Tag Archive for stimulus

Good night and good luck, America

I had to say a few things before this election. As I write it isn’t over yet, but whoever wins, the entire campaign will leave a lot of bad taste in many mouths.

I keep wondering how it is that one candidate for President is able to quantify how many jobs he will supposedly “create” if elected. If he truly cared about the country he’d disclose just how, and yesterday. Truth is he hasn’t got any more ability to “create” jobs than your dog. Now just where did he get that number, 12 million?

What if, just suppose that the membership of the U.S. Chamber of Commerce has been intentionally holding back on hiring. Why would they do that? Perhaps they hate having an African-American Chief Executive. Or they simply want to be able to do whatever they like. Either way, from what I read, those who do have jobs aren’t getting raises and are just about to work themselves into the ground. Stress and burnout are really good for productivity.

Twelve million sounds like a lot. That requires growing the paycheck lines by about five per cent. Actually, I’m not an economist, but if maybe around eight million were hired in short order, making the “capitalist” candidate look pretty darned good, those mysterious “multipliers” could take care of the other four million.

I would not put it past them. The Chamber has made no secret of its disrespect for and dislike of the sitting President. And many on the “red” side of the aisle (I remember when that meant they’d be Communists) openly express their dislike for the current Chairman of the Federal Reserve, Prof. Ben Bernanke. What now?

Bernanke’s “quantitative easing” has meant a lot of companies were able to hold on when pure “market” economics would have meant doom. These moneyed conservatives hate that. They read Schumpeter. They salivate over buying up assets for pennies on the dollar. They haven’t had many opportunities to do that since 2007, and they’re unhappy. According to this way of thinking GM and Chrysler should have been on the block that way, but the Administration headed off the Indians at the pass. No wonder the candidate with Utah connections has been upset over the bailout of the car companies.

Likewise, the “failed” stimulus. Bull. Picture the Dutch boy with his finger in the dike. When he grows tired or has to honor Nature’s call, he needs someone to stick his thumb in for him, or the Netherlands becomes the New Jersey shore last week. What if no one shows up? Would any Dutchman logically be unhappy if at the last minute some stranger shows up with a fresh thumb? Would anyone in Holland care very much who this new guy is? Truly, if no one fills the hole sooner or later those lowlands are gone. This is pretty much what happened starting in 2007, when that other rocket scientist from Texas sat in the White House. Was his policy misguided? No? You can’t have it both ways, pilgrim.

Onerous regulations are said to be the bane of American business now. If that were true, wouldn’t we expect to see dozens of lawsuits in federal district courts challenging every one of them? No, the Federal Register hasn’t hurt many. Businesses would apparently rather blame their own lack of innovation and creativity on the White House. If that fails, then there’s the Chinese at fault. Once in a while it might be labor unions. Or, if all else fails, there’s that tried-and-true bogeyman, the cost of money. Oops! Interest rates have been lower than a snake’s butt for so long it seems like forever. Corporations have been borrowing like crazy thanks to these tiny rates, trillions of dollars’ worth. Now, if government were run like a business, then they’d borrow and . . . Oh, fudge. There goes another mantra!

It’s sad to admit it, but the USA already has a health care system that rations service by income. Some want education to be the same. Where does that take us? Not to Canada, not to Norway, not even to Saudi Arabia. Try a place like Pakistan, or Niger. Some of these self-styled conservatives might envy Niger, because of their oil. Heck, I even see where some in Longmont have expressed envy over Firestone and Frederick. These people don’t get out much.

If voters want to buy a horse, they would almost always check its teeth. They should go a bit farther with their government. And if they are serious about having a government run like a business, they must ask themselves who benefits. If they have corporate experience, answering THAT question will be easy, and enlightening.

I wonder if Franklin Roosevelt wasn’t saved from assassination just before his first inauguration by the hand of divine intervention. FDR also avoided a coup from wealthy “businessmen” whose utterances would sound very familiar today. Then we were winners in World War II. It was fortunate for the nation that Hoover preceded FDR and not the other way round. A parallel is advocated by some today. If we get this wrong and elect a REAL non-Christian President, then what might befall us? Was Hurricane Sandy a warning? Or was it the wave one candidate needed?

Another contributor to this thread is fond of stating that the American public doesn’t like having a President smarter than they are. Well, in 2000 and 2004 they darn sure got exactly that. Now they’re uncertain, as they believe they have another one. I remember clearly during the GOP debate season (21 of them, I believe) that many “men on the street” claimed they wanted “somebody else” and not the man who was eventually nominated. Now in many cases that guy on the street is again saying, with regard to the incumbent President, I’d like to see “somebody else.” The electorate will never be happy. As for me, I am voting for the Presidential candidate who actually strikes me as having a bit of humility. This human quality will serve better than having a wallet at 1600 Pennsylvania Avenue. In case you’re wondering, this candidate is the one with daughters and not sons.

Good luck, America.

Rescued against all odds

Some people toss terms like snowballs – terms such as “socialism” and names of political parties, etc. I’m not a member of the latter or an advocate of the former, per se. But it’s a shame that misinformation and angry rhetoric make reasoned debate impossible.

Start with taxation. Income taxes are marginal – that is, only the income between amount x and amount y is taxable at a certain rate z. That income above $374,000 a year is today subject to the top rate. The top 1 percent of income earners in the U.S. paid an average federal tax rate of 19 percent in 2007 (2008 data are not yet available). The top 5 percent paid an average of less than 18 percent.

There cannot have been much “socialism” around lately if U.S. corporations were able to amass more than $1.8 trillion – a mountain – in cash. That’s a lot of Ford trucks.

A few years ago, Sweden suffered what would today seem to us a minor economic setback. Its socialistic system quickly righted the ship, and now that country faces far fewer challenges than we do. Norway displays extensive government economic planning based on welfare capitalism. The Norwegians boast the highest GDP per capita on the planet.

What of the dark side? Lacking stimulus, Ireland’s economy contracted last year by 7.1 percent. The Irish, by the way, significantly reduced their corporate tax rate in the late 1990s. Here in the U.S., private-sector wage income shrank last year by about 5 percent. Since early 2008, the dollar loss exceeds $300 billion. That’s also a lot of Ford trucks.

Since New Year’s Eve, American business has added a net of only about 200,000 jobs. The federal stimulus is the reason firms are back on their feet. Europe was more tentative with stimulus, a big reason why that region is in worse shape today. In short, the folly of opposition to relief efforts such as extension of unemployment benefits is like throwing a cigar butt instead of a life preserver to a drowning man. Unemployment is quite corrosive. There is peril in allowing creation of a stratified society.

Venture capitalists today structure their business plans with a specification regarding maximum and most speedy transfer of jobs from a young enterprise to China. There’s loyalty for you.

It is clear to most economists today that lingering corporate refusal to hire poses a significant risk to the onset of a sustainable recovery. Talk about a self-fulfilling prophecy. Business has a responsibility to maintain the industrial base and the society whose stability we may have taken for granted. Who said that? Former Intel CEO Andy Grove.

No less prominent Republicans than Richard Cheney and Ronald Reagan asserted (one in word, the other in deed) that “deficits don’t matter. ” Without significant changes to the tax code, revenues cannot deliver a balanced budget. Weak revenues are the largest cause of the deficit – federal tax receipts in the first quarter amounted to 15.76 percent of (a reduced) GDP, while the average since 1947 is 18.04 percent. We grew a lot since 1947. To rapidly reduce deficits at this point would mean flirting with a severe economic decline that looks “downright frightening.” I didn’t make this up; the writer is Jeremy Grantham, one of the most respected money managers on the planet. It is essential for everyone to comprehend that the only significant contributions to positive economic indicators (and there still are some) have since early last year been reflective of government efforts to shore up the economy.

What would some rather have? Depending on the discretion of that 1 percent to dole out a little largesse now and then? I don’t know about you, but slavery has never appealed much to me.

The U .N.’s Human Development Report of June 8 tells us the United States is “better” than Turkmenistan in terms of income inequality, but 76 countries place ahead of us. Perhaps now we can all see what’s behind all the talk about deficits and socialism. The well-off among us should recruit workers, not word warriors.

Gregory Iwan retired to Longmont in 2007. Mercifully, only about one-fourth of his career was spent as an economist.