economy.

As has been stated over and over, the roaring economy was much better for the top 10% than the bottom 90%. If that was the goal, than the Bush economic policy was a great success.

Perhaps some of it goes into the market, where lots of money chasing stocks causes a rise in the Dow without a rise in the actual values of companies? Businesses aren’t stupid - they are not going to invest in new production unless there is a market for that production. If you have caused the incomes of most of the population to be fixed or even to decrease, who is going to buy the stuff. (Exports are up due to the weak dollar, but that isn’t going to fix the problem either.) There are only so many K-mart clothes the rich can buy. Consumer spending was driven by the housing bubble. Goodbye bubble, goodbye spending. If there had been true wage increases, or if more of the tax cuts were steered to the middle class, perhaps we would have had a softer landing.

I’m sure that many of the rich were buyers of subprime mortgage instruments. It would have been better if that money were buried under mattresses.
Since ‘unregulated capitalism’ is as much a fantasy as ‘working communism’ I don’t see what the point of your other statement is. I was calling for LESS regulation (or maybe just a re-evaluation of the current regulations)…not NO regulation at all.

I’m sure glad that a conservative Republican wanted that bridge. Now I agree that it would be wonderful for Republicans to make a stand on spending. My reason is that they would all be out on their asses in no time. In the real world, cutting taxes now while pledging to cut spending later is pure fantasy. The only solution is to grow the economy, and revenues, faster than spending, and to cut things like welfare and unemployment through a better economy for all. The Clinton surplus was not from magically not spending. That’s why it disappeared so quickly after the bubble.

50

[QUOTE=treis]
That’s an interesting question. The Federal Government did expand during Reagan’s administration, but I also believe that tax revenues and regulation decreased. Of course since the laws of arithmetic do apply, this is an inherently unsustainable policy. Reagan did a lot of good things in regards to the economy, but Reagonomics is, in my mind, a failure. I think if we want to follow a model of a past president in regards to the economy it would be Eisenhower. Low regulation, low taxes, and balanced budgets.
[/QUOTE]

I would be surprised beyond comprehension if tax revenue decreased during the 8 years Reagan was president. I would literally fall of my chair onto the floor if you showed me that was true. They may have declined during (or right after) a recession, but that’s one of the consequences of a recession-- the economy slows, and so less taxes get paid.

51

**The (US) economy: What should be done? **

Bomb it?

52

Is there actually a crisis, though? It just seems to me that we have become so accustomed to smooth economic growth that the slightest downturn looks to us like the new Depression. But not so long ago, I mean within the past twenty-five years, we accepted occasional periods of modest “negative growth” as part of the natural order of things. These days, it is a disaster requiring intervention by the president.

Anyway, real downturns come when nobody is expecting them. This one has been so well telegraphed that I can’t get too worried about it.

53

[QUOTE=Voyager]
Much of the spending came from the Republican congress. Perhaps the last seven years indicates that conservative economic strategy is just as much a fantasy as socialism’s belief that a state can micromanage an economy.
[/quote]

If there was a “conservative economic strategy” during the Bush Administration I’d like to see it. Just because the Republicans were in charge does not mean they implemented anything close to the economic ideas of free market economists. What I think the Bush presidency coupled with the GOP Congress proves is that once anyone – conservative or liberal – gets his hands on the public till, it’s almost impossible to resist the temptation to divvy it up for projects you and your friends want.

Yes, usually those who are on the top do quite well. But the bottom 90% didn’t suffer. In fact, they prospered, too. Perhaps not as much as the top 10%, but they weren’t going backwards, contrary to what some liberals like to claim.

54

[QUOTE=xtisme]
Out of curiosity, what exactly do you think rich people and large corporations do with all that capital?
[/QUOTE]
I know! I know! They invest it in multi-national corporations, who create jobs in Asia! Thank god for the investor class!

55

[QUOTE=Anne Neville]
I’d rather see the money go toward fixing the subprime mortgage mess than giving it out as tax rebates.
[/QUOTE]

Fix it how? People borrowed money they can’t pay back. Should the government - meaning, You the Taxpayer - bail them out? Why? What about all the people who did things the right way and saved a downpayment and then bought a house they could afford?

Why should the taxpayers bail out the idiots in the banking industry who lent money to people who couldn’t pay it back, loans based on some misty-eyed notion of future equity or increased income? Those idiots should be prosecuted.

The proverbial chickens are coming home to roost. It’s true that the war in Iraq is an expensive little mistake, but the problem goes deeper than that: the USA and its citizens have been outspending income for decades. The personal saving rate is now a minus figure.

During the Great Depression few people had any debt beyond their mortgage, there were no credit cards, no car payments, no time payments on TV’s or RV’s.
Think about the situation now. Most people live paycheque to paycheque, no matter how big the paycheque is. Two weeks from disaster.

I like the idea above, to repair the horribly neglected infrastructure of roads and bridges, build transit, etc. It’s Mr. and Mrs. Taxpayer’s money and it ought to be spent to benefit them and their children.

Oh, yes, and get out of Iraq.

56

[QUOTE=xtisme]
So…what should be done about the Economy?

-XT
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I’m not as smart as most of you, so my answer is over-simplified:

ABOLISH the Federal Reserve and the rest of the central banks who manipulate this circus, and this issue becomes a non-issue!

These central banks have the tools (our politicians and our media) to distract us value adders from the real game that’s being played out on the world stage.

They want you to think that you can’t live without them. I say, they can’t live without US!

As an aside; If you, yourself, work for any Government agency, contractor, or any entity involved in any way in support of said agency, your opinion does not count!

57

I take it you’ll be voting for Ron Paul…?

58

[QUOTE=John Mace]
I take it you’ll be voting for Ron Paul…?
[/QUOTE]

Well,

I’d like the whole world to know that I was not the one to bring RP into the discussion. But, you snuffed me out.

Who do you support? Why?

59

[QUOTE=Absolute Jackass]
Well,

I’d like the whole world to know that I was not the one to bring RP into the discussion. But, you snuffed me out.

Who do you support? Why?
[/QUOTE]

Currently, I’m supporting Obama. But not because I think he’s going to manage the economy one way or the other. Unless the president really screws up and does something crazy (like invading a country for no good reason), I don’t think he’s going to have much of an effect on the economy. We’ve pretty much settled into a reasonable monetary policy at the Fed, and we may tweak taxes up or down a bit, but they stay in a pretty narrow range. It wasn’t always like that.

60

[QUOTE=John Mace]
Currently, I’m supporting Obama.

You know, a rather crazy thought crossed my mind a couple of days ago…

Obama is such an orator! He inspires people. He doesn’t offer “something for nothing”. Reminds me of JFK.

Ron Paul is the “reformer”. He has many years of of experience on “the hill”, yet he is still a non-conformist.

I would like to see them combine forces as Pres and VP. Like I said, it’s crazy, but they’re not that far separated in ideology, are they?