It’s going to be a long fourteen months, and I intend to ignore partisan politics. That means light traffic – the party-politics frenzy will suck up all the oxygen. Obama will win reelection easily, as he will have more money than anyone else, and so can buy more ads. That’s all that really matters. As 2008 showed us, he’s got really good advertising people behind him. His turd will blossom.
I won’t vote for him or any opponent, nor will I allow campaign rhetoric to replace reality. Elections do not affect public policy.
I did not listen to Obama’s speech on Thursday. I know he gives good speech, but there is seldom much content. I did read a summary of the “jobs” program in the Financial Times. It had some trial balloons, and one good thing – $85 billion in aid to state governments. That might help.
The tax cuts will help since they are aimed at the working class. Those people actually spend money on consumer goods, and that creates short-term activity. But since those goods are made overseas, it’s only a temporary fix. Maybe it will get us through November of 2012? They have probably done the math, so it’s a good bet.
But Obama wants the tax cuts to come at the expense of Social Security without a general fund offset. The program’s long-term outlook will be downgraded due to the loss of short-term funding. This will add fuel to the fire when he later joins the chorus and goes after Social Security in earnest. Obama is no friend of Social Security.
There is so much economic ignorance out there – not the green eye shade kind of stuff, but just a basic understanding of what drives our economy: demand. The ignorance is hard-wired into people in the same manner as Christians denying evolution. The accepted wisdom now is that John Maynard Keynes never had an intelligent thought. Experience means nothing to these people.
Tax cuts are a poor way to stimulate the economy. Experience tells us so. Austerity during recession/depression is insanity. Government is the solution here, but we can’t use that tool anymore. Government, in addition to being an amazing wealth creation engine, is also a rescue vehicle. But it is sitting in the garage.
George Bush’s tenure left us worse off than before despite his massive tax cuts, giving us the worst decade of economic growth in modern history. Taxes do not affect economic growth, and tax cuts do not stimulate investment. Taxes foster investment – we tell people to either invest in our economy in ways that help us, or turn it over to Uncle Sam. It works like a charm. Instead, we cut taxes and hope for the the best. It’s nonsense. The carrot does not work – only the stick.
The key to recovery is to create demand. Government stimulus can do that, but the long-term solution is to pay better wages to people. But the wealthy classes want nothing of that. They would much rather pay cheap labor in China than pay good wages to Americans. Until that changes, we’re not going to recover from our lingering malaise. There are only two ways that will change – the rebirth of organized labor, and protectionism. But, as in the 1930’s, we have to learn that lesson the hard way.
Obama is a stealth right winger, part of Karl Rove’s “permanent Republican majority.” The strongest force to be reckoned with in the Democratic Party is the DLC – aka “Republicans who favor legal abortion.” I’ll not harp on that, as it will all play out before our eyes. But watch him closely. We’re seeing ‘W’2 with him, and amazingly, after three years of right wing governance from a “left wing” or “socialist” Democrat, the rank and file don’t see it.
Maybe that is not amazing – party politics is like the NFL. Brand loyalty is irrational and unshakable. And after all that fury of fighting it out on the grid iron, a shiny trophy awarded, but nothing changes.
Piece of Mindful 
That second guy in the picture kind of looks like GW.
Government, in addition to being an amazing wealth creation engine…
In my spare time I sit around adding up the ways government creates wealth, and then subtract the ways government destroys wealth. So far the number is negative. You tell me, “that car is in the garage at the moment”. I say, “that’s the point. Government attracts people who keep the car in the garage, and other shenanigans, for various reasons. If history shows us government hits us in the head with a hammer instead of building a shed, let’s keep the hammers small.”
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Let’s see now – other than giving us a structure in which business can take place, building infrastructure, funding blue sky research and development, regulating monopoly, funding education for all, redirecting income to those who will spend it, and providing for the common defense and delivering mail … you’re right. It’s a pretty bad deal.
But agreed, making weopons and searching for enemies, imperialism and endless war is destructive in the extreme. Non-beneficial subsidy, like drug companies, ethanol, and (soon) health insurance companies, is destructive.
Mixed bag indeed.
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Let’s see now – other than giving us…
Well, I’m not sure it was given. It seems we had to pay for it.
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Nothing is free. The question is do these things produce more than they cost? Yes, except for our irrational defense budget, they do.
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…except for our irrational defense budget…
I suppose at too low a level, we would be at risk…maybe Mexico would send a million citizens a year over the border to occupy central California, installing their language and mores. We should be organized to stop that sort of thing, you know, protecting our posterity and all that.
The question is do these things produce more than they cost?
The money making parts of government action — roads, levees, necessary fire and police — is not that much, relatively speaking, compared to all the transfer payments, administrative bulk, and general churning that “uses up the products of the machine”. And those service and infrastructure items often came at a premium to prevailing rates. And to book all the economic activity that flows from highway 5 to government is somewhat fallacious.
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I don’t know why that comment was sent to the moderation bin. But it was.
Transfer payments are by definition not a waste of funds. You might not like them, and that is well and good, but they are not counterproductive, as they promote demand.
And roads by definition promote commerce.
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Sure, roads promote commerce. But that does not mean every road does. Or every re-paving project pays for itself.
… they promote demand.
Groan. Sometimes. Some are happy to give out money to crack whores on welfare. Some are happy to import more people, so such people can be given money to increase demand. Some people want to invent machines to which we can give money, and the machine can run around consuming. Some name the machines “dumpsters”.
We need to get some productive work out of this somewhere.
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You are saying that the word “always” does not exist. I agree. You are also talking about moral hazard. I agree that is a problem too, but one that can be managed to some degree. I still come down on the side of these programs, if for no other reason than because wealth inquality as we see right now is also a moral hazard.
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I like your reply, but I don’t see a whole lot of good management going on, what with gov’ spending and deficits rising much faster than economic growth.
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We have spent $3.2 trillion on two wars, all that money borrowed. I agree that it is out of control. Social Security is very well managed. Medicare is to a degree, as they claim low overhead, but they have a problem with private sector fraud, so that they might in essence be as expensive to run as privat insurance.
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Social Security is very well managed.
Hmm. Sort of. They attract good people to work there. But, there is a lot of moral hazard indulged in SSI. There is not vestment, so my friends dying at age 62 had the pleasure of paying a tax for a service they only used in an elliptical, indirect way. The future trends show today’s payers getting out less than they put in. Word on my street is not so positive on the program.
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“Concern” for the financial soundness of Social Security 25 years from now is current (concocted-crisis) “news.” No equivalant obsession exists in security/military, or banking/finance programs. Wonder why that is? Ending the Middle Class won’t be easy, but that’s where the money is. Unless an oligarchs v. oligarchs battle emerges soon, it’s fait accompli. Fat chance. The fat cats are marching lock-step to take those viable vestiges of suburban America. Second Amendment rights will prove inadequate to counter the assault. Only nature stands in the way at this point. The race is on.
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