Welcome back, class! I took some time away for some brief diversions regarding leftist intolerance, and with last week’s natural disaster I probably didn’t have your attention anyway. So now we’re back, and congratulations on staying awake through my two lectures on economic theory, but it’s going to pay off! Now we start to look at how the theory I’ve taught relates to the real world, and your learning has progressed to the point where we can explain to you why you don’t create jobs! If you need a refresher, links to the first three lessons are at the bottom of this post. Now, onto the next chapter of your enlightenment!
On weekends I lead tour groups here in the nation’s capitol, and when I take my charges to the second room of the FDR Memorial I dispel the mythology that the New Deal created jobs. Here is the example I use for my group to better illustrate:
I suggest a scenario where my tour group and I decide to run off to a remote island and form our own country, Bobylvania. We all have our own jobs that contribute to the country, but one day I lose my job. The good citizens decide that they want Bobylvania to be a leader in green energy, so they give me a government job creating windmills and solar panels to provide our energy, and they pay me a decent wage of $50,000 (or about $24 / hour) per year. This is great for me, but that money has to come from somewhere. If there are ten people in my tour group the easiest way to gather our revenue enhancements (or as we non-politicians call them, “taxes”) is for each of them to pay $5,000 per year to fund my job. For simplicity we’ll leave out my generous health benefits to which I don’t contribute or the unfunded liability known as my pension that the children and grandchildren of Bobylvania will have to pay (The Association of Federated Bobs local 101 chapter are good negotiators).
Going back to the Great Depression as well as our current economic woes we need a brief aside on a school of thought that has paralyzed the left from taking constructive action known as Keynsianism. What the Keynesians (thinking modeled after the British economist John Maynard Keynes) believe is that an economy needs to be stimulated from time to time if there is not great enough aggregate demand (generally speaking – not enough money) for the economy’s goods to be brought. Without the private sector to do this the task then falls onto the government to spend, or “stimulate” the economy. The government spends this money, puts it in people’s hands, and they then spend it elsewhere, and that third party spends it elsewhere, creating what is called a “multiplier” effect. It is this exact thinking that enables Nancy Pelosi to make statements like food stamps being a stimulus. The government has pushed money into people’s hands and the economy gets moving again. So why haven’t the various stimulus programs worked? If the New Deal was such a triumph in creating jobs why, save for two brief periods, did unemployment never drop below 15% before the start of World War II? How come Japan hasn’t fully recovered from its “Lost Decade” of the 1990’s? And why does unemployment continue to remain “unexpectedly” high?
Here is where we introduce you to another piece of economic theory known as the”Broken Window Theory”, which originated with the French Economist Frederic Bastiat. Wealth cannot be created from nothing, nor can it be created via destruction. If you have a few minutes Declaration Entertainment’s Bill Whittle does a great job of explaining how wealth is only created by producing something of value. The example that Bastiat uses to illustrate his theory is of a boy walking down the street who throws a brick through the local baker shop’s window. When the baker comes out to express his unhappiness with what the boy has done the boy responds that he had helped the town. By breaking the window the boy has created a stimulus for the economy. The new window that the shop keeper buys will put money in the hands of the glazier, who might then use it to buy a new pair of shoes. The extra money in the cobbler’s hands may help him to buy a new wagon, giving more money to the wagon maker to spend, and you get the idea. Lost in all of this is the baker. What Keynesians miss is all of the unseen activity that does not take place as a result of the wealth that they displace. The money that the baker is forced to spend on a new window might have been used in all of the places that the boy mentioned, or maybe the baker chooses to buy a better oven to produce more bread, which will force the baker to hire more employees to sell all of the extra bread that he sells (or as this private investment is called outside of DC, “Job creation”). Maybe the baker’s store becomes successful enough that he believes he can earn more profits by taking the risk of opening more stores. In turn, he puts to work the people who build his shops or renovates an otherwise vacant space, and hires more employees, and maybe becomes successful enough to go public, and his bakery becomes one of the stocks that fuels the mutual funds that help to fund various pension plans and he makes enough money to build a bigger home, reinvest in other ventures, and put more people to work in our economy.
Or he can use that money to pay for a broken window instead, and – HEY! I see some of your eyes are glazing over thinking about how the baker is accumulating wealth that he doesn’t need and how his taxes should be raised to pay for programs that the groups who funded your election campaign are calling for. Go back and re-read chapter 1, and you are not allowed to read any further until you understand it. Go ahead and bookmark this page – I’ll be here when you get back.
For the rest of the class, this was the same effect with FDR’s New Deal policy and with Obama’s today. FDR kept passing ever more regulations that left businesses reluctant to expand because they were afraid of what he would do next. And many of FDR’s programs caused more harm than good. His price supports for farmers guaranteed them minimum prices for their crops, while increasing the price of food. Since poor people pay a greater percentage of their incomes to buy food they were disproportionately punished by the president. FDR was big on having business collude to stay in business, but less competition leads to higher prices and fewer goods sold. Creating minimum wages, the 40 hour work week, and helping employees gain the right to unionize are not necessarily bad things on their own, but each of these makes hiring more expensive, which naturally leads to higher unemployment.
Lefties love to argue that in 1937 when unemployment surged to 25% that it was because FDR tried to rein in spending. In 1936 the exact words of his Treasury Secretary, Henry Morgenthau were, “We have tried spending money. We are spending more than we have ever spent before and it does not work.” Sound familiar? FDR viewed his re-election in 1936 as a mandate to become more aggressive in his New Deal policies. We saw increased taxes on the wealthy as well as the Wagner Act which gave greater power to organized labor. The spending “cuts” weren’t enough to cause the surge in unemployment on their own, and even if the cuts themselves could have caused the increase in unemployment, the timelines are wrong.
One of the few things that economists of all stripes agree on is that unemployment is a lagging indicator, meaning that unemployment actually reflects how the economy was doing, and not necessarily where it is now. Think about the general timeline using generic examples. Say in a period of time we see sweeping legislation that will “improve” our economy. We see laws passed designed to nationalize health insurance, allowing the NLRB to force companies to shut down new factories, prevent any offshore drilling in the US, bankrupt coal companies, and even put an end to that ever present and corrupt example of big business at its worst, lemonade stands. As these industries find themselves becoming less profitable, they end up doing less business. As they do less business they find that they need fewer employees. As the companies realize they need fewer employees layoffs start to happen, assuming that the company doesn’t simply decide to close its doors and as its remaining contracts expire everyone loses their jobs. These steps don’t happen overnight, and only after these occur do the unemployment claims start to be filed and counted in the statistics. The point is that it takes time for the true impacts of any policy to reflect in the unemployment numbers – just right for the Second New Deal of 1936, but far too short for the “austerity” of 1937.
Some economists argue that what finally took us out of the Great Depression was the onset of World War II and how it ramped up our industry and agriculture, leaving the US as the only major industrialized country at the end of that was mostly untouched by the fighting. But if Keynesian theory held true, why didn’t this surge of returning GI’s leaving their jobs in the military (government) suddenly cause a surge in unemployment? How did government spending dropping as a percentage of GDP at the end of the war not take money out of people’s hands and cause an economic downturn? How did America get mobilized and employed and lead to unprecedented growth and prosperity? This is not a kind thing to say (and I stop just short of this on my tours unless someone asks me to elaborate), but the biggest factor in finally getting us out of the depression was the death of FDR. Without this powerfully charismatic figure to champion his various innovation-strangling policies, the Republicans who had taken control of Congress in the 1946 election were able to push back on President Truman and get America back to work. Needless to say, these views are none too popular here in DC. In fact, on two occasions I’ve had elderly ladies who were passing by stop to yell at me for speaking unkindly about this president for whom they had such fond memories of and all of the jobs they saw him “create” firsthand. I’ve tried to explain The Broken Window Theory to them, but to no avail. To quote FDR’s successor Harry S. Truman, “I never gave them Hell. I told them the truth and they took it as Hell.”
So how does all of this tie together to suggest that only the private sector can create jobs and spur an economy? There is more to tell here but this lesson has already gone on longer than I had intended.
A logical next lesson would be to go into the chapter on unintended consequences, but I don’t think you’re quite ready for that yet. So we’ll take a side trip for our next lesson and kick off next time with:
Chapter 5: Businesses are Greedy – This is not Necessarily a Bad Thing!
Previous Chapters:
Lesson One: It’s Not Your Money
Lesson Two: Intro to Microeconomics, or Why Prices Matter
Lesson Three: Intro to Macroeconomics. or So that’s Where Government Fits In!
Cross Posted at Brother Bob’s Blog
Besides the broken window fallacy, which Krugman doesn’t seem to understand, you should consider that the lost man-hours of labor from unemployed people are a “wasting asset”, like an unsold hotel room. This is the real case for infrastructure spending IMO, and one that the average person intuitively understands even if they can’t express it in the form of an economic theory with a fancy title.
Let’s go back to your island – you’re unemployed, and, assuming your fellow islanders don’t want you to starve, they take up a collection and feed you periodically. As time goes on, some of them start to grumble that you’re not pulling your weight. You agree with them, and tell them you’ll do anything the group thinks is worth doing. One of them suggests that you move a bunch of rocks from one end of the island to another. When you finish they have you move them back. This situation is exactly the broken window fallacy – the island is worse off than simply feeding you because besides being poorer by the lost man-hours of labor it’s now also out the energy and materials you consumed in a useless activity. Fortunately your fellow islanders aren’t that stupid. Another one suggests that you construct a wind mill to provide some power. The others point out that you currently produce plenty of power from swamp gas. However, you all know that eventually you’ll start to run short of swamp gas. Constructing the wind mill will allow the group to use less swamp gas and you’ll run out much later – the project has a real, if low, positive return on the investment. It’s better than having you sit idle, and way better than employing you in a make-work (broken-window) activity. Still another islander suggests that rather than build a wind will, the materials (and your labor) would produce a more immediate benefit if you built a pipeline to bring fresh water from the stream over to the village. This will save the villagers a daily walk to the stream carrying water buckets. The pipeline idea’s been talked about before, but no one’s wanted to do it because it will take a long time to pay back, and no one is particularly bothered by having to carry water in buckets. In other words, the project doesn’t produce a high enough payback, and soon enough, to be worthwhile for someone to undertake on his/her own. But this isn’t the same as saying it has no value, or negative value, especially when you consider that the labor component is an input factor that would otherwise be wasted.
The point is that provided you have projects that produce some positive real return, the island as a whole can be made better off by undertaking them, since the alternative is the permanent loss of your unused man-hours of labor.
Doug,
I really liked your illustrations.
Warren Beatty , in his Liberals Redefine Words [Reader Post] added an important component: the forgotten man.
And WB explained how FDR messed with the original meaning of that phrase to fit his personal agenda better.
William Graham Sumner, who coined the phrase, ”the forgotten man,” defined it as, “Jim and Frank want to help Sally, so they team up and pass a law that coerces John to co-fund their favorite project to help Sally. In this scenario, Sumner defines the forgotten man as John, who is coerced to co-fund someone else’s project. He is the man who works, prays, and pays his own bills and is never considered by the likes of Jim and Frank.”
But FDR redefined the forgotten man as Sally!
Anyone who didn’t agree with his pet project (windmill or pipe from stream) was simply coerced into paying for it anyway.
In Obama’s cases whether or not these projects were good ideas to build is beside the point of them being pet projects designed to aid key constituencies.
Brother Bob,
I might get some flack for this but I’ll write it anyway.
Your illustration of the eleven-man island reminded me of the original intent behind tithing under the Mosaic law.
There were 12 tribes.
One was not supposed to do any work for themselves.
These, the Levites, were supposed to take care of the temple and all the arrangements for the entire peoples sacrifices and festivals.
This group, 1/12th of the people, had no income of their own.
So the arrangement was for the other 11/12ths to each give 1/10th to the Levites.
That gave the Levites 110% of the average of all the other tribes.
With that 110% they should have been able to feed, clothe and shelter themselves PLUS do all of the requirements at the Temple.
And this worked.
But when a congregation of modern-day Christians are told to tithe they are all giving to one man.
So, lets say 100 families are in his church.
Each gives 10%.
He gets 1,000% of their average income.
Seems a bit out of whack.
And, btw, a 100 family church is a small church where I live.
Now if this only had picture’s for the dense headed dem’s to understand.
@ Doug – Great examples. They were far better than my own examples and I’ll be keeping them in mind for the next time I’m explaining this.
@ Nan: Thanks for the Sally example! I hadn’t heard that one before.
I’m not quite sure I follow your tithing example, though. In this case the one man you’re giving to is actually your entire community’s church. If you don’t want to tithe to the church you don’t need to belong, and those who aren’t members don’t need to contribute. I don’t see your example as something that will draw a lot of flak; it just sounds like it’s a bit of an apples to oranges comparison.
I guess opinions vary. This article dates from July 7, 1991: Legacy of WPA’s Massive Relief Program Endures 50 Years Later
@Greg:
Typical liberal/progressive thinking, Greg. Now, granted, those temporary jobs lasted a few years, but the point is that they were not permanent jobs, and had a limited “life”.
It all boils down to who one believes can make their lives better. The government, by giving and giving and giving, usually with other people’s money. Or, private industry, who do not “give” people jobs, but hire them to perform work for them. We know where you fall on this. We also know where that road ends up, and as for me, no thanks. I’ll continue to earn my way in this world myself.
Greg.. this is becoming a one-hand-tied-behind-my-back bit with you of late.
Let’s see… what did the WPA do?
First, let’s address the obvious. The interstate highway system wasn’t in existence. Airports didn’t either, being as commercial flying was pretty much non existent in that era. They didn’t have sewer lines (and Chicago can thank theirs for none other than George Pullman, BTW).
So infrastructure was built to accommodate for them not being there at all… to the tune of $11 billion US dollars, circa 1935. Remember that figure, Greg. I’m going to bring it up again.
So today we have an interstate highway. Is it in the “disrepair” that so many moan/groan/wring their hands about? Not really. (read your own dang link, Greg… if that isn’t too inconvenient for you… does the phrse “built to last” and “durable” appear?) Yes, they need repair when mother nature wreaks havoc, and time takes it’s toll. Hey… isn’t that what the gas tax is all about? If all that cash isn’t going for roads, and the roads are in such deplorable condition, how are commercial and private citizens moving around the country?
And don’t give me this US is sixth or so in infrastructure bit. That’s because China and the other countries ahead of us are doing what we did decades ago, and their airports and rails are newer and shinier. But more efficient? Not necessarily.
But we’re hardly in the position of needing to construct an entire transportion/road network. Same with airports…. with so much airport traffic, what airports would you like to build to add to that traffic, Greg? Bridges? Got ’em. When they are needed for expansion of an urban center, the cities work it out. Not the federal government’s job to pay for another bridge to cross the Columbia River because Portland would like yet another bridge to handle their urban sprawl.
So much for apples to kumquats comparisons. Shall we talk money now? $11 bil on the taxpayers dime in 1935. Calculating for the rate of inflation for that same amount between then and now, the BLS inflation calculator, $10,000 in 1935 is the equivalent of $164,906.47 in 2011.
You’d have to multiply $10K times $1.1 million to get to the $11 billion figure for 1935, Greg. You know what the $11 bil in 1935 is equivalent to today? That would be $181.4 billion approximate.
What would $181.4 get us today? Mostly a never ending boatload of interest on debt for $181 bil we don’t have. But in the real world, that’s not even a quarter of the ARRA stimulus. You know, that spending that, after interest, costs the US taxpayer over a trillion at least? And how’d that work out for ya? Think we’d get many needed airports, road, etc for $181 bil? That’s a bail out for a couple of federal agencies… that’s it.
Now, before you say you were only addressing the New Deal, “creating jobs”, we’re going to have to examine whether or not you consider temporary construction jobs on the taxpayers’ dime… or not-so-shovel ready, as Obama likes to put it…. as “jobs”? Seriously playing loose with “job creation” here, aren’t you? Especially considering the trade off with debt these days.
If you’re going to soak the taxpayer’s hide, there’s no end to BS jobs that can be created to match your loose definition. We can tear down a bridge, then rebuild it. That “creates jobs”. We can burn forests down, pay firefighters to douse it, then pay for reforesting. That creates jobs too. How about we raze a school, then build a new one? There’s some job creation.
But is it wise job creation? Nope…. all it’s doing is keeping the unemployed busy at the expense of those who are working. Let me ‘splain…
Your problem is that for every job you want to “create”, you are not creating new or unique revenue. Neither did FDR. But at least that did lay in infrastructure that would lead to businesses and trade traversing that network. But are we without that now? Is “high speed rail” going to make significant difference? Hey, if you’re talking about “beaming me up Scotty” technology, I may agree with you. Let’s build transporters. But that’s not where we are right now.
The only “jobs” that government creates recycles private sector revenue. It does not increase it. And to make it worse, it usually adds to the future tax burden interest to borrow the revenue – that isn’t there – to “create” the “job” – that isn’t needed – by government.
But it’s sure a handy spin cycle for people like you. Dang, guy… doofus thinking. Is this your norm? You really need to improve your talking points game.
What we really need is new, fresh revenue. And government can’t create that… it can only stop it from being created. And it does that very well.
@Greg, did you even read the posting before finding your talking points? I’d like to see your study on how many jobs were destroyed by the New Deal. Do a quick google search on unemployment rates during the depression if you want a quick starting point.
@MataHarley, #7:
And from there we circle back to the predictable republican alternative, which involves getting rid of “job-killing taxes” and “job-killing regulation”–the cure for everything that ails us.
Why should anyone think that more high-end tax cuts and corporate tax cuts will result in a surge in job creation? We got into the situation we’re presently in despite some of the lowest high-end tax rates in decades already being in effect, and still in effect. For many corporations, effective tax rates could hardly be lower. They’re also already sitting on some of the largest reserves of capital in U.S. history.
Why should anyone think that regulation has caused any of this? The recession hit in 2008 without any significant regulatory initiatives. It hit at the end of a long period of deregulation–when many of our regulatory agencies had been put in the hands of people having long-time connections with the very industries they were intended to oversee.
Then there’s the debt. A May 22, 2011 article might be of interest: What’s Really Driving The National Debt? Tax Cuts and Wars. The Center on Budget and Policy Priorities chart is interesting. According to the CBPP, tax cuts and wars will account for nearly half of the public debt by 2019. Another conclusion: “Simply letting the Bush tax cuts expire on schedule (or paying for any portions that policymakers decide to extend) would stabilize the debt-to-GDP ratio for the next decade. “
ah yes… to quote Nan G’s imfamous observation once again… “move the goal posts, much”?
We’ve been here, done that so many times before.
1: You could tax every taxpayer of all classes… since you think in classes… for 100% of their earnings, and it still wouldn’t pay for the spending. Horse manure, and a piss poor attempt at an Alinsky diversion tactic.
2: Corporations are comprised of individual taxpayers – shareholders and employees. All pay taxes. The more profitable the corporation, the more the tax payers earn and the more taxable revenue is available. Additionally, there are fees, licenses and taxes on corporations on top of that. But nothing is enough for the spending that you and your party, with the creation of the two entitlement programs, have wrought.
LOL! Housing bubble/collapse led to this, Greg. This didn’t involve sundry regulation and deregulation over the decades? “Regulation”… equals new banking regs to comply with CRA mandates for expansion. Regulation… equals mandated higher portfolio risks for GSEs. oh.. but you don’t remember any “reglations”….
Doofus thought again.
Lawdy, Greg. First, I have to ask… have you a clue to the difference between deficit and debt? And are you aware that the US downgrading of credit was due to long term debt?
Secondly, INRE your assessment… which you prefer to base on Crooks and Liars 2nd hand report of the actual 10 page massive and in depth (/sarc) study by the CBPP. Is there anything missing in there that may, perhaps, make up 49% of US spending/debt? You know, entitlements like Medicare, Pensions/SSA, and welfare?
Hey, I can’t blame the CBPP.. they probably got a government, taxpayer funded grant to figure out, one more time, how to fit a square peg in to a round hole, mind you. But what can you say about a “study”…. using that term loosely… that evaluates US spending that ignores 49% of US spending?
BTW, do you see any disclosure in there of the GDP figures for projected growth that was used to come up with this cute little graph you rest your talking points on? Hint, they actually point out, in the footnotes on pg 3 of the study’s PDF, that the effective positive peak of the ARRA stimulus on the GDP was last year.
But here’s what you really need to pay attention to… because that is what S&P paid attention to when downgrading the US. Even with your hoped for increased taxes by letting the Bush tax policies expire on EVERYONE (not just the $80 bil for the evil wealthy, but including the $463 bill for the middle class), the debt to GDP ratio still rises from 76.8% (GDP to debt, not deficit) in 2013 to almost 90% in 2019. (Table 2 on pg 10 of the PDF… read it and weep, mourning the loss of your BS)
Thus the reason that the S&P downgraded the US… because it was the entitlement programs driving the costs… not the tax cuts or the wars as you and this study like to portend.
Straw man. Simple fact remains. Seize every penny that every taxpayers earns over the next 20 years, and we still won’t make a dent in the US debt (not deficit). In fact, seize every penny that was not collected by the Bush policies, and you still wouldn’t make a dent.
@MataHarley: Applause! Applause!
Man, I love it when you school Greggie like this. One wonders why he keeps coming back for more…
@Greg:
Your comment here about tax rates being the cause of the situation we are in is pure BS. I have explained before that it is the spending, as has Mata and numerous other posters here. I will post a clearer picture for you of this later, when I have time.
Mata: it’s a good point that the WPA’s infrastructure build-out might have been a one-trick pony. And I agree about the gas tax – I’m tired of hearing about “crumbling infrastructure” – if it’s really crumbling then for pete’s sake fix it, and if the gas tax (which is a fixed amount not inflation-adjusted) is insufficient to pay for the repairs then raise it until it is. Still, those WPA projects did provide lasting value, in contrast to the 2009 stimulus which appears to have been used largely to prop up unsustainable state and local payroll and benefit expansions (and which just delayed the inevitable scaling back of that spending).
All that said, as of yesterday, our government was able to borrow at less than 2% for 10 years. It’s an absurdly low figure, and it’s hard to believe we collectively have no projects that can produce a payback greater than 2% that could be undertaken. In energy alone there have to be $billions of such projects, even low-return renewables projects. (As an aside, if I were Geithner I’d be rushing to fund as much of the outstanding debt as possible at these low rates, instead of doubling down on the short-term funding we’ve come to rely on – if/when interest rates go up, our national debt funded at the short end of the curve is going to be the mother of all option-ARMs.)
Concerns about a WPA 2.0 would include:
– overpaying for labour courtesy of prevailing wage laws
– using it as a slush fund to reward crony capitalists and big campaign donors with contracts
– spending it on broken-window projects by e.g. replacing buildings that don’t need to be replaced
– spending it on negative-real-return but politically favoured projects (e.g. iffy “green” jobs)
– spending it on “infrastructure” that produces no payback e.g. more money down the public ed rathole
This doesn’t mean that as a matter of principle I think infrastructure investment is a bad idea. Yes, even if the money’s borrowed. It’s only as applied or practised that I would worry.
Agreed. I have no problems with needed infrastructure spending. I have problems with unneeded infrastructure spending for creating employment illusions, Doug. High speed rail? Mostly a joke. Works when you have the population density of DC to NY or New England to NY and regular commuters. Doesn’t work for Portland to Seattle, or Tampa to Orlando. That’s desperately searching for something to do.
Power grids? Probably could use some improvement. Most cost effective if you don’t expand into some pristine area, triggering enviro lawsuits, upping the cost and delaying the actual work. Refineries, drilling and pipelines? Absolutely. But you can’t get Congress to touch it with a 60 foot power pole.
WPA was good planning at the right time. Commercial aviation was just getting started. There were only about 50,000 cars on the road, but it was also on the brink of increasing as entrepreneurs starting finding ways to make them more affordable for all. Making a transportation network by ground and air encouraged private enterprise. No problems with the WPA. But we sure don’t have to replace everything just for the sake of government spending and pretend jobs. And we sure couldn’t do it for the same amount of money.
Oh yes… before I’d support any gas tax increase, I’d want full accounting of what has been done with the money collected thus far…. they will find no trust from me when demanding more.
@anticsrocks:
I think there is something very wrong with greg. I mean I’m used to leftists being blind to reality, but greg takes it to an all new level.
On the bright side, he makes our side look really good when we destroy his claims.
It’s interesting to see the kind of bizarre thinking that can arise, when an obviously intelligent and well educated person subjects his judgment to an arbitrary ideology. For one thing we have to endure this kind of reasoning by example, leading to such absurd assertions as government must be run like a business.
Your island scenario has nothing to do with Keynsian theory. Bastiat’s broken window fallacy merely illustrates that breaking a window (and repairing it) doesn’t create value, as some economic theorists of his time speculated. This is not big news! Failing to repair the window doesn’t create wealth either, compared to the situation before the window was broken. The same disposition of resources that you describe at such length can take place, if the window is intact or if the window is broken and not replaced. This assumes that the window can be left in a broken condition, which is essentially saying that it had no value to the business to begin with! However, what if leaving the window broken has adverse consequences? Suppose it allows cold air to enter the bakery and ruin its wares. Suppose the unsightly broken glass drives away customers. Then the window did have value to the business and breaking destroyed this value, that is, created “negative” value. This will be reflected, if the window is repaired, in the alternative uses that must be deferred for the money that is used in the repair. Again, nothing to do with Keynes’ theory of demand!
Now consider a scenario that’s actually relevant to Keynesian theory. Suppose we have a stalled economy. There are no jobs, people are out of work and have little or no money. Businesses have money, but no customers, no reason to hire workers. Give businesses extra money (e.g.: a tax cut) and you’ve done what to change the situation? Nothing! They already had money. They still have no customers, no demand. How does one create demand in this situation? As Keynes recognized and as you mentioned (before dropping the idea like a hot stone) the government becomes the customer of last resort. Why? Because government is the only entity in the economy that can actually create wealth (or value) from nothing through either fiscal or monetary policy.
How’s that work? Businesses must pay their employees more, so they do what? Fire employees? How does that help them? With a smaller workforce their productivity goes down and they make even less money. Bad business model! Better to take the increased wages out of the bottom line to begin with, maintain productivity, and grow back to the same profitability. Remember: in FDR’s day, just as today, businesses had plenty of money. They just didn’t have customers.
Yeah, it does. Morgenthau was a conservative. What else would he say than that New Deal policies didn’t work, just as modern conservatives try to float the same belief. And why should we credit his ideologically driven assessment any more than we do that of modern conservatives? His plan for postwar Europe turned out to be a disaster, which led to its being replaced by the highly successful Marshall Plan, based on Keynesian economics. Once again conservative economic theory was a dud. As for 1936, the legislation that FDR supported and Congress passed (including the creation of the WPA and Social Security) resulted in the period 1936-38 being known as the Second New Deal, characterized by even heavier reliance on Keynsian style deficit spending. Why? Because demand was still inadequate and consumers still didn’t have enough money to support the recovery.
No! As businesses become less profitable, they simply make less profit for executives and shareholders, while doing the same amount of business. If demand for their product remains the same, how does reduced profit mean less business? You make an assumption here with no justification!
And if the war did finally get us out of the depression? War spending (of borrowed money!) to create jobs and demand is just Keynesian intercession with another name!
(1) You said (correctly) the onset of the war got us out of the depression, not the post war return of GI’s. That’s a different matter, but your question is easily answered. (2) Who was working, while the GI’s were overseas? Women were: their wives, sweethearts, even mothers! When the GI’s returned these millions of “Rosy the Riveters” gladly put down their hammers and went back to being wives (or brides), opening millions of jobs for returning men. Furthermore, a lot fewer GI’s came home than went to war! There was no shortage of jobs.
As you pointed out, the U.S. was the sole intact industrial power in a shattered world eager to rebuild, probably the greatest single market opportunity in the nation’s history. The government actually continued to spend money with the GI Bill and the Marshall Plan, which helped to funnel money right back into our economy. It was a boom time in America.
We had the highest industrial capacity in the world at the time. It merely needed to be retooled back to peacetime production. With a ready labor force, open international markets, and a civilian population eager to forget rationing and go back to the good life, it was a business paradise. Anyone who couldn’t run a successful enterprise then had no business trying.
Oh, yeah. That’s why Truman had such success running against the Republican Congress in 1948, calling them accurately the “Do Nothing Congress.” He was right. Americans recognized it and turned the GOP out of both houses.
You tell the truth according to your right wing perspective and I take it for what it is. Doesn’t bother me, if you want to think that way. You’re just wrong!”
Actually, AJ, you have not been paying attention.
You wrote (and quoted)
Employers have been losing people due to attrition and not filling their slots….much….yet, up until this last quarter, productivity had continued to rise.
Fewer workers, all afraid of being laid off, can produce much more than lots of workers not afraid of anything.
My husband owns a print shop with about 45 employees.
Used to have 65 people before Obama.
Only in this last three months has anyone left who actually impacts the speed and excellence of the work product at the shop.
Up until his departure, every bit of work was done on time and on budget, just as before.
Having fewer people was not impacting productivity at all.
Now, because of this one guy leaving, I have to do some (about 1/2) of the estimates for potential jobs.
And I can work from my computer at home.
BUT you also brought up ”giving businesses money.”
You make a good point.
Giving a limited, targeted tax incentive to hire is not going to work.
WHY?
Because business models are not based on one year.
We make up 5 and 10 year projections.
We can’t do that well if Obama keeps changing the rules on us.
One year auto companies get a deal, but their shareholders (me, hubby and thousands of others) get screwed.
Before that banks get screwed but now are expected to ignore that.
Now guitar makers and air plane manufacturers are being targeted based more on which political party they gave to the most.
Will we be next?
Is there any way to predict?
No.
There is not.
In Obama’s first year he did come after our American paper suppliers for their use of green energy.
Yeah, it was not the green energy HE wanted.
Then he dropped that, but a few American paper manufacturers are gone.
Less good choices in quality paper for our customers.
Yes, businesses sit on money.
We had plans to expand just before Obama.
Plans included buying a couple more multimillion dollar new presses.
Plans included sending three employees to Israel to learn all about running and maintaining the new presses.
All that went away.
One thing we’ve done to expand: go to bankruptcy auctions of former competitors and get some of their good stuff for pennies on the dollar.
BTW, just so you know, printers are unionized.
Ours make a minimum of $45/hour and a minimum of a 4-hour day.
But their local is claiming a 60% unemployment rate.
Up until now Obama and the gov’t have not chosen to become our customers.
Many printers are gone.
He didn’t help them get jobs.
And their printers were unionized.
Why should unionized construction workers be the only ones Obama cares about from the unemployment line?
Mercy… mind boggling for anyone to assume that if the government increases spending… ergo leading to the need for increased taxation on privately generated revenue… there would be more money for consumers to spend and increasing demand for products.
???
How does that work? If consumers are already strapped for spending, absconding even more of their income cures that …. how?
It doesn’t. I suggest that all it does is delay a looming, exacerbated problem by using the proverbial kick-the-can-down-the-road approach. This has been evident by the ARRA spending, that merely staved off needed state and local government cuts. Using the US taxpayer to foot the public sector payroll for another six months is not a solution. It’s a waste of money, increased debt, and compounded interest.
The fly in the ointment is assuming that, for increased revenues, the tax breaks/credits/tax cuts need to be confined to businesses. Now who ever said that? In fact, the opposite has been proposed by both the Debt Commission and the GOP’s plan. What needs to be done is putting more of a taxpayer’s individual income/earning back into his/her own pocket to use for their choice of purchasing power, not the government’s. They will have more cash, therefore more able to consume. Altho I find it ironic that Geithner speaks out of both sides of his mouth when he insists that the economy needs consumption, but then chastises the nation when they do not save.
INRE businesses, IRS reforms are certainly necessary. Since “business” or “corporations” are comprised of individuals, many who pay their taxes via flow thru earnings from their businesses, they are apt to experience higher cost of production and perhaps slightly lower profits. But then are are able to keep more of what they draw from business for individual income – to be used to spend as they see fit.
The theory that the government can recycle existing privately generated revenue to a glorious outcome is simply folly. This is the classic redistribution of wealth, which has never worked in history.
Two simple things are needed… encouraging new private sector generated revenue, combined with serious reduced spending by government. You cannot create the environment or opportunity for new revenue by depleting current private sector revenues. Seizing more cash does not increase a taxpayers ability to consume, nor develop a product for which there is a demand.
The second? The payrolls of the public sector must be reduced. Just as private industry has proven that profits and efficiency can be achieved with a small, productive workforce, all levels of government should be brought down to an efficient, shaved down workforce. Only those providing the vital and genuinely Constitutional government services should be retained. The rest should be thrown back into the private sector pool to contribute, instead of drain, the economy. i.e., to generate fresh revenue, and not be sucking off the private sector’s teat.
If there is a genuine need for services they were performing as taxpayer paid employees, the void will be filled with a private enterprise providing the same service. Success is defined by entrepreneurs, seeing opportunity, and filling a vacuum when presented.
The battleground remains the same…. the ongoing philosophical wars between those that believe the individual should be in control of his own earnings, and those that believe the government knows best how to spend an individual’s earnings for the “collective” good…. a pure socialist theory that cannot be shaken by those that hold that tenet as infallible.
I do not waste my time dealing with socialists, marxists, communists, or any degree inbetween. They will not convince me their philosophy is superior. Nor will I be able to effect a change of heart in the socialist. As I said before, that chasm is too wide to be traversed.
This nation was not founded on that philosophy. And while our freedom tolerates those who do hold that view and seek to alter this nation off it’s founding principles, I will fight them to my death.
@AJ:
“Because government is the only entity in the economy that can actually create wealth (or value) from nothing through either fiscal or monetary policy.”
Ye gods man do you really believe that?!? Nobody creates wealth from nothing – nobody. All wealth either already existed naturally, is created through invention, or is created through effort and then deferring some consumption of the product of that effort. Jeeze just look at Apple if you want to see the private economy creating wealth, then just look at the value of a dollar to see poor policy destroying it. If simply printing money created wealth then Zimbabwe would be the envy of the world. If borrowing money that can never be paid back were the answer then Greece would be the envy of the world.
@MataHarley, #10:
Somehow you folks always manage to equate the position that tax increases are an essential part of any real solution with “seize every penny”.
Both spending cuts and tax increases are a necessary part of any real solution.
And somehow “you folks” manage to misconvey that the GOP presented plans did not include any increased tax revenue with IRS reforms. The problem between all of us, who do agree that spending cuts and revenue generation is needed, is how to accomplish that. “You folks”… LOL…. remain fixated solely on the Bush tax policies. Yet I have yet to hear any of “you folks” who want to let those taxes expire on the bulk of the population, where the majority of revenue lies. Most of us see increased taxation on all individuals as the wrong way to go. Removing the ability to consume by absconding more cash from the individual’s wallets is insane in this economy. However revenues can be increased by IRS reform, which the GOP’s plan, Ryan’s budget and the Debt Commission all proposed.
We also have a problem with how cuts are to be implemented. Again, “you folks” want to leave the size of the increasing federal bureaucracy in place, and just cut the benefits. The Ryan plan and GOP plan wants to reform the entitlements so that the benefits for those who are on them, or will be on them shortly, remains status quo, but allowing the young to opt out. Nor do you want to eliminate wasteful government agencies. When you say “cut spending” to “you folks”, you always race to the DOD… one of the only Constitutional mandates for federal spending and is integral to national security…. plus our prosperity. When we say “spending cuts”, we’re talking about reducing the size of wasteful agencies, subagencies and sub sub agencies. In other words, ceasing to bail out the Dept of Education, rein in the EPA, HHS, etc. What I find expendable and wasteful bears no relationship to what you see as the same.
What we have is a base agreement that revenue growth needs to be encouraged, and spending needs to be cut. We simply see different ways of accomplishing that. Considering over the past eight decades, that your party has held the nation’s purse and spending in it’s hands for the majority of Congressional sessions, I’d say that you’ve adequately proven you’re clueless as to how to accomplish this. The GOP has done little better in it’s brief reign of power. Both liberals and conservatives should be equally irate at the elected ones’ fiscal irresponsibility over decades. But it seems that the only ones that genuinely are, and at both parties, are the now demonized fiscal conservatives.
@Mata: Great responses! I think that you put more time into your responses than you did on my original post!
@Nan: Thanks for the example of your own business woes. If you don’t mind I’d like to cite them in the upcoming chapter on unintended consequences.
@AJ: If you truly believe that the government creates wealth this posting was too advanced for you. Go back and read my first three posts and watch the Bill Whittle video linked just after the Bastiat discussion, then come back – I think they’d help you a lot. That said, thanks for your posts. However misguided I appreciate the time you put into them.
@AJ & Greg: One other question – how do you call a decade of massive unemployment under FDR a success? And if they were so successful, why didn’t they work in Japan and why aren’t they working today?
@Brother Bob, #23:
A tide of human misery was greatly lessened by FDR’s programs over that decade. I’m more impressed with that than with hypothetical arguments about how much better everything might have been if nature had simply been allowed to take its course.
Yet “you folks” never hesitate to seize the hypothetical when arguing how much worse it would be if ARRA didn’t happen. Such a trap words can be, don’t you think, Greg?
@Brother Bob: @Nan: Thanks for the example of your own business woes. If you don’t mind I’d like to cite them in the upcoming chapter on unintended consequences.
Go right ahead if you like.
Hubby was looking at the Post Office threatening to close later this year IF we don’t bail them out.
IF the Post Office closes (even just for a few days or weeks) I have no idea how the casinos (our major source of printing work) will get their fliers out.
1.Will they stop ordering fliers?
If they do a lot of our people will be laid off.
2.Will they find an alternatively cheap way to advertise?
If they do will it include us printing for them?
Again, potentially a lot of lost jobs.
@Greggie: You said:
Does that mean that you are against the hypothetical arguments that without Obama’s insane spending of the past three years things would have been much worse?
@MataHarley: Oops! LOL great minds think alike!!
@Greg:
Something interesting that I found, regarding the “Bush tax cuts”, and the probability of what might have happened without them. Something to keep in mind is that the Bush tax cuts, the tax rate cuts, happened in 2003, and were retroactive to the beginning of the year.
The average increase in tax revenue due to individual tax returns is around 6.5% per year. Extrapolating this out, and starting from the number from 2002, the end of the year figure for 2007(prior to the housing market crash) would have been around roughly $1.092 Trillion. The actual figure seen at that point is $1.116 Trillion. The difference is $24 Billion.
Now, it is hard to imagine that the increases, percentagewise, seen from 2003-2007 would have been the same, or even close to the same. Overall, $24 Billion is not much of a difference, so as far as federal revenues go, I’d call it a push as to which one was better for the country. The real boon seen from the reduced taxes is the increased economic activity, in which a big jump in GDP growth rate can be seen, as compared to the period from 2000-2002. It is unlikely that anything short of the tax cuts enacted would have seen the same jump in GDP growth rates.
The only conclusion that one can make, when looking objectively at the data, is that the Bush tax cuts neither robbed from, nor increased, tax revenues from individual income taxes, if one assumes that those tax revenues would grow at the average annual pace as seen from 1980-present.
Data can be found here;
http://www.taxfoundation.org/news/show/250.html
http://www.tradingeconomics.com/united-states/gdp-growth
@johngalt: You make excellent points john, but Greggie only sees those evil richies keeping all that money which he is entitled to.
@Nan G: An interesting and well thought out reply, but I’m not sure that you and I necessarily have a lot of disagreement. For one thing, you provide a great deal of information about a single, specialized business, that is unlikely to apply to businesses in general. For instance, I sincerely doubt that many other firms could tolerate a 30% reduction in labor force, as yours did, without compromising their productivity. On the other hand, if they did operate with that much slack, wouldn’t a competitor promptly come in with a more streamlined operation (thus lower prices) and put them out of business?
I can see that 5 or 10 year business forecasts might be difficult to make and, if your firm depends on them, inability to create them could put you at a crippling disadvantage. However, from the evident size of your operation, you must do large scale printing consignments. I’d hazard a guess that the vast majority of commercial printers are small scale (like Kinkos?) with a staff on the order of a dozen. Such businesses would almost certainly be impaired by losing several people, even though yours wasn’t. My point is that arguing from personal experience is not a good way to establish overall principles. I think it’s great that you and your husband have built up such a successful business, but I’m not at all convinced that your experience represents that of businesses (large or small) in general.
As for Obama, I have no idea why the man does anything. My only consolation is that I didn’t vote for him, but he still pisses me off nearly every day.
@Brother Bob: @MataHarley: @Brother Bob: Although reliable estimates of unemployment were not available at the time Roosevelt took office, current esdtimates range from around 24% to 36%, wih a mean around 30%. I’d say cutting this figure in half was no mean feat! As to why unemployment didn’t drop further, I couldn’t say and I suspect no one can. But to hang a contention that the New Deal policies didn’t work on that hook seems like an overreach.
As for today, I would say the absolute absence of any kind of job-creating legislation might answer. If nothing else, a WPA type program would be a nice start. Considering the fact that, if you go to a national park (say) today, you will drive on roads, stay in hotels and use facilities every day that were created by the New Deal’s WPA and CCC. These programs not only put millions of people to work and supported their families too (Remember, a large chunk of their wages went directly to their homes.), they also created an extraordinary inheritance of infrastucture that we still use today. (Have you ever driven – or biked! – Skyline Drive through Shenandoah Park? The entire 105 mile length cost around one and a quarter million dollars. You couldn’t build a single mile of it for that much today. Even considering inflation, that’s an incredible value.)
@MataHarley: Allow me to unboggle your mind. Right now the world’s business community has well over $2 trillion in cash assets, which it is merely sitting on. (The reason: the poor dears are plagued by a crippling “uncertainty”, they say.) Meanwhile the super rich in the U.S. “control” something like 40% (depending on whose figures you like) of the nation’s wealth. Are they spending it? Evidently not. They’d be hard-pressed to find ways to dispense that much lucre anyway. It only takes so much to live even in ridiculous luxury. Meanwhile the poor and middle class are spending nearly every penny they can snare just to get by. Their problem is that they don’t have enough money to jump start the economy. So, there are those who have lots of money and won’t spend it and those who would love to spend more money, but don’t have it to spend. Solution: take money from the former and give it to the latter. That seems as straightforward as you could want. You may not like the solution. In fact, you probably hate it, but it does solve the problem.,
Take their money and give it others? That’s a lovely solution AJ. I bet your jackboots have a lovely shine to them. As has been said, scratch a liberal, find a fascist and you just proved it.
I bet if I took a large chunk of your money and gave it to the poor you’d scream bloody murder. Leftists like you always want others to give up their money while you keep yours. Yet another reason why the term liberal hypocrite is redundant.
@Hard Right: @johngalt: Do you contend that a job must last indefinitely in order to qualify as work or to produce anything of value? Most small business start-ups fail within a year. Few of them endure long enough to be called “permanent” by any stretch of the imagination. Does your caveat apply to them as well. As to government jobs not producing wealth, what would you say about the construction of Hoover Dam? Did all of those construction workers waste their time? Did they produce nothing of value? How about the Tennessee Valley Authority? Frankly I think that this particular right wing meme is one of the least tenable of the bunch and that’s saying something! In fact, it’s so incomprehensible and counterintuitive that I wonder, if I understand you correctly. How does it apply to the Appollo Project, for example. Does it mean that none of the NASA engineers and scientists were working, while the comparable employees of private firms that contracted with NASA were all workiing? What about the private companies using government grants? Real work or no? And what tangtible difference is there between the money that a government employee gets, when he cashes his paycheck and the money an employee of General Electric gets?
@Hard Right: You’re nuts! You’d be offensive too, if your ideas and insults weren’t so sophomorically stupid. I pay taxes, same as anyone and I vote in the elections that ultimately determine how that money is spent. Sometimes I like the result, often I don’t, but I’m not so uninformed and immature as to claim that we live in a fascist system. We may be getting close, but we’re not there yet. Besides I get the distinct impression that, if corporations were completely excluded from influencing governnment, if the influence of money on our government were completely eliminated, and if our representative democracy worked exactly as it was intended, you would still scream “fascism”, when “we the people” decided to redistribute a bunch of our wealth to the poor. Which tells me that you have no idea what you’re talking about.
Awww, the truth hurts I see. Sorry AJ, you are a wannabe tyrant cloaking your hatred and envy of the upper middle class/wealthy in compassion. Your reading comprehension is rather poor too.
@Brother Bob: OH, COME ON, BOB! ARE YOU KIDDING ME/ THAT WHITTLE VIDEO WAS SIMPLISTIC NONSENSE! HE EVIDENTLY WOULDN’T KNOW A GENUINE LIBERAL FROM A BUTTERFLY.
It’s very easy to mischaracterize others and attribute attitudes and opinions to them that serve your own arguments, but its transparent casuistry and someone of your acumen should know this. Liberals don’t subscribe to the BS beliefs that Whittle describes and government (at least our government) does more, much more than just regulate and tax. That’s all that Whittle mentions, so perhaps he’s that uninformed, but I think he’s just slanting the facts to decieve those who really are ignorant.
Does that include you? I wouldn’t have thought so.
I’ve got to go, but I’ll get back to you on this.
Okay, Bob. This is perfect. It’s a short tghread so far, topic fairly narrow, a great place to have this discussion. Unfortunately I must go into town for a couple of hours, but otherwise I’m free.
So, let’s do it. Let’s walk our way through the idea of “wealth”, what it is, how it’s created, how it’s distributed in society. Let’s have a good old fashioned debate without the diatribes or the labels or the personalities and see if we can reach some concensus on the truth.
Are you up for it?
@Hard Right, surely you are not surprised at the “solution” presented. As I keep saying, a chasm too wide to traverse philosophically.
Of course, a fast forward of that socialist solution proves it to be temporary and finite, as history has shown. Assuming that those hoarding the cash, as was insinuated, are the ones creating the products that aren’t being sold, the solution is the suggestion that the business simply buys out their own inventories. This, of course, doesn’t create new demand since buying their own products is not a profitable business model for any sustainable length of time.
Then of course, there’s the ugly reality that the money seized from them, to give to others to buy out their own inventories, will suffer a serious creaming off the top by a government middleman… so they won’t even be buying out their own inventories with the full amount seized. Great scam, and apparently some are foolish enough to fall for this type of reasoning.
WPA was a wise investment because it created an air and transportation network that did not exist when cars/trucks and planes were just starting to be feasible for the masses. To compare such with hotels and motels in parks is absurd. The latter is not only a waste of cash for a seasonal business, the lawsuits you’d face with environmentalists would make it cost prohibitive. After all, the entire reason for a park is to leave the land pristine, without improvements. In Alaska they go so far as to even prohibit roads into any of the areas.
The TVA… success? I guess that’s true from the perspective of those regional locals who benefited directly from a nation who footed the bills for their improvements – tho not sharing in their benefits. Why would I, across the nation, want my tax dollars to pay for electricity that I cannot use?
I’d say Reagan summed up the folly of the TVA quite nicely.
Always a vicious circle of idiocy when it comes to government business ventures. If there’s a dumb and expensive way to do something, government finds it.
Obviously some insist that government should not be run as a “business”. This means that profit/loss is a non-issue because it’s a no lose situation since the loss is borne by the nation at large, while “government” has nothing vested to lose. Yet poorly run government ventures (TVA did not become self-financing until 26 years later) do affect the rise of private industry in the same, which actually generates new revenue and not recycling existing taxpayer revenue. While it’s difficult to assess repercussions via an alternative universe, it’s naive to suggest there are no repercussions on competitive private entrepreneurs.
Nor was the central government designed to be in the utility business via the Constitution… far outside their authority. A federal court ruled it outside Constitutional authority, the New Orleans 5th Circuit overturned that. As SCOTUS tends to do when broader issues arise, they narrowly focused on a couple of brief specifics, and totally dodged the larger issue of Constitutionality. That would be the contractural right to dispose of the energy created, and that the specific construction of Wilson Dam was Constitutional under the war and commerce powers…. as it was creating power for aluminum plants manufacturing bombs and planes during WWII.
I doubt that the specifics of the war powers can be applied today, but I’m just as sure that the over abused commerce power would quickly be dragged into any lawsuit as a defense for a government nationalizing a particular industry in economic recessions/depressions. It is these exact environments when the citizenry are more accepting of central authority, taking over large segments of their lives. Hence the popular WH calling card, courtesy of Rahmbo (parapharased) , “never let a crisis go to waste”.
No Mata, I’m not surprised. It just never ceases to amaze me that they think it’s ok.
I would enjoy seeing such a solution being enacted provided it’s proponents would be the ones targeted.
@MataHarley: Clever perjorative: “buying their own inventory”. You guys are masters of that. Well, fine. In fact, if you like we can characterize all taxation the same way. So what? That’s the way our world works.
If you’re persuaded that noone would want “my tax dollars to pay for electricity that I cannot use”, then by implication you don’t want to pay for anything that doesn’t benefit you directly. That’s why I call your political doctrine one of unabashed selfishness. Strange that you find the description offensive, when you trumpet your unwillingness to share at every opportunity. Why not just be honest? It’s who you are.
As for the TVA, your quotation is typical Reagan. He omits mentioning that the uncontrolled flooding in the Tennessee Valley caused massive and repetitive human tragedy: family farms obliterated, homes and even whole towns destroyed, people swept away. The original electrification program was a huge success; it transformed the region. Did population growth overtake it, prompting ill-conceived fossil fuel burning? Yep, but noone knew better then. That doesn’t change the original conception.
Unintended consequences (Bob’s next lecture, I understand) attend every human project. Using Reaganesque hindsight to condemn current ventures dooms us to stagnation, because nothing we do turns out exactly as planned.
You foks and the Constitution slay me. It’s an eighteenth century document written by eighteenth century thinkers using an eighteenth century worldview. As such it’s totally unsuited to guide social policy in a huge segment of contemporary life: global trade, information technology, healthcare, communications, biotech, … even the damned stock market. Mercifully the courts have recognized this and used various subterfuges –notably the “Commerce Clause” – to extend the government’s ambit. Otherwise we’d live in a world that was totally out of control, a runaway nightmare.
When you attempt to insult, Hill’o’beans, it would be nice if you at least learn to spell the words you repeatedly use. . The word is pejorative… p-e-j-o-r-a-t-i-v-e, oh self declared master of the English language. Write it down. Altho it’s interesting that any combination of words with which you disagree, now becomes a blanket “perjorative”… LOL… and likely added to your PC taboo list.
But let’s see if we’ve summed up your pathetic attempt at a response (not that I even cared to get one…) with what constitutes just more generic insults.
1: If I see local pork as an unwise use of my federal tax dollars, I am now unabashedly selfish…. uh huh
2: If Reagan said it, it must be wrong
3: The Constitution and the founding principles are simply outdated
Yup… chasm too wide to be traversed.
Al, you wannabe tyrants slay me. You want to tell others what rights they should have, what they should be allowed to think, and how to live their lives to YOUR satisfaction.
I’m not surprised you are all for violating the Constitution to achieve your socialist wet dreams.
Like I said, scratch a liberal, find a fascist.
@MataHarley:
And
@AJ Hill:
As a mere anecdotal point about ”buying one’s own inventory,” I can attest.
We, as I mentioned, have attended several bankruptcy auctions.
Some of these competitors we had known well for decades.
Now and again, because of limitations in machinery or time pressure, we had traded jobs with one another.
As to buying one’s own inventory, we saw it every time.
Shortly before going under, printers will use their paper and ink to create free advertisements for themselves.
Also more and varied business cards for themselves.
Even making little calenders and other give-aways with adverts on them so as to try to drum up a little more business.
Maybe it works a bit.
Printers probably have a bit of an advantage in being able to draw on their own inventory to good use.
Not quite apples to apples, Nan G. If you were a manufacturer of printers, it would be akin to buying your own printers and giving them to someone else.
In the case of your particular business, a similar analogy would be doing your clientele’s jobs on your own dime. You, after all, were robbed of the cash to give to the government, who gave it to your clientele, who then gave it back to you as a printing order. Might as well skip the government middle man, and just do the job for free.
What you were describing is standard overhead for advertising costs and promo which, at least for now, can be tax deductible. That is not the same as buying out your own inventory.
@AJ: There have been too many points made and I won’t have enough time to respond to all of them (or continue to respond in a timely manner) but wanted to touch on a few:
You say that the Bill Whittle video is simplistic. Actually, an explanation being simple does not equate simplistic. If his explanation is wrong, can you provide an example of a government creating wealth? Not the wonderful things that it does with the wealth that it confiscates, but where does it actually create wealth on its own? (BTW, that said – thanks for taking the time to watch the video)
I hate the label of fascism that tends to get overused (and that’s not meant as a dig at you, Hard Right), but your suggestion that we confiscate the wealth of companies and redistribute it is the end point of where that idea eventually leads. What determines which companies are targeted? Who gets the largesse handed to it? This sounds a lot like how Hugo Chavez has been turning an oil wealthy nation into an economic basket case, complete with hyperinflation and shortages.
Why are these fat cats sitting on all of this capital? We know that businesses are inherently greedy and evil, so if right now it’s as great a time to invest as Obama says why aren’t they taking advantage? Since it can’t be because of the threat of higher taxes and increasing regulation what is the reason?
And what is it about liberal politicians that makes them so morally and intellectually superior that they have the knowledge where to best allocate the resources of a vastly complex economy?
And one last note on comment #32 – You’re right, we couldn’t build a single mile of the Skyline Drive today. We would have lefties discovering all kinds of endangered species (who after Kelo have more rights than tax paying citizens), tons of litigation to fight despoiling the park, and maybe even a few more greens chaining themselves to trees or sabotaging equipment at night for good measure. Throw in mandatory “living” wages that states are forced to pay various unions along with the inevitable delays and cost overruns and you’re right – we couldn’t get that built today like FDR did.
@MataHarley: What I cannot fathom, Mata is why we STILL have the TVA?
http://www.tva.gov
I mean how many people are there that still don’t have electricity?
@AJ Hill: You said:
So you don’t view the US Constitution as a valid contract between the citizens of the United States and their federal government?
Take that same view with your mortgage. I am sure that your mortgage holder would be thrilled to know that you feel that when the mortgage was written times were different, things have changed. Let’s just change it for financial expediency (yours). Or flip that, maybe the bank says things have changed and they demand the balance paid in full next month.
You cannot change the Constitution for political expediency, for if you do, then where do you draw the line? Such absurdity shows you as a socialist, AJ.
@MataHarley: @MataHarley: The fact that I have a better command of English than most people (and most decidedly you!) doesn’t mean that I’m infallible or that I can’t accept correction gracefully, when I make a mistake (decidedly unlike you!) I stand corrected on “pejorative”; it wasn’t a typo. My use of the word was perfectly appropriate, nor was it meant to be insulting, merely objective.
(`1) This is exactly what you said in assessing the TVA:
You didn’t mention “pork” or anything like it. Your sole point was that those “regional locals” [sic] might benefit from it, but you wouldn’t, so …
(2) “If Reagan said it, it must be wrong.”
Now where exactly did I write that? Oh, yes, that’s right. I didn’t. You did!
(3) The Constitution outdated? Well, yes! Or can you cite where and how it deals with any of the issues I mentioned? (Hint: declaring that our government is forbidden (by omission) from regulating or policing these areas of society won’t do, makes you a proponent of anarchy.)
Hill’o’beans… yawn. Your ego, your cyber yapping and desperate spin is so predictable as to always be boring. For a man who has repeatedly used the word “perjorative”, then spent a good deal of his commentary lecturing others on your superior communication skills, it becomes even more amusing that you do not know that the definition of “pork”, or “pork barrel” or “earmarks” is precisely as I used it in reference to the TVA… a federal appropriation and expenditure aimed at specific and particular recipients in a localized area. Hey… your problem. Not mine. I shan’t lose sleep over your continued linguistic shortcomings, but I will continue to get serious belly laughs at your increasingly desperate attempts to flex your anemic educational muscles. There may be some here you fool… but not likely the amount you hope for.
As I said, the political chasm is not only too wide to traverse to bother with you in any serious debate, but I’m not in the least bit interested in engaging your egotistical socialist’s spin. That others are finding you entertaining? How wonderful for them. That they think you civil… for a short time… they miss who you are. Keep you talking long enough, and it all spills out and your facade evaporates. I saw you for exactly what you were when you entered this forum, and you confirmed it the moment your devotion to Bernie Sanders slipped thru your cyber lips.
Therefore don’t take it personal. What mental exercises or time I spend addressing any points in your comments are not directed to you. They are directed to others who might actually waste their time reading your BS propaganda.
You’ve been pretty snide towards most all of the community here – and most especially towards me, without provocation – from the start. None of us, including me, have ever presented ourselves as a member of the super race of linguists. That onus has been yours, alone, to bear. I don’t personally care about your laughable attempts at disguised silver tongued insults – the same MO you’ve used since entering this forum. But I’d say you owe an apology to all of those who you’ve attempted to demean, while touting your own supposed superior command of the language. That would include Ms. Bees (who’s first language is French and has grown leaps and bounds in English since her arrival here), anticsrocks and Nan G. I might also add that johngalt’s attempt at civility has also resulted in your silken glove slaps in the cyber face. You should also include him as well.
But as I’ve been quick to note, humility is not in your genetic make up. Neither are social skills. But then, that’s the bane of those who chose to be in your personal or cyber presence. I do not.
Ah yes, I forgot to mention.. thank you for that demonstration of accepting corrections “gracefully”…. LOL Soooooo very reminiscent of your first “apology”… you know, the one when you spent the first five paragraphs or so lecturing me on grammar and language?
@anticsrocks:
Well, anticsrocks, I can’t answer why the TVA is still a federal entity. (makes you wonder how long GM and Chrysler will be, eh? LOL) It is supposed to be fiscally self sustained since 1959.
But of course, it becomes ironic that the TVA CEO, Tom Kilgore, was making over a couple of mil a year back in 2008. Chutzpah to use the very same argument a private company does… that the pay scale was compensation” …designed to recruit and keep the best talent to make TVA successful.” Guess that’s supposed to be kosher for federal corporate kingpins, but not private.
Of course, it’s the TVA consumer who pays for those costs. Just as in the private sector. I believe they justify that salary because it’s “less” than what the private sector equivalent position pays.
Then again, the private sector equivalent didn’t have the option of running in the red long enough to build 20 dams, because they made every one else in the nation pay for it. Low risk for government owners. They have the bottomless pit of taxpayers’ dollars on which to draw.
@AJ: To break down how the Constitution is now outdated, what exactly has changed over time that has made a centrally planned and controlled government the best system?
@Brother Bob: I’m disappointed. It might have been an interesting discussion, certainly more worthwhile than that egregious video. I applied the term “simplistic” to it advisedly. The concepts of wealth and wealth creation are subtle, sometimes hard to understand. Many people conflate wealth creation with wealth accumulation, a zero sum process that leaves the total amount of it in society unchanged. I thought that Whittle spoke primarily about this form of wealth “creation”. True de novo synthesis of wealth is something quite different. In a monetary economy it often involves the issuance (often mistakenly referred to as “printing”) of new money, which can be accomplished only by government or its licensees (such as the Fed).
If we accept the conventional viewpoint of wealth creation as accumulation, then government certainly isn’t excluded from the process. NASA, for example, has introduced a large number of innovations into society that have made billions of dollars in private commerce. The most frequently mentioned invention, the Velcro fastener, didn’t actually originate with NASA; it was devised and patented a half century ago by a Swiss mountaineer, who based it on the hook-like fuzz that enables burrs to cling to clothing and animal fur. Other novelties did originate with NASA, including:
Scratch resistant plastic lens coating
Memory foam
IR thermometry
Freeze drying as food preservative
Cordless hand tools, and
Anti-skid grooving for road/runways
Two other contrbutions by government of almost inestimable value are:
(2) the interstate highway system (actually copied from the German autobahn)
(3) the internet, developed initially by DARPA (the Defense Advanced Research Projects Administration) combined with the hypertext protocol invented by British physicist Tim Berners-Lee while working at CERN in Switzerland.
I’m sure you can come up with numerous examples of your own, if you set your mind to it. How about giving me instead an example of a private concern which, all on its own, has increased the total amount of wealth in the country beyond just transferring money from the pockets of customers into its own bank account, as Microsoft and Apple have done (that is, the conventional idea of wealth creation).
BTW, I agree with you: the terms Fascist and socialist are bandied about (usually as epithets) on this site with little regard for their definitions. (I’ve been called both, an interesting contradiction.) You might perform a valuable service by posting a short tutorial on what the terms actually mean. I could do it, but the information would almost certainly be rejected by those most in need of the instruction.
@Brother Bob: Regarding your questions about “confiscation”, I didn’t mention how the hoarded wealth of private concerns could be channeled back into the economy. The usual method in a democracy like ours is taxation. However it’s done, even if outright confiscation is used, this is not tantamount to Fascism. I would have thought you knew that. Totalitarianism might fit or a number of other terms, but Fascism has a specific meaning, spelled out by none other than Il Duce himself, and it doesn’t apply here,.
Beyond that, I really must ask, do you seriously contend that liberals think business is “inherently greedy and evil”, or that they themselves are by virtue of their politics “morally and intellectually superior” to everyone else, or that Skyline Drive couldn’t be built today because of the host of left wing boogie men you invoke in your last paragraph? That kind of puerile sarcasm, which the right seems to find endlessly diverting, is so predictable and boring that I wonder why someone of your acumen would waste your time with it. Surely you didn’t hope to initiate a serious conversation with it, which means that you must have intended it for the delectation of the know-nothings, making you into a kind of internet stand-up comic,. You should have more self esteem than that.
Skipping ahead to your next post, which you obviously meant seriously, here’s a partial list of what has changed to make the Constitution outdated:
The nation must deal with a commercial and communication system capable of conducting transactions on a global scale and in time frames almost too rapid for human response. Out of necessity the “commerce clause” has been stretched to accommodate the regulatory authority necessary for this juggernaut, but provisions specifically taylored to make this possible would be better.
The repeated obeisance to “states’ rights” in the Constitution is ill suited to a continent spanning nation in which citizens can and do travel and change their places of residence with extraordinary freedom. Furthermore it’s detrimental for national and international businesses to pick and choose the states in which they incorporate and then play states against one another to gain concessions and to evade effective regulation.
The cumbersome and outmoded electoral college system of national elections spelled out in the Constitution may have suited the purposes of the Framers, but it causes too many problems in the era of national campaigns and electronic voting. Specifically the apportioning of electors and the “winner take all” strategy of this system destroys faith in fair and impartial elections.
The nation’s lack of an effective energy policy and a humane and economically viable healthcare system, to name just two, stems at least partly from the fact that neither of these important issues was even conceivable when the Constitution was written. Thus no provision was made for them.
Modern technologies, including information storage and handling, forensic capabilities, and surveillance techniques have made tremendous inroads on personal freedom and privacy. The Bill of Rights (at least) should be enchanced to provide the additional protections that citizens deserve.
I could probably come up with others, but I’m out of time and these are at least representative. As I said, for all its prescient brilliance, the Constitution is an eighteenth century document and we now live in the twenti-first century. The fact that it has served us as well as it has for this long is truly remarkable, but governance is not religion. It needs to evolve with the times.
@Nan G: Question: don’t they do this as a normal business expense anyway? Surely a printer wouldn’t hire another commercial printer to produce its advertising at going rates, when it could do it in house for less. I guess I just don’t understand the relevance of “buying one’s own inventory” in this context.