Do you want to know why the economy is still in recession?
The top one-fifth of Americans own approximately 85% of all our nation's wealth while the bottom two-fifths own less than 1%. For the economy to recover, that disparity needs to be reduced so that the working class can adequately engage in the consumer spending which alone can invigorate business expansion and lead to job growth. Step one? Re-empower unions.
SteveThe growing income gap..Nicely put..
Tiguhs OndaBayouFuck unions, or, er, most of them. The only thing I wanna see get unionized [any further] is the service sector---cause they getting fucked
Tiguhs OndaBayouI agree with your point about the income gap/consumer spending tho disagree with that unionization is the answer
Matthew RozsaRather than craft a lengthy rebuttal to your post, I will instead refer you to a blog article I wrote almost two years ago that addresses it perfectly:
Tiguhs OndaBayouThat's cool, I'm anti-blog, pro-message board
Matthew RozsaPS: I don't think unionization is the only answer (hence why I referred to it as "Step One"). Indeed, I view strengthening union power as primarily the means of maintaining prosperity once the economy has been restored. Prior to that, I feel we need to increase stimulus spending by $2 trillion, offset part of the difference on that by letting the Bush tax cuts on the wealthy expire, and raise the minimum wage.
Matthew RozsaYou don't have to read my blog, but I'm not going to rewrite here what you could just as easily find for yourself there. Incidentally, very little of it contains my own analysis; instead it cobbles together salient observations from Marriner Eccles, Robert Reich, and Adlai Stevenson.
Although I believe the Bush tax cuts on the wealthy (which equal $1.3 trillion) should expire, that doesn't mean I support anti-business measures. Indeed, if Barack Obama had the spine to follow in Franklin Roosevelt's footsteps and end our era's prohibition (in this case against marijuana), he could then combine the money saved from that facet of the war on drugs with the revenue accrued through pot taxation to create a tax break on all businesses (large and small) who create jobs for and hire unemployed Americans. While this measure would only cause a momentary surge in employment growth (by "momentary" I mean lasting for a couple of months), that upward shot - when combined with the other measures I mentioned - could create enough momentum that it would ultimately result in a self-sustaining expansionary cycle.
I am sick to death of conservatives claiming that liberals are "anti-business." We are "pro-prosperity" and that INCLUDES the communities of big business and Wall Street - it is just that, unlike conservatives and so-called centrists, we also think it includes everyone else.
Laura BrownSee: Zappos, Toms, Costco, all fabulous examples of the New Business model. They provide excellent salary, job autonomy, opportunity for mastery and a clear business purpose. Their profits are not the end, their purpose is. Lets look at how to allow the natural drive of human free will to run our businesses, education and families.
Governor Chris Christie, who has sacked thousands of New Jerseyites in the name of cutting spending, was found to have billed taxpayers for his stays at luxury hotels.
This is only slightly better than Governor Mark Sanford, who refused to help the unemployed in South Carolina because it would be "wasteful"... but didn't mind using tax dollars to visit his mistress in Argentina.
Aren't fiscal conservatives great?
Here is an article I wrote about Chris Christie one week ago (which also appeared in "The Rutgers Observer'):
"I had to go someplace for part of my job. We tried to get the government rate. We couldn’t. So my only alternative would have been to not go."
After all, it would have been unseemly for a U.S. Attorney to sleep in a Holiday Inn, a Ramada Inn, or some other such facility.
At least Mark Sanford had the sense of honor to admit that he was a scumbag once he'd been caught. Christie seems to sincerely believe that, while it is wasteful for taxpayers to spend money on good schools or creating/saving jobs, but it is necessary for them to put a fat cat in the fluffiest pet bed he can find.
Ugh...I actually kinda liked him until now.
To clarify, I didn't necessarily agree with everything he did. I appreciated the fact that he did almost exactly what he said he would do.
Kevin Brettell*ahem* The only tax "cuts" I saw anything about were actually refusals to raise taxes on the wealthy. Those are not the same thing. Is there a cut I should be aware of?
Oh, and my blasting of Christie for doing this can be found in the blog article I posted earlier.
2) Even he wasn't cutting taxes on the rich and was instead merely refusing to raise them, shouldn't that in its own right be cause for consternation? Why should middle-class and working-class Americans be expected to sacrifice their jobs, children their education, and the elderly their benefits in the name of "fiscal responsibility" when the wealthy aren't even expected to sacrifice a little bit more money in taxes?
Regarding your second point, I'll reiterate my response to another one of your posts:
We did not get into the situation in which we find ourselves because of low taxes (although I concur on the tax loopholes). We got into the situation in which we find ourselves because of incredibly excessive spending (including both defense and social welfare programs).
Also, define what is "rich" for me. Increasing taxes on couples who make over $250,000 will not reduce the bank accounts of those who are already rich; it will reduce the number of people who ever become rich in the first place.
Kevin: Rather than repeat my response to the first time you wrote this, I will instead refer you to the work of Marriner Eccles, which I have posted in a blog article and on this Facebook site. It explains how economics works in situations like this.
Let me put this bluntly: Any so-called "fiscal conservative" who doesn't want to increase taxes on the wealthy along with cutting state spending is lying about his or her actual objectives. Even though that individual may claim that their hope is to implement responsible policies, the notion that we can balance our budget without requiring the rich to pay more money is as logically absurd as it is morally repugnant.
For all of you conservatives who are preparing to slam on your "caps lock" key and write "socialist" below this post, bear in mind that the main national policymakers at that time were President Dwight Eisenhower, Senate Majority Leader Lyndon Johnson, and Speaker of the House Sam Rayburn.
Maximillian P. Miller
Matt! Have you read The Predator State?
Although I haven't read it, I am very familiar with the arguments it presents and feel they are absolutely correct.
Maximillian P. MillerJames K. All The Way.
- Pass a stimulus package that pumps $2 trillion into areas of our economy that will catalyze job growth within the first twelve months of its implementation.
- Simultaneous to this, immediately repeal the Bush tax cuts, thus allowing rates on the wealthy to return to Clinton-era levels (39.6%) and using the $1.3 trillion in additional revenue to offset the first two-thirds of the cost of the stimulus package.
- End America's prohibition on marijuana so that the additional revenue thereby accrued (both from taxes on the product and the costs saved from no longer spending hundreds of millions of dollars on that facet of the war on drugs) can be used to offset the remaining one-third of the cost of the stimulus package.
- Push for strengthening labor unions through the passage of the Employee Free Choice Act.
Although Obama lacks the clout at this point to make any of these goals a reality, he had the public support, congressional base, and overall political capital to do each of these things back at the beginning of his presidency. I'm not sure I can forgive him for being so eager to win conservative approval that he cast aside the needs of the American working class in order to get it - and, indeed, feel like his continuing to be spurned by the very people to whom he has pandered is a form of poetic justice.
Laura BrownRa Ra. Warren Buffet shares your view.
Matthew RozsaDuring one of the presidential debates, Barack Obama mentioned Warren Buffet as someone he would consider for a Treasury Secretary. I wish he had followed through on that.
Laura BrownMe, too. Warren is one of my heros.
Kevin BrettellYes, because we must be lying if we say that the way to balancing the budget should be a smaller government, not increasing taxes on any members of society.
2) Conservatives who say that the choices are between "smaller and fiscally responsible government" or "larger and fiscally irresponsible government" are arguing on the basis of a logical fallacy - i.e., they are establishing a false dichotomy that hinders correct understanding of the issues. It IS possible for us to have a government that provides Medicare, Medicaid, Social Security (at least for those who are needy; we should cut it for those in the top 33%), the Food and Drug Administration, unemployment insurance, job-creating stimulus during periods of crisis, and other social welfare programs AND simultaneously be run in a fiscally sane manner. The reason that doesn't happen is because conservatives insist that the four obvious and easiest ways to do this be automatically taken off the table - reducing the size of the military-industrial complex, ending the war on drugs, raising taxes on the wealthy back to Eisenhower-era levels, and closing big business tax loopholes. Until those ideas are at least put back in the debate, any claim on their part to really be in favor of "fiscal responsibility" is a hypocritical self-serving pretense, and should be called out as such.
Laura BrownUber Nui Loa , very well said. Moderates are sexy.
Also, define what is "rich" for me. Increasing taxes on couples who make over $250,000 will not reduce the bank accounts of those who are already rich; it will reduce the number of people who ever become rich in the first place.
To Laura: Good ideas all of them
1. A housing market that was entirely inflated by excessively loose credit. The government encouraged absurd risk taking on the part of banks in order to foster home-ownership (a noble goal, but the means was severely flawed).
2. Government oversight of our financial institutions was, and is, flawed at best. Huge red flags were raised regarding the activities of Bernie Madoff over the course of several years. He was not taken to task until his scheme collapsed. By contrast, much smaller financial advisors who had done nothing wrong on an ethical level were routinely given career ending fines and sanctions over paperwork and verbal technicalities. The reasons? Bernie Madoff had associates at the SEC who had no interest in pursuing him. He was also very well-lawyered. He was, essentially, too hard to take down when compared to smaller financial advisors. It was (and is) easier to take down small guys and make it look as if the SEC was actually doing something.
2a. Goldman Sachs was selling people and institutions securities bundles that they knew to be stinkers. When acting as a market maker (i.e., one who stands ready to buy and sell certain securities at market prices in exchange for a percentage of the transaction), this behavior is perfectly acceptable, as the responsibility for the quality of the security rests with the customer. The market maker makes no representation as to the quality of the security. When acting as a broker with fiduciary responsibility (which GS often was), it is completely unethical and illegal. In the course of my job, I have a legal responsibility to act in the best interests of my clients. I am not a market maker. Neither was Goldman Sachs, in many of the cases at hand (although in some, they were). The senators who conducted the GS hearings had absolutely no idea what they were talking about, and therefore asked the wrong questions over and over again. Instead of admitting their lack of expertise and employing actual experts in the field, they made public fools of themselves. Which leads me to:
3. We've become (or are becoming) an idiocracy. It's actually somehow become practically a necessity that one be completely unqualified in order to be elected to high office (with notable exceptions). We aggrandize ignorance as "real", and decry those who are supremely competent as "elitist." This cannot continue without grave consequences for our nation.
As for the causes of our recession:
Not one of the points you mentioned was incorrect. That said, you leave out another important factor, which you can find in my Facebook note "The Origins of the Great Depression" - i.e., the growing disparity in wealth distribution between the richest and poorest Americans. Moral problems with such a development aside, it also creates an unsustainable economic infrastructure, as it creates a climate in which eventually demand for goods and services will inevitably contract as the capacity of the middle-class and working poor to have enough money to pay for them diminishes. This variable is not just an important one; it is the most important one, since all the factors you cited explain the recession's catastrophic deterioration after the Wall Street crash of September 2008, while the recession itself actually began (thanks to these aforementioned factors) in December 2007.
Which brings me to Laura's point. Do you honestly, in your heart of hearts, believe that it is unethical for a business owner to make more than 10 times the wages of the least paid worker? That's lunacy, in my mind. Why shouldn't a business owner be able to make more than that with a clear conscience? Let's say (and maybe you'll disagree) that a reasonable wage for menial work is $13/hr (that's actually well above what many menial positions pay, and with good reason). At 40 hours per week, 50 weeks per year (which is how most salaried positions are really calculated), that's $26,000/yr. Are you telling me that it's unreasonable for the owner of a business to make more that $260,000/yr? Really? And regarding removing the cap on SS earnings while simultaneously capping the benefit at $150,000 in salary: essentially, what you're saying is, we should take money from that guy because he makes too much and give it to that guy because he never made enough, regardless of the reasons for those things. You are getting rid of the necessity of saving for one's own retirement (unless, of course, you happen to be a high earner, in which case it's mostly on you). You are advocating institutionalized theft.
Specifically relating to wage proportion: Morale among workers increases when the ratio of lowest to highest is viewed as equitable. Think of how you feel when the boss makes 1,000,000 and you make 23,000. You can't legislate morality, or force humans to appreciate their work force, but the world works better when you do. Not because the government tells you to, but because you understand human nature.
2) The argument that the rich already pay a disproportionate share of taxes in this country only makes sense if you look at it as a zero sum game. Yes, 35% is more than 25%, but can't a wealthy person afford to pay 35% of his or her salary than a poor person can to pay the same amount? A progressive income tax is more moral than a flat tax because it acknowledges the reality that people who earn more money can afford to pay a higher amount than those who earn less; what's more, it recognizes that in a system with a progressive income tax, the distribution of wealth winds up being disproportionately skewed toward the top earners, thus creating an unstable economic infrastructure in which the middle-class and working poor can't keep prosperity going due to diminished consuming capacity. The proof of this, by the way, can be found in the Bush tax cuts; even though reduced the top tax rate from 39.6% to 35%, the net result was a redistribution of wealth from the middle-class and working poor into the hands of the rich, causing a stagnation in income for the vast majority of Americans and exploding unemployment rates (all of this, by the way, was explained in Eccles's essay). In short, it isn't "stealing" from the rich that I advocate, but creating a taxation system that guarantees fairness and basic humanitarian justice to all Americans (although I'm curious why you view progressive taxation as stealing from the rich but not the Bush tax cuts as stealing from the poor).
3) You have mentioned, in many of our debates, that not all of the rich make money through dishonest or unethical means. That is a non sequitur on your part, since it has nothing to do with any of the arguments that I've been presenting in favor of progressive taxation.
4) Regarding Laura's point:
I actually don't care how much money business executives make relative to their workers; my sole concern is:
1) That all Americans who wish to work forty hours a week be capable of finding jobs that will permit them to do so, and
2) That those jobs pay them enough money to support the needs and, within reason, wants of their families.
Look up Franklin Roosevelt's Economic Bill of Rights. It makes my point perfectly... and quite frankly, I find the sanctimony of those who disagree with its conclusions - and who instead argue that it is the superrich who are persecuted and the advocacy of the cause of those who have plenty that constitutes morality - to be not only wrong, but frankly mystifying. How is it that helping the privileged maintain advantages at the expense of those who work just as hard but happen to be lower on the socioeconomic totem pole is right? I miss the days when Christians understood Christianity.
PS: * - I meant to write "a system without a progressive income tax"
Very quickly, as I have to head out. When I point out that many of the rich make their fortunes honestly, it is because you (and some other posters) often question the morality of making large amounts of money, as you often equate it to exploiting (in a negative fashion) their workers or the public. It's not always the case.
This is what logicians refer to as a "straw man argument" on your part - you are trying to debate not what I've said, but what you would like to have other people believe I said, so that way you can strengthen your own case by beating up a phony straw man instead of the actual position being advanced.
Ah yes, here's one:
"My observation about the privileged benefiting at the expense of the less fortunate is not based o...n an assumption that the economy is a zero-sum game; rather, it is based on the fact that the wealthy oppose policies that would help the working class so that they can make more money (Wall Street and big business regulations, empowering labor unions, additional stimulus spending, increased taxation on the upper 1% of earners, etc.)"
Your assumption that the wealthy oppose such policies simply so that they can make more money is an implicit statement that there is something morally wrong with the wealthy. You refuse to acknowledge any other reasons that they might oppose such policies (and there are several). I have a hard time reading it any other way. If I'm misreading it, please explain it to me. If I'm not misreading it, you just falsely accused me of committing a logical fallacy. Frankly, even if I am misreading it, it's not a leap to come to my conclusion from it, and you are therefore, again, falsely accusing me of committing a logical fallacy. Either way, I'll expect your notarized apology in the mail (I'm kidding).
"I challenge you to point to one comment of mine in which I claimed that it was immoral to make large amounts of money. While I have stated that it's wrong for middle-class Americans and the working poor to be incapable of making ends meet so that the rich can have a little bit more, I have never said that it is actually wrong for them to make a lot of money in the first place."
Notice the distinction I drew between saying it's wrong for people to earn a lot of money in the first place and saying that it's wrong for people who earn a lot of money to also oppose policies that might lessen their profit margins but help those who are less privileged.
It endlessly fascinates me that this is a distinction you are incapable of making.
Oh wait, I forgot... you believe that my claim that "the wealthy oppose such policies simply so that they can make more money" is "an implicit statement that there is something morally wrong with being wealthy."
1) Not all wealthy people oppose such policies; only some of them. The ones who oppose them are the immoral ones, not all of the rich.
2) How exactly do you draw a connection between my saying "it's wrong to oppose policies that help the poor so you can get richer" and my allegedly saying "being rich is general is a bad thing"? There is no logical connection between the former and the latter whatsoever, and I'm a bit surprised that you would say something so blatantly absurd and indefensible.
I'm not accusing you of making a logical fallacy; I'm observing, objectively, that your argument is strewn with logical fallacies. Sadly, your own stubborn pride will make it so that, even though I have pointed this out to you in a way that only an idiot would be incapable of seeing, you will still deny it.
And why am I getting insulting? Because I can handle people who make intelligent cases why they think I'm wrong, but I'm fed up with dealing with people who have their own logical errors pointed out and refuse to acknowledge them (or, as you've done, respond with more irrationality).
There is one point in which you are correct:
"You refuse to acknowledge any other reasons that they might oppose such policies."
You're damn right I do. So too, by the way, do other wealthy people - from Warren Buffet to George Soros - who also recognize that the motives of their rich counterparts are purely avaricious in nature.
It is how you treat people, not how much money you make. Money is not immoral, people are.
Earn 110,000 pay 6,820 6.2%
Earn 220,000 pay 6,820 3.1%
Nice break for the upper wager earner. Since inception of SSI.
I appreciate the support, Laura, but I fear you're wasting your time. Kevin is as immune to fact as he is to logic. He'll no doubt find some way around both.
I suppose you're right. And it is such a nice day today, too. 81 and sunny. My cat weighs 12 pounds. He's really soft.
Laura, is the SS benefit currently capped? I'll admit to a lack of knowledge here. If it is capped at the same level as the withholding is capped, what, exactly, is the problem?
And, by the way, you have (and did, in the post I referenced) equate making large amounts of money and opposing those policies with being immoral.
Those who do not make lots of money and still oppose those policies, you simply dismiss as either stupid or hoping to get rich, and therefore immoral.
I am beginning to think your obtuseness in understanding my point here is deliberate.
2) It is easy for you to dismiss me as an "ideological purist" who is intolerant of other people's views, since that allows you to brand and accordingly dismiss my assessments as being motivated by that bias. The reality is that I actually DO understand what makes economic conservatives tick - and it is through that understanding that I come to such harsh conclusions.
One of the notable trends of our times is the tendency to assume that if you "just understand" another side's point-of-view you will automatically develop empathy for those who share it, even if you do not agree with it yourself. That assumption only works if the other side is genuinely motivated by greater humanitarian goals; if, on the other hand, that side is driven by something far less noble, then they deserve to be condemned. In the case of economic conservatives, there is a LOOOOONG history - both in this country and throughout the world - of people creating elaborate justifications for policies that are motivated by the simple desire to make more money than they would if more liberal alternatives were implemented. One can see it in the opposition to food and drug regulation and trustbusting during Theodore Roosevelt's presidency, child labor laws and the eight-hour work day during Woodrow Wilson's administration, the New Deal during FDR's tenure, and Obama's various policies today. The only difference is that we have had historians who, with the distance and objectivity that comes with time, look back on the conservatives from TR, Wilson, and FDR's eras and empirically prove that the right-wing opposition to their measures was fueled by sheer cupidity. Because Obama's efforts are going on as we speak (er, write), those historians haven't written yet.
3) I actually never called you a homophobe in the debate about homosexuals openly serving in the military. My friend Z did, but I felt that you had valid arguments which were simply incorrect. Reread it if you don't believe me.
4) The post you referenced referred very specifically to "the wealthy oppose policies that would help the working class so that they can make more money (Wall Street and big business regulations, empowering labor unions, additional stimulus spending, increased taxation on the upper 1% of earners, etc.)" Notice that I did not say "everyone who is wealthy"; I mentioned those wealthy individuals who work in opposition to the interests of the working class, which is done solely so that they can make more money. Apart from the fact that I neglected to include a "who" between "the wealthy" and "oppose", your argument that this was an anti-rich statement has no basis (and even that claim is a weak one, considering the context of the rest of what I wrote).
5) Your last post is correct.
I still do. It is one that lacks any empirical verification from objective sources (that author's homophobia is pretty blatant) and is only embraced by those with a predisposition to agree with it.
I've noticed that the people who condescendingly lecture liberals that they "don't get how the economy works" and that our current system is "natural" and "the new normal" are usually members of the privileged classes. Isn't it awfully convenient that their superior knowledge of "the real world" leads them so smugly to conclusions that benefit themselves at the expense of the less fortunate?
why do you view the economy as a zero-sum game?
in reference to "...that benefit themselves at the expense of the less fortunate"
Tiguhs OndaBayouIMO the current state of the economy is more realistic than the '07 bubble economy
2) Neither of these economic states corresponds with "realism" - the '07 bubble economy was built on a foundation of non-existent wealth while this one has the American system operating well beneath its productive capacity. There is no sound reason why, with our Gross Domestic Product growing and with many untapped industries and services remaining within the sphere of American capacity, unemployment shouldn't be plummeting and middle-and-working class income levels rising. This is occurring because wealthy Americans are sitting on their expanding profits instead of investing them to create jobs (thereby shooting a giant hole in the "trickle down" theory) and are timid about expanding into new markets due to weak consumer spending (although they aren't bright enough to see a connection between the inability of consumers to spend and the gross income disparity between themselves and the rest of the country). For solutions to these problems, see the policies proposed in the parenthetical notation at the end of my first point.
Even though conservatives and libertarians like to denounce Obama's stimulus package as a classic piece of liberal legislation, they conveniently ignore the fact that virtually every prominent liberal economist (Paul Krugman, Robert Reich, Joseph Stieglitz) opposed it at the time - not because they disagreed with the merits of pump priming the economy, but because the logical basis of pump priming theory is that the money put in has to cover the difference in Gross Domestic Product caused by a given economic setback. In January 2009, that difference was $2 trillion, but Obama - in a misguided attempt to win Republican Congressional support - only devoted $500 billion to stimulus projects (as well as an additional $287 billion to tax cuts).
This isn't to say that it was an entire failure. Prior to its taking effect, unemployment had shot up from 6.2% (where it was the financial meltdown occurred in September 2008) to 9.4% (where it was when the stimulus began to have an impact in May 2009). Had it continued at that rate, unemployment would have reached between 16% and 17% today. Because of Obama’s stimulus, however, it has steadied out, hovering between 9% and 10% for the last year-and-a-half.
That said, had he included an additional $1.5 trillion, basic arithmetic shows that unemployment would have started declining. At the very least, it would be between 7% and 8% now, based solely on the direct impact of the stimulus alone (and although that unemployment rate is still higher than healthy, it was the same as where it was when Ronald Reagan was reelected by a landslide in 1984). More likely, however, the increase in consumer spending that would have begun once more people were employed would have created a self-sustaining cycle of growth that could have had us out of the recession even now.
The sad thing is that we live in anti-math society, as with the exception of a very few astute observers, no one is criticizing Obama for the real mistake he made.