Tag: ek Economics

America Goes Dark

By PAUL KRUGMAN, The New York Times

Published: August 8, 2010

(A) large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble – literally in the case of roads, figuratively in the case of education – they’re choosing the latter.

…

But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.

…

The antigovernment campaign has always been phrased in terms of opposition to waste and fraud – to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.

Monday Business Edition is an Open Thread

1 BP spends $6.1 bln on Gulf spill response

AFP

57 mins ago

Greenspan, Rubin, and Herbert Hoover

Robert Reich

Sunday, August 8, 2010

Herbert Hoover’s disciples are making noises even as America moves closer towards a double dip recession

Why We Really Shouldn’t Keep the Bush Tax Cut for the Wealthy

Robert Reich

Monday, August 2, 2010

The economy is slouching backward because consumers can’t and won’t spend enough to revive it. Congress is about to recess for the summer without doing anything to fill the gap. And it looks like the only issue it will be debating when it returns is who, if anyone, should pay more taxes next year – just the very rich, everyone, or no one? The cuts enacted by George W. Bush will expire in January, and with midterm election pending in November we’re about to be treated to months of tax demagoguery.

…

Unfortunately for supply-siders, history has proven them wrong again and again. During almost three decades spanning 1951 to 1980, when America’s top marginal tax rate was between 70 and 92 percent, the nation’s average annual growth was 3.7 percent. But between 1983 and start of the Great Recession, when the top rate was far lower – ranging between 35 and 39 percent – the economy grew an average of just 3 percent per year. Supply-siders are fond of claiming that Ronald Reagan’s 1981 cuts caused the 1980s economic boom. In fact, that boom followed Reagan’s 1982 tax increase. The 1990s boom likewise was not the result of a tax cut; it came in the wake of Bill Clinton’s 1993 tax increase.

Defining Prosperity Down

By PAUL KRUGMAN, The New York Times

Published: August 1, 2010

I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape – and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.

…

We’re told that we can’t afford to help the unemployed – that we must get budget deficits down immediately or the “bond vigilantes” will send U.S. borrowing costs sky-high. Some of us have tried to point out that those bond vigilantes are, as far as anyone can tell, figments of the deficit hawks’ imagination – far from fleeing U.S. debt, investors have been buying it eagerly, driving interest rates to historic lows. But the fearmongers are unmoved: fighting deficits, they insist, must take priority over everything else – everything else, that is, except tax cuts for the rich, which must be extended, no matter how much red ink they create.

The point is that a large part of Congress – large enough to block any action on jobs – cares a lot about taxes on the richest 1 percent of the population, but very little about the plight of Americans who can’t find work.

Monday Business Edition is an Open Thread

1 Greek truckers end week-long strike

by John Hadoulis, AFP

Sun Aug 1, 3:48 pm ET

When Double Dippers become economic party poopers

By TOM RAUM, Associated Press Writer

Sat Jul 31, 11:11 am ET

WASHINGTON – They’re a minority, but a vocal one, and they’re hovering like storm clouds over a brittle recovery.

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Are double dippers becoming recovery party poopers?

“If consumers are hearing a lot of bad economic news and they’re already scared, they might pull back some more,” said Nigel Gault, chief U.S. economist for IHS Global Insight.

There are 15 million people unemployed. “Employers might be willing to hire more if consumer spending was doing better,” Gault said. “But then maybe consumer spending won’t start doing better until employers start to hire.”

…

With such a mindset, warnings of an impending double dip-recession can hit home because “consumer behavior is driven by outlook, not only people’s present situation but their future concerns,” said Pew associate director Michael Dimock.

Magical thinking is the solution to everything!

Remember, the reason they deserve this kind of money is that they are better and brighter than you or I.

They know things.  They work hard.

For the Calivinists among them their material prosperity is the manifestation on earth of their elect status in heaven.

Because luck and connections had nothing to do with it.

(also worth reading is Why Conservatives Hate Keynes By: masaccio Sunday July 25, 2010 10:30 am)

1 Hayward payoff ignites new BP controversy

AFP

6 mins ago

It’s a very good country for the rich man. Chauffeurs, servants, big houses. The question is, who is suffering? The common man.

This is the tax policy that DC elites, Republicans and Democrats, want to see adopted.

I on the other hand favor moderate, mainstream, FDR tax rates of 90% on marginal income; and if corporations have the right to speak like individuals they have the right to be taxed like them too.

Who wants to be long on a July weekend anyway sucker?

1 Moody’s downgrades Ireland debt rating

AFP

2 hrs 2 mins ago

Ireland has gladly adopted a strong austerity policy.  This is what happens.

(T)here’s something else in David’s column, which I see a lot: the argument that because a lot of important people believe something, it must make sense:

… Are you sure your theorists are right and theirs are wrong?

Yes, I am. It’s called looking at the evidence. I’ve looked hard at the arguments the Pain Caucus is making, the evidence that supposedly supports their case – and there’s no there there.

And you just have to wonder how it’s possible to have lived through the last ten years and still imagine that because a lot of Serious People believe something, you should believe it too. Iraq? Housing bubble? Inflation?

…

The moral I’ve taken from recent years isn’t Be Humble – it’s Question Authority. And you should too.

This is the first installment of what I hope is going to be a regular Monday feature.

I always find it instructive to keep track of the money since I think it explains a lot about politics.

There are 2 major interrelated economic stories moving in the background.  One is the question of stimulus and the recovery of the ‘Main Street’ economy and the other is the question of deficit reduction and austerity particularly related to Social Security.

What relates these 2 stories is the abandonment by modern economists of Keynesianism.  If you haven’t already, you should really read Krugman’s How Did Economists Get It So Wrong? from September of 2009 where he describes the irrational theories of the two main trends of academic economics, the salt and freshwater schools.

To me ignoring the proven facts of Keynesian Economics makes about as much sense as a biologist rejecting the ‘Theory’ of Evolution and Genetics.  I suppose it’s possible to do good and rigorously academically grounded work but you’re really rejecting everything that makes your ‘science’ umm… ‘scientific’, which is to say predictive of measurable future results.

Just because your second derivative (in the calculus sense) quant guy can give you a value for the change in the slope of a curve doesn’t make it anything but mathematical masturbation unless your model bears some relation to reality.

Anyway, below you will find some stories I’ve collected from the Business section of Yahoo News.  Just because some of these guys are rich doesn’t mean any of them are smart.

Monday Business Edition is an Open Thread

1 India rocked by strike over fuel prices

by Giles Hewitt, AFP

1 hr 14 mins ago