I know none of us are economists (at least not that I’m aware of), but let’s talk about the economy.
What are your thoughts on how we can get our nation’s economy moving again?
Do we need another stimulus?
What about a national infrastructure bank, so that we can rebuild our crumbling infrastructure?
Are spending cuts really the answer?
Discuss.
Let’s get behind Congressman John Conyers jobs bill.
http://www.examiner.com/unemployment-in-denver/jobs-bill-conyers-2011-full-employment-act-support-support-hr870
It’s deficit neutral through a modest tax on Wall Street stock and bond transactions. We don’t have to wait for the so-called ” job creators” Paul Ryan and Sean Duffy are constantly yapping about. We can be our own job creators.
whatever happened to “green” jobs? that’s all we heard about a few short years ago.
How about we realize that there are ebbs and flows to the economic cycle and we let the system recover on its own. Our attempts to avoid the ebbs have created a perilous bubble and bust cycle which is quickly approaching catastrophe.
Steve, I have to disagree that Conyer’s plan would be deficit neutral. Perhaps it has a title that he can sell to his constituents but it is a seriously flawed plan. First, it fails to recognize that trading is voluntary and trading volumes will be reduce if you put a tax on the transactions. As empirical evidence, we can look to Sweden who tried a financial transaction tax between 1984 and 1991. They found that stock prices fell, people took fewer capital gains and trading volumes plummeted. The consequence of the tax was that Sweden realized less taxable revenue and thus, they abandoned the failed experiment in 1991. Trading volumes than dramatically increased and share prices increased and the Swedish government collected more revenues from capital gains tax.
This article was from last year, but it underlines my point of there being no magic bullet that will fix the economy. Not stimulus, not tax cuts, not interest rate cuts. It’s just going to take a time.
http://money.cnn.com/2010/10/14/news/economy/no_fix_economy_full.fortune/index.htm
SI, this statement flies in the face of what almost every major economist would tell you regarding the last 50-75 years. Whereas it is exactly fiscal activism, both by congress and especially the Treasury, that has served to smooth out the severe cycles of boom and bust we experienced from the civil war up to the first gilded age.
Though Hoover and today’s Washington (led by, but not exclusive to, the GOP) would be most happy to agree with the do-nothing approach.
JCG, I’m going to go with Jim Rogers(He was Soro’s partner in the Quantum fund where they both become very wealthy) on this one.
http://blog.mises.org/7726/rogers-rips-bernanke-predicts-demise-of-fed/
Look back to how the intervention worked under Bush. We’re going into a recession in 2001, Congress lowers taxes and the fed cuts I rates. The result is that we get out of the recession but create a bubble in real estate. The real estate bubble collapses and here we are in worse shape.
Further, the Keneynesian notion that we could fine tune our way out of recession was discredited in the 1970s with stagflation.
As James Callaghan, who was the Labour party prime minster (And I can’t believe I’m quoting a socialist to make an economic argument) remarked :
“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting spending. I tell you in all candor that that option no longer exists, and insofar as it ever did exist, it only worked on each occasion since the war injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step . . . You cannot now, if you ever could, spend your way out of a recession.”
Any way, I’m not sure what your referring to regarding Hoover. He was quite the opposite of a do nothing (I submit that he did the wrong things). He engaged the country in public work’s projects (i.e. the Hoover dam) and he raised taxes on the rich to pay for it. The top tax bracket went from 25% to 63%. The left now seems like it wants to repeat Hoover’s experiment.
Inflation? Do you really think the markets bum-rush U.S. Treasuries the way they are when they’re worried about inflation? Quite the opposite. In fact, I’d argue it’s the constant hand-ringing in Washington over potential inflation fairies that has caused this recovery to stall.
Super ID,
But the Swedes weren’t using the tax for a job creation program, which could have produced the taxes that were lost due to decreased trading.
We won’t know how well it might work here until we at least debate it thoroughly.
So I think Sean Duffy and Paul Ryan should look into Conyers bill and issue some type of statement, pro or con. Let’s hear what the bright lights of the GOP have to say.
Steve, Revenue is revenue regardless of what it is allocated for. So I would suggest that you first need to assess whether the plan would be successful and then assess the whether the proposed method of paying for it would outweigh any benefit from the plan.
I guess I’m skeptical of any plan that purports to lower unemployment to 4% which the Conyer’s bill does, as that’s lower than the natural unemployment rate , which the CBO projects at 5%.
http://www.cbo.gov/ftpdocs/80xx/doc8008/2007-06.pdf
The only way to lower unemployment below the natural rate would be to depress wage rates. I suppose in theory that you could cut salaries for public positions to increase employment. On the thinking that one $40,000 job equals two $20,000 jobs. But I’d argue against such an approach as it degrades the overall standard of living.
Super Id,
It’s hard for me to imagine that Conyers, who has access to a range of legislative staff, wouldn’t have anticipated some of the concerns you raise.
Have you looked through the Conyers bill thoroughly?
Also, if you’re going to argue against an American legislative initiative based on the failure of the Swedish effort, can we assume that we should look at some Swedish success stories for possible replication here?
Like national health insurance?
Since I’m a believer in the markets, and the markets are telling us right now that they can’t possibly get enough of U.S. Treasury Bonds; and since corporations are raking in record profits but just sitting on their cash piles, in part because there’s no demand for their stuff; and since we continue to have F-ING 9+% UNEMPLOYMENT(!!!), it feels equivalent to saying “Yes, the water is wet”, to say we should be doing anything and everything to pay to put people to work, doing anything. Pay them to dig a ditch then fill it back up, for all I care. looking around my fine city it’s pretty hard not to spot something we could pay people to do at every turn. Just get people to work, money circulating into the economy where it circulates the best, and oh hey btw new taxpayers into the system to reduce the deficit.
Or, you know, keep cutting budgets and putting more people out of work.
It’s not just the corporations. We are seeing an overall deleveraging, which is painful but I’m not convinced is a bad thing.
http://research.stlouisfed.org/fred2/series/PSAVERT
Average Credit card debt is down as well:
http://www.prweb.com/releases/2010/02/prweb3585354.htm
Go tell that to the folks in the unemployment line. I dare you.
Super Id must have gone to the Chauncey Gardner school of economics.
Anyone who lives in a world where Neoliberalism was likely rich and well off to begin with and lived in a life of privilege. The fact is, ever since the Carter Administration introduced it and the Reagan Adminstsation tore the backbone from our economy to simply inflate and not produce sustaining jobs we have been dancing using deceptive numbers.
It’s not 9%. In fact, it’s actually over 21% and has been for sometime. A huge reason why I’m hesitant for taxing businesses however is the fact then the prices will go up on products so people cannot afford even basics needs. This is why the rich need to man the hell up and join the rest of society who pays their taxes to pay it as individuals instead of constantly using the loopholes. However, fat chance that’s going to happen though. As I stated before we have to cut, regulate, and tax things as a combination whether any of you like it or not.
The economy is a sham and it hasn’t been showing the real numbers even as long as I was born. This is why we have a pathetic and almost shameful jobless rate.