Re “Some Fiscal Reality” (editorial, Nov. 11):
The current federal budget deficit was caused mainly by unnecessary wars and related military spending, the worst economic downturn since the 1930s, and large tax cuts and bailouts for the rich, all stemming from the Bush administration.
Now a bipartisan commission proposes that we solve the long-term deficit “problem” by cutting back Social Security, Medicare and other social welfare programs. Thus the poor, the sick and the elderly would pay for the tax breaks and bailouts for the already wealthy.
The Republicans have made it clear that they have only one economic goal: making the rich richer. Are there no Democrats left with any backbone?
Short Hills, N.J., Nov. 12, 2010
The writer was chief economist and under secretary of commerce during the Reagan administration and is the author of “Voodoo Deficits.”
Yes, I'm hugely disappointed with the Commission's proposals.
But is it really a bi-partisan Commission? I haven't heard....
I think they could come up with a zillion other things to cut instead of Medicare and Social Security.
Drat it, maybe it's time already to start callin' 'em all out on the carpet.
Republicans should know better than this carp. And I cannot imagine it being their idea to perpetuate this nonsense.
who is this mitch mcconnel? i think he would be more like turtle head or turtle face ha. but this is good!
wow brenda this is a first for you ! now you see what we were saying before. they always go for big business and at any expense. now they have everyones vote and they don't need you anymore. and yes it is a bipartisan commission of 18. they will have to get a vote of 14 before they can send it to the president. so cross your fingers
'fraid this is incorrect. The problem was caused by massive monetary inflation and improper government incentives -- just like every big depression in the past couple of hundred years.
Unfortunately we're trying to cure the problem with more of what caused.
'fraid the facts say you are wrong.
Here's the annual inflation chart.
http://inflationdata.com/inflation/imag … _chart.htm
Here's average inflation by decade.
http://www.inflationdata.com/inflation/ … lation.asp
The Great Depression was marked by massive deflation - a word that libertarians don't understand. The most recent economic information about he current crises says we may be looking at the same in the future.
ah, you still use the word "inflation" to refer to the CPI, which is a symptom of true inflation.
Inflation truly means an increase in the money supply.
So you are saying the government can't increase the money supply?
I don't want to get reported and banned from posting. This will be my last post to you.
The government can't create wealth by creating money, but it can create money. Doing so causes chaos.
And even the world Economists are finally discussing what every "Austrian Economist" has been talking about for centuries: that free market money is the only true money, and that money is almost always gold and silver.
http://www.nytimes.com/2010/11/14/opini … .html?_r=1
To have this summed up briefly: over the past ten years or so, the banks of the US have been given over $1 trillion created out of thin air. This means that they are then able to increase that money supply 10 fold thanks to Fractional Reserve Banking. This means that they are the first people in the economy to use this money. They lend it out and *cough* "stimulate" the economy by making loans. But, those loans have to be repaid (thus they get interest on top of the money that was created out of thin air! BRILLIANT!)
But because there has been no true creation of wealth (i.e., bricks, steel, oil, etc), there is simply more money chasing the same number of goods. But because the money has yet to filter throughout the entire economy, the market has yet to respond to this increase of money properly (by raising prices). Gradually -- instead of instantly, as SHOULD be the case -- prices go up (slowly at first, then at an increased rate as consumers begin to realize that the increased prices are permanent). As those who took out the loans realize that the amount of money they took out can't sustain the projects that they started (i.e., the price of the project has gone up X-fold since they borrowed the money), they have to go bankrupt.
luckily, the market begins to readjust to this, and prices gradually decrease. But "ZOMG, deflation is evil" and so the government instigates New Deal policies, and prices are forever held too high.
This has been your loose, 5 minute guide to the Austrian Theory of the Business Cycle. It has accurately predicted just about every major economic crisis in the past 200 years, including the failure of the Bretton Woods system, and the abandonment of the gold standard. And it has properly predicted that gold will have to return as the core money people use --- the question now is merely "will we return to gold because we properly perceive it as what must happen to keep debts in check? or will we return because the dollar will be worthless and our economy has been completely ruined?"
-- Once again, I'm sure I have not convinced you, but i must speak the truth. I don't want to get banned from speaking (it's happened about 10 times since i've joined half a year-or-so ago). So this will be my last response to you.
Can you suggest any actions that will speed the recovery from the recession and 10 percent unemployment? That is the concern at this time, not inflation.
because I was directly asked, I"ll respond.
... but, c'mon ralph! I already know you're egging me on! You already know what I'll say! Just disagree with it ahead of time and save me the time of typing it all out!
Let the market take it's course: quit printing money, repeal restrictive legislation, open up trade barriers, repeal some of the idiotic New Deal legislation that are still on the books. Abolish minimum wage (perhaps wage rates are too high), end government monopolies on countless industries. etc etc.
Think about it: in order for the government to "create jobs", it has to steal money from the people through taxes (or inflation, which is a tax), and then hire people that could have worked through the public system. But, because it's competing with the public system, they have to pay MORE than the public system would, thus the government can't create as many jobs as the public system could! And on top of that, the government can then say "we created XXXXX jobs!!" (which the statistics will confirm, because you can't measure what doesn't happen. This gets politicians re-elected), even though they ACTUALLY stole jobs, and then paid too much for labor!!!!!!!! (Economics in One Lesson, by Henry Hazlitt hammers this point in furiously. It changed my life. you can watch videos of the same name to get a taste)
Does anyone actually believe that creating 6 trillion dollars out of thin air is going to lead to long-lasting prosperity? Of course not. It'll just raise the numbers -- JUST in time for it to look like the economy is doing better for the 2012 election cycle. The money will be crammed into the economy, the first stage of the business cycle will begin (it'll probably take a year or so depending on how the banks respond), and prices will begin to rise after 3 or 4 years (just an estimate. It's impossible to predict what the few people who get the money first will do with it).
The government gets its money through theft, and then uses that money to compete with the very people it stole the money from!!
Let's look at the 'serious' proposals.
"Abolish minimum wage"
This remains a cornerstone of libertarian thinking and it's particularly popular in periods of high unemployment - because it allows rich people to get MUCH richer by pushing wages down even LOWER, far below the minimum people can live on.
"end government monopolies on countless industries"
One of the 'monopolies' has been discussed before - public roads. Many libertarians think the roads should all be PRIVATELY OWNED on some kind of toll system entirely paid for by fees paid if YOU if you 'choose' to move around in the USA. And we can expect that the company who has this monopoly will administer it for the good of all. NOT!
Want to read ridiculous? Check out some of the libertarian ideas for privatizing the JUSTICE SYSTEM. That's right - make justice a commodity for sale and see if it isn't the fat cat who wins every time. Check out what libertarians mean by the glossy phrases they use. It's obscene!
"repeal some of the idiotic New Deal legislation that are still on the books."
That means abolish Medicare and Social Security, but Evan won't come out and say it. He's not talking to me anymore, but ask HIM if he wants to end those programs, if you don't believe me.
'repeal restrictive legislation'
Rand Paul opposes the role of 'restrictive' legislation that provides safe working conditions - even in dangerous work - like mine safety. A true libertarian thinks market forces will naturally regulate safety, because when too many people are dying in coal mines because of unsafe conditions, they will refuse to report to work. Libertarians hate unions - so don't expect unions will be able to conduct an organized strike over unsafe conditions that the government won't be able to regulate in the libertarian utopia - unions won't be allowed to strike.
Remember how eggs got pulled off the shelves a few months ago? It was a case of the failure of inspectors to shut down a chicken ranch for completely gross and unsanitary conditions. These conditions WERE efficient and profitable, but libertarian philosophy would totally remove the standards AND enforcement that keeps our food chain relatively safe - being poisoned by food producers is the EXCEPTION not the rule. Under libertarian thinking - the question of poisoning the consumer is determined by the overall profit in the practice under consideration.
OVER and OVER when you scratch the surface of libertarian rhetoric, you find reality that makes victims of the worker and consumer - and empowers the rich. The basis if libertarianism is that wealth is produced by the rich - and that by empowering the rich nobility, there will be prosperity for all.
How poor will you have to be - without Social Security, without Medicare, unable to afford health insurance, unable to afford decent housing and provide for your family on the lowest wages that your employer can get away with.. before you realize it's NOT government that's oppressing you - it's the unrestricted power of business. The only entity strong enough to defend the consumer - and we are all consumers - against the abusive practices of business - is government. And the voter has been convinced that castrating government will produce prosperity.
"Many libertarians think the roads should all be PRIVATELY OWNED on some kind of toll system entirely paid for by fees paid if YOU if you 'choose' to move around in the USA."
Aside from the obvious mistake of privatizing a public facility, tolls are a very inefficient way to collect taxes to pay for roads. Just drive up the East Coast from D.C. through Delaware and experience traffic jams at the three toll booths stops in 40 or so miles in that little pirate state.
It's not just the inconvenience of tolls.
The libertarian notion is that the free market must set prices without government regulation. So give a company a monopoly on the previously public roads from Tampa to Orlando, they can and WILL raise toll prices to maximize profits. In other words, prices will go up and up until traffic seriously declines. Of course, this won't be a 'real' monopoly (to a libertarian) which justifies government interference in the free market because drivers will be 'free' to drive from Tampa to Orlando via Miami - an 800 mile detour.
wow, you guys... you guys really haven't read much Libertarian literature, have you?
They've addressed all these points, and have established very sound arguments against this.
But I'm sure you won't bother reading them. Oh well... glad I'm typing here.
I think I read the libertarian argument about how establishing monopolies on private roads would not lead to price gouging.
Everybody gets in a circle, closes there eyes and chants, "I do believe in fairies.. I do believe in fairies..." over and over.
Increasing money supply is about the dumbest thing government could do. It doesn't inflate prices, it decreases the worth of the dollar.
The more money there is, the more worthless it becomes.
What do you recommend for getting us out of the current recession and unacceptably high unemployment? Deflation is the primary worry at the moment, not inflation.
deflation isn't bad.
All that deflation means is that money is becoming worth more, or, that people want to *gasp* save their money for the future. That's really all it means (at least, in incorrect mainstream economic terms). Prices go down, and... that's supposed to be bad...
After years of (monetary) inflation, a little (monetary) deflation can only be expected.... .... oh wait, no, they're creating $6 trill out of thin air ($600B x Fractional Reserve Rates of 10% = $6T)
Yes yes yes, we've all heard of "deflationary spirals" and all that garbage... Has there ever been a true example of one? I know of numerous hyperinflation examples: WWI-WWII germany, zimbabwe, and I'm sure a quick "hyperinflation" google search will bring up countless more.
(http://en.wikipedia.org/wiki/Hyperinfla … ld_history)
We had deflation in the Great Depression. It was accompanied by unacceptably high levels of unemployment and growing support for Marxism. (The Communist Party fielded a candidate for mayor of Detroit in 1935?)
Deflation is great for people with money. The paper with pictures of dead presidents will buy MORE next year than it will today when deflation kicks in. As you pointed out, Ralph, the last period of severe deflation was during the Great Depression, when unemployment was at 25% and wages were slashed for those who did work (and kids exploited in the work force for pennies).
So who came out on top in in deflation? The cats with big piles of cash. Surprise, surprise.. Austrian economics and libertarians tell that deflation is good for us....Yeah, right.
Didn't they take the gold away from everybody and substitute paper money about then, to keep anyone with savings from being able to get the benefit of the deflation that was occurring naturally?
That's a massive generalisation. I personally have benefited from deflation (although I'm far from wealthy except by Third World standards), as has anyone else who's been using a PC over the last couple of decades.
Why? Because the price of a new PC has come down from around £1,500 in today's money back in 1990, to about £300-£400.
By people with money, I think he means people with a positive net worth. Even if that net worth is very small.
I dunno, I think he actually does mean rich people. Of course, rich people would benefit more from deflation (just as they'd benefit more from tax reduction), but that doesn't mean to say the rest of us wouldn't benefit.
I'm not sure he even has a consistent definition of what rich people are. For instance, someone who has a million dollar debt and lives in a palace, is he rich? Because deflation definitely won't help him!
On the other hand, someone living in a hovel with $100.00 in the mattress is not rich by anyone's standard, but will definitely be able to buy more with that money if there's deflation.
Put foreclosures in forbearance for at least a couple years.
Put a temporary ceiling cap on rent for at least two years.
Make the banks refinance vehicles to reflect their [buyers] current economic status which they can re-adjust after a two year period.
Of course, you might see this as 'deflating' prices but I see this as freeing up consumer cash for more purchasing power and I would also suggest that if anyone took these deals, they would also have to purchase saving bonds or something of the sort with a reasonable interest rate, perhaps 5% that they cannot cash in for the two years.
Then maybe use the savings bonds to pay for the rate adjustments after the two year period has expired to help pay down their principal.
holy god! I can agree with sandra on something!
I didn't see [monetary] inflation addressed in either of your links.
The argument of inflation hawks is that the VALUE of money falls when the supply increases. (inflation) The expectation is that monetary inflation will always cause a rise in prices and a loss of purchasing power.
In the current economy - and in the Great Depression the value of money INCREASED as the value and/or price of goods fell. Wages also went into free-fall, and the fat cat with piles of folding money could buy MORE with a million bucks this year than he could last year - and he can anticipate that as long as deflation is in force he could buy even MORE next year with his cash. This is one reason why major corporations are sitting on cash - not expanding - not building - not investing (not creating jobs) - they are potentially building huge amounts of VALUE by hoarding cash.
In times of ordinary inflation - the fact is the cash will be worth LESS in the future than today - which is incentive to 'work' your capital - because it will be worth less and less if you keep it uninvested.
Without cuts to SS, Medicare, and defense, there is zero chance of balancing the budget.
Cut the defense budget and tax the rich at WW 2 levels.
that would be a painless and perfect solution. if the current proposal were to go into effect, then we are on a fast track to becoming a third world nation. the very rich and the very poor
I agree with everything you said...
... except the increase tax part.
You forgot one. They will also cut the defense budget as well to pay for it.
I find it to be absolutely and inconceivably "evil" to push for more funding so many years while calling people against war "hippies" (at best) but can suddenly say, "yeah okay, we can finally cut defense spending so the rich can get their cut".
It's is so ridiculously obvious that they just want money that anyone who could agree is just plain well... wrong, yes wrong.
I agree that the "defense" ("offense budget" would be more accurate) should be cut bigtime.
Holy god!! I'm agreeing with someone else I usually disagree with!!
... Christmas isn't for another 2 months, though... is it a miracle?
Ralph - what I find strangest is that America seems intent on taking this lying down. Over here we had protests at the austerity measures for the general public coming hard on the heels of the bailouts for the rich. Protests in Greece, Spain, France and most recently UK.
Yet over there, most of the protest seems to be in favour of tax breaks for the rich and cutting social programmes for the people. It defies explanation.
Paraglider, if you stop looking at people as being divided into the stereotypical groups of "rich" and "poor", then it does not defy explanation. There are people who are not in debt, and there are people who are in debt. Sometimes the people who are in debt live luxurious lives, spending money that they don't own. Sometimes the people who are not in debt live lives of self-denial, working hard and spending very little. Helping those who are irresponsible, of whatever class, to get out of debt at the expense of those who are responsible, of whatever class, is something most Americans are against.
Aya - I am not in debt, I work hard, and while I don't believe in self denial, I also don't spend a great deal because there's really nothing I want for myself. However, I do want to see more fairness in society. There is no doubt that the divide between the extremely rich and the rest of us is far greater than ever before. So I'm afraid your apparent stereotyping of people as deserving or undeserving doesn't really match up to reality.
Paraglider, this was not supposed to be about you personally. I grant you that you possess all these virtues that you named. I'm not proposing to take anything away from you or others like you. Or from anyone, for that matter! This was about defending the people you want to dispossess, not for being undeserving, but just for being "rich" (whatever that means).
I believe in fairness. The words "deserving" and "undeserving", that you invoke, but I did not use, are all about fairness. Your view is like "no-fault" insurance. It doesn't matter who caused the car wreck. How is that fair? Shouldn't it matter what people do with their resources? Isn't that what fairness is all about?
Most of the dispossession we see going on around us is not of the rich. It is of people who often through no fault of their own find themselves in financial distress. And of course also of people whose improvidence brought distress on themselves. But here's a simple scenario for you:
If a hundred people have a total of $100 dollars between them, but one of them has $99.01, that leaves one cent each for the others, whether they 'deserve' it or not.
That's what we're dealing with - gross inequality. A system that allows a few to suck up all the wealth is a system that should be challenged, not supported.
Inequality is not in and of itself about fairness. The question is how the hundredth person got all the money. Did he steal it? Did he take it by force? Did he use fraud? Did he earn it by climbing trees and picking apples and giving them to the other people in return for money, while they sat and waited to be fed?
Of course, many people ARE poor because money was stolen from them. Most people, actually. The poor are people who would have had much more if they were not forced to give a very big chunk of what they earned to the government. Most welfare recipients would be better off if it were not for social workers and the welfare state, who take everything, but contribute nothing.
So in America, there's a sizable portion of the people who still realize that our neighbors, rich or poor or in between, are not the problem. The government, and the people it pays our money to, is the problem.
What do you call caviar eating, champagne drinking public servants, anyway? Are they rich, because they have lots of stuff? Or are they poor, because it doesn't belong to them?
The point is that we are at the stage where it hardly matters any more how the distribution became so skewed. The mere fact that it is so skewed means that most people no longer have the power to dig themselves out.
There would seem, then, to be two options: either the government exercises the means to reduce the inequalities or, sooner or later, you have a popular uprising with inevitable loss of life.
Which do you favour?
You are assuming that the popular uprising would be by poor people who want to loot the rich? But the wonderful thing about the American public, the thing you were lamenting earlier in the thread, is that this is not how Americans think. They don't see it this way.
If a popular uprising were to occur, then you would find the poor and the middle-class and the rich fighting side by side for the same thing: the right to be left alone to make their own money.
If what you say is true. it had better start soon, because the middle class is fast disappearing. And when it does, the game's over, because, as a general rule, ideas and culture emanate from the middle class.
Okay, you may very well be right, but what do you think is making the middle class disappear?
There are many agents of disappearance. Unreasonable expectation regarding lifestyle entitlement, failure to recognise the inflationary effect of compound interest on debt, complacency in the face of corruption in the corporate/military/government coterie... but the plain fact is, the US and much of Western Europe have simply lost the plot. They have allowed themselves to be shafted by the unbridled greed of a supremacist cult who can command bailout money while the rest of us suffer 'austerity measures' to fund the bailouts.
What I don't understand, Aya, is why you prefer to level blame at the duped, rather than at the dupers.
Because there are good people who are poor, good people who are middle class, and good people who are rich, I prefer not to blame people based on their social class.
I'm happy to point the finger at the dupers: those who want to redistribute other people's money without asking them.
A lot of the duped are poor people. I don't blame them for that. I had people coming to campaign in the last election urging me to vote Democrat in order to help "the middle class." I looked at them. They were clearly not middle class themselves! They had a strong regional accent, which is a sure sign that someone is below middle class. But here they were, thinking that they were going to get something from voting for a guy who promised to help out the middle class!
Aside from inequities in the income tax and the fashion in CEO compensation here's a major factor:
The New York Times
The 61 percent of Tea Partyers' skepticism about the benefits of free trade is shared by many non-Tea Partyers as well and for good reason.
As Mr. Lighthizer said, devotion to free trade is supported by both parties and the academic and foreign policy establishment (the same people who gave us deregulation of the banking and financial industry).
If it's true that the majority of Americans actually benefit from free trade with China and other countries, it's only fair that the minority of displaced American workers and communities should be more fairly compensated by the rest of us for their sacrifice for the common good. Job insurance should be provided for older workers and something similar to the GI bill and other adjustment assistance provided for all displaced workers.
"Throwing Free Trade Overboard" by Robert E. Lighthizer
http://www.nytimes.com/2010/11/13/opini … ef=opinion
By "inequities in the income tax" are you referring to the fact that the more people earn, the less of it they get to keep? That is, the progressive income tax rate? Or are you referring to the fact that the very poorest earners are expected to shell out a large percentage of their first four hundred dollars for social security taxes that people who are better off can avoid for the majority of their income? The regressive social security tax? Or are you referring to the fact there are so many loopholes and exceptions that very few people can make heads or tails of it without the help of legal counsel?
Which particular inequities bother you the most?
I haven't studied the U.S. tax system, but off the top of my head two that bother me a lot are (1) the rule that lets hedge fund operators' income to be taxed at the capital gains rate and (2) the rules that allow U.S. international corporations to make profits in subsidiaries without paying U.S. taxes until or unless they repatriate the taxes to the U.S. This effect of this loophole is twofold: it encourages companies to outsource production and jobs, and it induces them to use phony internal transfer prices to make the profits show up on the overseas subsidiary's books thus avoiding U.S. corporate profits taxes. (In other words the tax law induces companies with overseas components operations to overcharge their U.S. operations for the parts, thus reducing U.S. profits and taxes. It's hard for the IRS to police this type of cheating.)
The Social Security tax contributes to the regressivity in our tax system. The loopholes benefit mostly the rich.
The progressive feature of our tax system has been well-accepted for a long time. Our tax system is less progressive than in most industrial countries.
Yes. You're right, Ralph.
And the income tax contributes to the opposite.
Let's do away with both, and call it even!
And what programs do you suggest we cut? Or how big a national debt are you willing to tolerate? I'm happy to have my monthly Social Security check deposited in my checking account on the third Thursday of each month. Some day you may also be happy you have a Social Security benefit.
The libertarians and conservative Republicans constantly whine about re-distributionist tax proposals when since Reagan all the redistribution has been toward, not away from, the richest Americans thanks to the power and influence of big money in American politics. In case you haven't noticed, the rich are "being left alone to make their own money" by fair means or foul. If you doubt this watch the excellent documentary "Inside Job."
But Aya is probably right. These, umm, politically confused individuals probably will help the rich strip away the last opportunities they have to change anything. They will die in poverty, never understanding that they helped destroy a nation.
That nation would never had existed in the first place, if it had agreed to stay under British rule.
Actually, I suspect you are wrong. It probably would have become the tail wagging the dog and Canada of course woud be a big part of it.
But more to the point, what does that have to do with present day? Are you about to claim taxation without representation?
Paraglider mentioned popular uprisings, as something to be avoided. But this "nation" is a result of a popular uprising. If an uprising had been avoided at all costs, taxation in the colonies would have been the same as in the UK.
What I think bears considering the most is in what ways the American Revolution was different from the French Revolution that occurred during the same period.
The French revolution was bloody precisely because it was all about class warfare. The bourgeoisie, the beloved middle class, were told this revolution would be good for them, and the only people hurt would be the nobility. But it didn't quite work out that way, did it? And the only thing it really accomplished is to make "bourgeoisie" an international insult to anyone who happens to be middle class.
By contrast, the American Revolution was not about class warfare. It was about keeping people who were not contributing from taxing everybody else. Landowners, shopkeepers and ordinary workers fought side by side, knowing they had a common cause.
Is there taxation without representation now? Yes, in the sense that people who are not taxed get to vote on what tax will be imposed on people who are. That's what the Americans objected to during the revolution.
The common cause was fairly equivalent to the Taliban cause - Foreigners out!
The Americans simply resented the British Crown exerting authority over them. That's why you had (a degree of) unity of purpose from pauper to landowner.
But that battle's been won, and in spite of your insistence that Americans still think that way - I'd say, they would, if threatened by a foreign sovereignty, but right now, shafted by an 'enemy within', comprising big bank, big industry, big military, they are floundering, refusing to recognise the horrible truth, that some hugely rich Americans are not American in any real sense, but are self serving global brigands.
They are your problem, not the guy struggling with his mortgage.
It may seem that way to you now, after the long separation between Americans and the British, but it wasn't about foreigners at all at the time. The American colonists were British. They spoke the same language, were of the same ethnicity, had similar tastes in literature and art. They wanted to separate only because of taxation. It wasn't anything like the Taliban cause! It's not anything like anything that has happened in the world before or since!
Conditions here at the time of the revolution don't remotely resemble our current situation.
Actually it was less valid than the Taliban cause! But they were not all British. They were largely European, and predominantly British perhaps, but hardly homogeneous. And they weren't first generation either. Most Americans who fought in the war had never set foot in Britain. So I'll meet you halfway on that one, but only halfway!
Okay. Good enough. The point is, that second generation or not, other nationality or not, they had no problem accepting British culture and British rule, as long as they weren't taxed. It was all about taxes. It wasn't religious persecution. It wasn't culture. It wasn't language. It was just the desire to keep what they earned.
It depends whom you read. Some say it was all about taxes; others that it was all about taxes going abroad. But to bring it back to modernity, what Ralph says is true: the gross skew is the result of continued Reaganomics and deregulation. These guys are not your friends. They just want your money. And you are aiding and abetting them in the name of 'freedom'??
Oh, come on, Paraglider. I like you, and I don't want to insult your intelligence. At this point, don't we each know which side we are on? I'm not using any labels concerning our respective ideologies, because you object to them, but clearly you can understand what my position is.
I am on the side that says "Live and let live." I don't want to take anything from anyone, and I don't want them to take anything from me. Deregulation is my friend. It lets me do whatever I want. Deflation is my friend. It makes my money worth more. Nobody takes anything from me except directly through taxes and indirectly through inflation and regulations about what people are allowed to do. When taxes, local and Federal, are reduced, I am better off. When they go higher, I am worse off. When there are fewer rules and regulations, I have more freedom. When there are more regulations about what may or may not be done, I am less free. It's that simple.
Who else do you think is hurting me besides the government? When was the last time a rich person so much as looked at me, much less took my money?
Deregulation is what allowed a few Wall Street banksters to take a lot away from many around the world. An unpunished crime.
Before anything could have been de-regulated, it had to have been regulated first. The government sponsored loans to people who were not good credit risks.
Before the government did this, people used to have to pay cash for a house. If they could not afford that, they built it themselves. If they couldn't afford that, they rented.
The practice of buying houses on credit sponsored by the government is what created a completely unrealistic housing market.
You over-simplify. Multiple factors led to the housing balloon and crash which led to the world wide recession. A major cause was the trend to deregulation beginning under Reagan (savings and loan deregulation scandal) and continuing under all subsequent presidents through Bush. One key misstep was the repeal under Clinton of the Glass-Stegall Act that prohibited commercial banks from engaging in risky investment banking activities. The banks took advantage of this and created risky, no toxic, subprime mortgage secutities and sold them to investors around the world. Until this happened mortgage lending was a relatively safe, humdrum banking activity in most countries around the world.
Here's a bit of history from Wikipedia:
"Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property (see commercial mortgages). Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:
* Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
* Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property.
* Borrower: the person borrowing who either has or is creating an ownership interest in the property.
* Lender: any lender, but usually a bank or other financial institution. Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.
* Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
* Interest: a financial charge for use of the lender's money.
* Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan; without this aspect, the loan is arguably no different from any other type of loan.
"Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system."
I'm saying that no de-regulation could occur before there was regulation. When I say the housing market was unnatural, I don't mean just in the past ten years. This has been going on for quite a while, and it was never right.
No matter what the industry or the issue, regulation has got to precede deregulation. That's your real culprit.
There was regulation. Until the Glass-Steagall Act was repealed banks weren't allowed to do what they did that precipitated the crash. Also, the FED had regulatory powers that Greenspan chose not to use because of his faith in Ayn Rand. And as you noted, Congress and Freddie and Fannie played a key role in facilitating subprime mortgages.
There wasn't free market in housing. So everything was already skewed. Any regulation that was in place was on top of that.
You need to get into a time machine and return to the pioneer days of the 18th century when homesteaders like my grandparents lived for a year or two in a sod house and then built a barn and a house out of wood.
Ralph, why don't you just agree that limited liability, for anyone, is a bad idea? So let's do away with that when defining corporations. Why not also agree not to bail out anybody who runs a business into the ground?
Those who argue for the redistribution of wealth in any direction simply fail to understand the difference between Consumer goods and capital goods.
Let's go on a journey of the mind.
in 2001, the top 1% of Americans owned 38% of the wealth. No joke. Of that 1% there was a guy named Bill Gates who owned at least 1 "computer factory". This computer factory is considered a Capital Good -- It exists to make consumer goods that are then sold to people who aren't the owner --- sure, Bill Gates OWNS the Factory, and it might consist of .5% of that 38%, but it only exists to create consumer goods FOR OTHER PEOPLE.
Now, let's say that we want to remedy this "evil" institution of "bill gates owning too much"... after all, lord knows he didn't "earn" his money!!...
... anyway... let's say the government said "we shall liberate the wealth from the top 1% and then dish it out to the rest!" ... how would they do that to a factory? They couldn't. it would be impossible.
Then, on top of that, the factory wouldn't be owned by anyone who actually wants to keep the factory running and producing computers -- imagine that EVEN IF there were SOME way to ACTUALLY distribute the ownership rights of that factory to EVERYONE in the US, there would be 300 MILLION PEOPLE trying to decide how that factory would be run!!!!
!!! Imagine 300 MILLION CEOS!!! that would be impossible.
Plus, on top of all of this, ... if you wanted to start a business and run a factory, would you want to risk doing it in a country that might just one day up and "liberate" your wealth from you? ... of course not. Investment would plummet in your country.
Translation: Socialism doesn't work. Communism doesn't work. Redistribution of wealth is NONSENSE. UTTER NONSENSE.
! I know I didn't convince anyone -- these forum posts never do -- but I need to speak logic. I will not respond to any post to this one because I tend to get banned from posting when i disagree with people. !
Michigan has had "no fault" car insurance for 40 years or so. It has greatly reduced litigation and resulted in much faster reimbursement for damage to motor vehicles involved in accidents. It may be or seem unfair, but practically it works quite well.
People get their information from a right wing propaganda machine that includes Fox but extends far beyond it. They hear "deficit spending" and "federal debt" and "higher taxes" and don't get the rest of the information.
People voted the Republicans into Congress because they wanted lower taxes. Unfortunately, this means cuts in social programs.
The smart thing to do, and what Obama has proposed all along, is to raise taxes on the rich, and cut taxes for everyone else.
Now, after the election, we can see what the right wing agenda really was. More for the rich and less for the poor.
whoa whoa whoa, all of history has shown this sentence to be incorrect:
"...they wanted lower taxes. Unfortunately, this means cuts in social programs."
Really what this will mean is lower taxes, increased social programs... But rampant monetary inflation.
As much as everyone thinks they're the devil, rand paul and Ron Paul ARE arguing for cuts in spending. This is the only way to balance the budget at this point.
Exxon and another big corp paid no taxes last year.
Hedgefunders and investment banksters are taxed at 15%, while middle class is taxed at 35%?
FICA is capped at $106,000?
And they want to cut from every social program.
Collecting Haliburtion waste fraud an abuse could probably make us solvent.
Baucus mentioned 235 mil in taxes due, that are never collected.....can you say FOC (friends of congress)
CUT FROM THE TOP......we are SOLVENT! And it won't hurt them a bit.
Whereas, the poor and middle class are in a load of hurt.
Ridickulous policy. Stupid, selfish, greedy and self-serving for a small percentage of Americans.
Like Bush one and two said: "It's fuzzy math!" "Voodoo economics!"
The "whiny law professor"--
http://delong.typepad.com/sdj/2010/09/m … s-war.html
Or, it's simply in the name of "We hate Obama."...Period.
I swear, he could propose that HE himself, would pay down the deficit with his own money, and they still would say "he's a devil who wants to destroy America."
Makes me sick. They all make me sick. And now we gotta LOOK at them for the next GD 2 years............AGAIN. argggghhhhhh
"Whereas the conservatives' predecessors in the old regime (pre-revolutionary France) thought of inequality as a naturally occurring phenomenon, an inheritance passed on from generation to generation, their encounter with revolution shows them that the revolutionaries were right after all: inequality is a human creation. And if it can be uncreated by men and women, it can be re-created by men and women...He (the conservative) demonstrates a belief in the power of men and women to shape history and to propel it forward--or backward...from the revolution, conservatives also develop a taste and talent for the masses, mobilizing the street for spectacular displays of power while making sure that power is never truly shared or redistributed. That is the task of right-wing populism: to appeal to the mass without disrupting the power of elites or, more precisely to harness the energy of the mass in order to reinforce or restore the power of the elites. Far from being a recent innovation of the Christian right or the Tea Party movement, reactionary populism runs like a thread throughout conservative discourse since its inception...."
Corey Robin from "Conservatism and Counter-revolution from Burk to Palin in Harper's December 2010
I never trusted Reagan. He was another war president. I'll bet that half of the work that was done under the Reagan Administration was put out by George Bush Senior. Reagan was just a well trained puppet under Bush's hand strings. Trying to justify a trillion dollar defense budget, and the whole idiotic Star Wars defense system, that we are probably still paying for.
Bush senior then had to raise taxes to pay for the mess that he and Reagan made, and is one of the reasons why Clinton became president, and lead us into some of the best economic times we had in years. Only to be crushed by Georgey Junior.
If it wasn't for George juniors desire to make himself into this glorified war hero, and go after people that made daddy mad, we would not be in the mess we are today. I couldn't believe that he got elected to a second term! Are people that stupid?
Sorry, but I wouldn't believe any information that came out of the Reagan administration. They were some of the most secrative bastards on the planet. Or, don't people recall that Reagan would only answer questions that he was scripted to answer?
One simple question? Are all republicans rich (those in office) and all dems (in office) poor? I don't think so....
The problem is they are all rich. That's why they care so little about the poor.
We had a little test here in Michigan with a former Governor, to see how their life would be if they were on the public assistance that was on the chopping block to cut costs. Well, they were on food stamps and all that.
His wife comes on TV and says it was perfectly fine, you just have to know how to budget. Then she and her kids got back into the Limo, and drove back to the governors mansion, where they lived while they were on food stamps.
Um hello Governor! People who live on welfare do not live in a Mansion, and they certainly don't have a limo available to take them shopping! I
say put the family in Government housing for a year, take away all their credit cards, and make them take the bus, like a majority of people on welfare. When I saw her saying how easy it was, I just wanted to reach through the TV and slap her silly.
no just their philosphy for getting things done are different.
Okay, You Fix the Budget!
http://www.nytimes.com/2010/11/14/weeki … amp;st=cse
I am a conservative and it hurts to say that since Republicans want to cut food stamps to the poor before they cut military spending. It is a disgrace. Our overseas empire costs trillions of dollars! How can you even consider tinkering with social security, medicare, etc. without addressing the biggest spending issue first?
That being said, social security and other forms of entitlements ultimately hurt the economy. They also create a society of dependents. First and foremost, it is absolutely unconstitutional to force people to pay into this system. People should be given a choice; if you want to pay a tax and receive government checks later on down the road, that's up to you. But the truth is social security is broke and there should be an opt-out option. There's a misconception that the government taxes a bit from each paycheck, and puts your money aside in a lock-box until you retire. Untrue. The government hastily spends your money. Whatever is being paid back to retirees is borrowed money, further hurting the economy. How long can this be sustained? That is debatable, but the answer is not forever.
This whole idea that small-government, pro-private enterprise philosophy leads to elitist favoritism is complete farce. If anything, it is big government that is in bed with the ruling class. If you don't realize that the agendas of the rich minority are entwined with government practices and vice-versa, then it is going to take much more than a lively debate to fix your gross misconceptions. Monopolies exist because of government subsidies, regulation and intervention, making it impossible for competitors to get a foothold in the market they wish to compete in. If there was TRUE competition, then this would be the most effective and potent regulator. Unfortunately, government intervention stifles any form of competition, and then they use the failures of the companies THEY subsidize as an example of why "Washington regulation" is not only necessary, but MORE of it is needed!
One more thing: not everybody is surprised by the economic problems we are now facing. Many have been predicting these collapses for some time now. It's no coincidence that most of these people belong to the libertarian party/philosophy.
In my opinion, Social Security and Unemployment Compensation are absolute essentials in a modern industrial economy which experiences ups and downs in employment causing people to lose their jobs for no reason attributable to them. Conditions were so bad in Detroit and Cleveland and other industrial centers during the thirties that the citizens were on the verge of revolution. China has recently experienced social unrest due to declines in production and layoffs, but it has no comparable social support network. It won't be long before they'll be forced to follow the lead of the U.S. and other industrialized countries.
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