Here’s the problem: Democrats will not cut spending; Republicans will not raise taxes. Democrats labor under the illusion that all problems can be solved by government; Republicans cannot raise taxes because Jesus told them not to (I guess). That’s not a winning formula for balancing the budget and lowering an enormous public debt.
This is not the problem, this is only an attempt at dealing with the symptoms. The structure of the economy is the problem. It’s a STRUCTURAL issue. The difference between taxes/spending cuts can’t deal with the fundamental issues so you are also suffering from ideological dead-end thinking, getting side-tracked by a political debate.
Do you really think adding a tax here or cutting spending there will fix the balance of payments problem and lack of jobs?
Here’s the problem: Democrats will not cut spending; Republicans will not raise taxes. Democrats labor under the illusion that all problems can be solved by government; Republicans cannot raise taxes because Jesus told them not to (I guess). That’s not a winning formula for balancing the budget and lowering an enormous public debt.[/quote]
The bigger issue is economic growth IMHO. You can have lower taxes and higher spending, but with significant economic growth, the revenue brought in will still be substantial.
The Chief Economist at the speech I attended mentioned that the most important thing for Europe and the US were to stop the huge deficit spending and hope for similar economic growth to the 1990s. In those optimal conditions, a quick turnaournd like Canada did would be possible. He was quite pessimistic of this happening and thinks it will be take decades even with painful austerity measures. He was especially pessimistic about Europe because the countries debt ratios are substantiall higher than the US (although not quite as bad as Japan).
If you’d like to discuss figures, perhaps in advance we should discuss their relevance to the topic at hand. What I mean is, which figures: post-bail-out figures? Pre-bail-out figures?
And, more importantly, what is the value of the figures? No-one has agreed that “degree of socialism = percentage of GDP which is in the public sector”. That is a bit facile. Beyond the bail-out bulge, we also need to consider the overall spirit and track-record of regulation over the last decade; the comprehensiveness of key programs which are cultural symbols; whether bail-out type operations are aimed at the “average dude” or just Big Business; and the general politico-cultural environment.
Numbers don’t mean sheeee-it unless you put them in context.
Your turn…
I know, but I think it’s debatable how much more economic stimulus can be accomplished through tax cuts. I realize you’re no fan of Obama, but to be fair, both Kennedy and Reagan started with much higher tax rates to come down from and less severe recessions.
My biggest problem with Republican fiscal policy is the near total dependence on tax reductions. Of course, tax cuts will produce an economic stimulus, depending on the MPC of entities/individuals who benefit. But even if we accept the Laffer Curve as an economic reality, at some point the tax rate will move to the left of the optimal rate (t* in the graph below).
I think it is very likely that the Republicans will retake control of the House and will make significant gains in the Senate this November. If Republicans are sincere in their new-found opposition to budget deficits and public debt, they’re going to have to make some tough choices and that may include tax hikes and across-the-board, deep reductions in discretionary spending. Do Republicans really have the courage to deal with reduced federal expenditures, and lost federal jobs in their districts?
I am skeptical. I think Republicans like talking about small government but loathe losing federal jobs and monies for infrastructure. If anything, Republicans will be able to accomplish more tax cuts with little to no reductions in spending. That will mean more deficit spending and more public debt.
Why is it that the Canadian government was able to make the tough decisions but American politicians can’t seem to?
The long term solvency of the nation is key to economic growth. I don’t think that is particularly controversial, but solvency will not be maintained if deficit spending and public debt are not reduced.
In terms of the structural changes, it seems that your solution is creating more manufacturing jobs. I couldn’t agree more. Modern manufacturing jobs typically require skilled labor, with the low paying rote tasks being handled through automation. As the professional manufacturing clubs are happy to point out, manufacturing jobs now are typically more stable, higher paying, and have better benefits than service jobs.
But I do not believe that protectionist laws are the best way to bring in manufacturing jobs. Despite the trade imbalance there would be repercussions and retaliations and we don’t need the trouble.
Politbureau has repeatedly attempted to make the point that we can bring manufacturing jobs back to the US by lowering the cost of wealth creation. He’s right. Even though I supported the financial bailout as a necessary evil, I opposed the auto bailout because we simply do not need the Big 3. They operate primarily in union shop states in the North, and their costs are enormous. Meanwhile, in South we have 15 foreign automotive companies that cumulatively employ about as many as the Big Three, which is about 300,000 people. And the supply chain supporting them employs millions more. The Big Three should have been allowed to fall and the foreign automotive companies expand.
Unions played a major role is improving working conditions in the US. But the safety standards the unions forced management to agree to have been enshrined in law since the 70s. With OSHA and comparable state agencies closely monitoring companies, in particular manufacturing firms, unions do little more than raise salaries well above the market value in foreign countries and non-union shop states. They raise the cost of wealth creation above sustainable levels and drive out business.
I know several people who work for foreign auto companies here in the South and they are quite content with their jobs. They didn’t walk out of high school and make 80,000 USD a year, but their jobs are stable and they can support their families. I very nearly ended up working for a German auto company when I first moved to Alabama.
We have manufacturing jobs in the US and can get more if California and the Northern States follow the Southern model and:
[ul]Dramatically reduce or eliminate welfare programs.
Repeal union shop laws (this is a state option per the Taft-Hartley Act). Every state should become a right-to-work state.
Offer tax incentives for both domestic and foreign manufacturing firms to open branches or expand existing business.
Support both public and private trade colleges teaching electronics, mechanics, hydraulics, etc.
[/ul]
Note that the tax incentives end up raising government revenues because new business is generated that would not otherwise have existed. This will be vital as the health care reform law is implemented over time and the burden shifts from the federal to the state coffers.
BigJohn: I’m largely an observer in this thread, which is why I was disappointed that rather than really engage Chewy, you chose (as so many do here, presumably because of his political views) to deal with him in a fairly off-handed manner. I don’t necessarily agree or disagree with what he said (actually, I don’t really know enough about it), but I would have liked to see it handled reasonably.
Chewy: Check out the video I’ve posted of a Niall Ferguson talk around these parts. The long-term projections for U.S. debt to GDP ratio actually have them on a par or worse than some of the so-called PIIGS. Everyone thinks this is a problem of crappy Mediterranean countries, but if those projections are correct, the U.S. (and also U.K.) are in serious trouble. Also, Ferguson points out that there’s only one historical example he could find (Britain in the 19th Century after the Napoleonic Wars) that managed to survive such debt levels.
If you don’t know much about the issue, how would you assess what was a reasonable response to his statements?
In any case, I stated my case clearly:
I basically disagree that the US is as socialistic as Canada. I think there is a much larger hard-core right-wing faction in the US and this creates a very anti-left / liberal political culture that permeates the nation. I think the right-wing faction is blind to its own inanities and tends to err in favour of low regulation which helped make the recent crisis possible.
I was never rude to Chewy, by the standards of Forumosa.
So, step off, eh!
[quote="BigJohn I think the right-wing faction is blind to its own inanities and tends to err in favour of low regulation [color=#BF0040]which helped make the recent crisis possible.[/color]
[/quote]
That is a statement of belief and not of fact. The financial crises was not about over or under regulation it was about poor regultion. Which is not a the same thing. At least GIT knows what he is ignorant about.
[quote=“Gman”]
That is a statement of belief and not of fact. The financial crises was not about over or under regulation it was about poor regultion. Which is not a the same thing. At least GIT knows what he is ignorant about.[/quote]
And the poor regulations that started the whole housing crisis/downturn were due to Clinton and the Congressional Black Caucus. 
Let’s take the time machine back to 1999. So, when BigJohn calls it the ‘right-wing’ faction, is he referring to Clinton and his cronies? 
nytimes.com/1999/09/30/busin … nding.html
Who exactly is Franklin D. Raines? Look deep inside the company and you’ll find lots of Democrat-Clinton apparatchiks.
[quote=“Gman”][quote="BigJohn I think the right-wing faction is blind to its own inanities and tends to err in favour of low regulation [color=#BF0040]which helped make the recent crisis possible.[/color]
[/quote]
That is a statement of belief and not of fact. The financial crises was not about over or under regulation it was about poor regultion. Which is not a the same thing. At least GIT knows what he is ignorant about.[/quote]
No, it is not only about regulation although it was certainly a part of it. It is a fundamental problem of the American economy, you ain’t making useful stuff anymore that people consume, importing too much…it’s become top heavy with marketing and MBA grads and CEOs who want to make a quick dollar from the switch and bait of outsourcing to foreign countries or merger activities(not a dig at Chewy, just saying)…and the regular punter jobs are disappearing or becoming unstable. If you cut off your own legs it’s hard to stand right?
So taxes/spending/regulation blah blah, okay they play a part…but as Gao Baohan said you need economic growth, not only that but solid economic growth, not one that will bust 5 years down the line again. You’ve got to put a laser like focus on private led job creation.
From Wiki, which must be liberal, since it didn’t blame the crisis on black people:
en.wikipedia.org/wiki/Subprime_mortgage_crisis
[ul]The crisis can be attributed to a number of factors pervasive in both housing and credit markets, factors which emerged over a number of years. Causes proposed include the inability of homeowners to make their mortgage payments, due primarily to adjustable-rate mortgages resetting, borrowers overextending, predatory lending, speculation and overbuilding during the boom period, risky mortgage products, high personal and corporate debt levels, financial products that distributed and perhaps concealed the risk of mortgage default, monetary policy, international trade imbalances, and government regulation (or the lack thereof).[33][34][35] Three important catalysts of the subprime crisis were the influx of moneys from the private sector, the banks entering into the mortgage bond market and the predatory lending practices of the mortgage lenders, specifically the adjustable-rate mortgage, 2-28 loan, that Mortgage Lenders sold directly or indirectly via Mortgage Brokers.[1][36] On Wall Street and in the financial industry, moral hazard lay at the core of many of the causes.[37][/ul]
From Wiki, which must be liberal, since it didn’t blame the crisis on black people:
en.wikipedia.org/wiki/Subprime_mortgage_crisis
[ul]The crisis can be attributed to a number of factors pervasive in both housing and credit markets, factors which emerged over a number of years. Causes proposed include the inability of homeowners to make their mortgage payments, due primarily to adjustable-rate mortgages resetting, borrowers overextending, predatory lending, speculation and overbuilding during the boom period, risky mortgage products, high personal and corporate debt levels, financial products that distributed and perhaps concealed the risk of mortgage default, monetary policy, international trade imbalances, and government regulation (or the lack thereof).[33][34][35] Three important catalysts of the subprime crisis were the influx of moneys from the private sector, the banks entering into the mortgage bond market and the predatory lending practices of the mortgage lenders, specifically the adjustable-rate mortgage, 2-28 loan, that Mortgage Lenders sold directly or indirectly via Mortgage Brokers.[1][36] On Wall Street and in the financial industry, moral hazard lay at the core of many of the causes.[37][/ul][/quote]
And these conditions were all created spontaneously? Are you saying that the financial industry was completely unregulated? Why did homeowners CHOOSE to take out adjustible rate mortgages? Who provided the incentive (low interest rates) to do so?
It is the government and their regulations that provided the Moral Hazards that lay at the core of these many causes. All you’ve done with your post and your quotation of Wikipedia is illustrate the effects of the causes that Chewy’s post illustrates. Rather than refute them directly.
[quote=“Gman”][quote=“BigJohn”] I think the right-wing faction is blind to its own inanities and tends to err in favour of low regulation [color=#BF0040]which helped make the recent crisis possible.[/color]
[/quote]
That is a statement of belief and not of fact. The financial crises was not about over or under regulation it was about poor regultion. Which is not a the same thing. At least GIT knows what he is ignorant about.[/quote]
I wish the same could be said of you!
Poor regulation often equals toothless regulation which equals low regulation, at least in terms of effectiveness.
You are really quibbling, aren’t you?
Anyway, at the risk of getting into a quibbling rivalry, why do you imply that a statement of fact needs to be different than a statement of belief?
That’s a superficially interesting point. It did start that way. But it ended up as a feeding frenzy on securitized debt sold and re-sold until, when the elastic finally snapped, it cut deeply through so many banks and investment houses that it dealt a body blow to the economy.
All under the watch of Bush et al, and their right-wing cronies!
[quote=“BigJohn”]
Anyway, at the risk of getting into a quibbling rivalry, why do you imply that a statement of fact needs to be different than a statement of belief?[/quote]
I never said or implied that a statement of fact needs to be a different than a statment of belief. What I implied was that a statement of belief is not the same as a statment of fact. What I stated clearly was that what you put forth as the cause of the financial crises was merely what you believed and not the actual facts of the matter. To simplify it for you, you’re wrong.
BigJohn: I don’t need to be an expert on this subject (and let’s be honest, even the most well-informed people here are not truly experts) to see that earlier in this thread:
-
You made assertions about what Canada and the U.S. were or weren’t in relation to each other;
-
Chewy threw a whole lot of figures and links at you;
-
You basically responded with, “Yo mama so fat…”
Look, it’s fine to talk shit and take the piss, but I was asking if you could be serious for a second.
I see the problem in people having houses with four car garages and giant houses full of shit. I find it a little suspicious that anyone really needs a four car garage or giant houses full of shit, but I guess if they can actually afford it, then fair enough. The problem is basically that Americans were/are not living within their means.
Rather than bailouts, I think the American government needed to order a copy of The Richest Man in Babylon for every fool who got in over his head from those getting the mortgages to those selling the mortgages to those buying the investments in the mortgages. It’s written like a child’s story so any twit can understand and has two very basic principles:
- Save and invest at least 10% of your income;
- Live within your means.
The only problem is that I think these morons actually need someone to slap some sense into them and it’s not really a big enough book to do that effectively.
Chewy forgot to mention that increasing home ownership to the poor has been a goal of both Republican and Democratic Administrations. No doubt, it merely slipped his mind that President Bush ordered Fannie and Freddie to increase mortgage lending to low-income buyers by 50% in 2004. There you go Chewy, hope that helps.
[quote=“GuyInTaiwan”]BigJohn: I don’t need to be an expert on this subject (and let’s be honest, even the most well-informed people here are not truly experts) to see that earlier in this thread:
-
You made assertions about what Canada and the U.S. were or weren’t in relation to each other;
-
Chewy threw a whole lot of figures and links at you;
-
You basically responded with, “Yo mama so fat…”
Look, it’s fine to talk shit and take the piss, but I was asking if you could be serious for a second.
I see the problem in people having houses with four car garages and giant houses full of shit. I find it a little suspicious that anyone really needs a four car garage or giant houses full of shit, but I guess if they can actually afford it, then fair enough. The problem is basically that Americans were/are not living within their means.
Rather than bailouts, I think the American government needed to order a copy of The Richest Man in Babylon for every fool who got in over his head from those getting the mortgages to those selling the mortgages to those buying the investments in the mortgages. It’s written like a child’s story so any twit can understand and has two very basic principles:
- Save and invest at least 10% of your income;
- Live within your means.
The only problem is that I think these morons actually need someone to slap some sense into them and it’s not really a big enough book to do that effectively.[/quote]
:bravo: :bravo: :bravo: :bravo: :bravo:
BigJohn mentioned that right wing regulations were responsible for the economic downturn. I’m not debating whether it was the fault of ongoing adminstrations for what was started. Of course, it was as well. I’m merely saying the root of the cause were the repeal of Glass-Steagall regulations in 1999, and the changes to mortgage qualifications highlighted in that New York Times article in 1999 (which indeed were done at the behest/pushing of the Congressional Black Caucus).
But I thought Bush hates black people and low income earners. I mean, that’s what the Big 3 networks projected during Katrina and what so many left-leaning politicians seem to believe. 