Friday, July 29, 2011

Zeno's Way -- Part 3

LIE:  High taxes are hampering businesses in the US, preventing hiring, discouraging new businesses from forming.

TRUTH:  Business taxes in the US are historically low.  Business gets a much better break with taxation now than at many times in the preceding century.  Just see the charts below.  Taxes on business revenues today are low both as a percent of GDP and as a percent of government revenues, compared to the past 60 or 70 years.

Low taxes were supposed to encourage investment in plant and equipment, leading to higher economic growth and more employment.   Did it work?   I don't think that anyone would say that we are having a good period of employment and economic growth right now.

The government certainly isn't getting much of its funding from business taxes today.  Of course, that's part of the problem.  We are experiencing a budget crisis now in part because wealthy business interests have been getting a break.  Business and the US can both afford a balanced budget.

The rest of us aren't getting a break.  It's about time the special business interests paid their share of the burden of government.  They get more than their share of the benefits of government. 

Tuesday, July 26, 2011

Zeno's Way -- Part 2

LIE:  It is Obama's fault that high unemployment and low growth are still with us.

TRUTH:   This downturn is a secular process caused by unsustainably high debt levels and precipitated by a financial crisis, NOT a standard inventory cycle recession.  It will take YEARS to work this out, and the country has in fact been PERMANENTLY changed.  The good old days will NEVER come back.
Don't expect one President to solve a problem that the Republicans and Democrats both worked DECADES to cause.  Decades of misdirected investments cannot be reversed overnight.  The damage to the country's capital is permanent, and high growth won't come back. 
Other nations are rising, productive technologies are spreading, and the competitive environment has permanently been leveled.  The overwhelming advantage that the US had for a short time after WW II is gone forever.  If America is declining now, it is because short-sighted leaders protected their own interests by playing it safe rather than acting like true leaders.   
Don't blame reality on a political party.  NEITHER party wanted to look at reality.

Sunday, July 24, 2011

Zeno's Way -- Part 1

Ever since the Federalists and Anti-Federalists duked it out in 18th century newspapers, political interests have used the press to peddle partisan lies and half-truths to the American people.  Today, political interests on the extreme right continue to spread lies and half-truths in an attempt to influence the debate about the US government's budget deficit.   Right-wing ideologues in the service of elitist special interests have done the country a grave disservice in poisoning the debate with their lies about the budget deficit, lies which many so wrongly believe.  These servants of the radical special interests are, in fact, steering the nation in a direction will do nothing to solve the problems underlying our economic and budgetary problems.  Their proposals will instead bring hardship to millions of Americans.  Today's blog entry is the first of a series to restore a more balanced dialectic by contrasting those lies to the simple truth. 

LIE:  If we get the government's fiscal house back in order, everything will be hunky-dory with the economy in short order.
TRUTH:   Those expecting an immediate comeback in the economy are either totally deluded or vicious liars.  The spending reductions needed to balance the US budget are so large that they cannot fail to cause a severe reduction in the pace of economic growth.  Economic activity can only contract if the government reduces transfer payments to the elderly, the poor, and the disabled.  If the military budget is cut back, there will be immediate reductions in industrial activity and in consumer spending by military personnel, their families, and the civil servants who are let go.

MORE TRUTH:  The economy is not coming back in any recognizable way for years.  We are experiencing a period of debt deflation, not an ordinary inventory cycle.  Private citizens, the financial sector, local and state governments, and the US government are all buried under excessive debt loads.   Excessive debt cannot be worked off in weeks or months in the absence of confiscatory policies that would frighten our creditors and land the nation in an even worse mess. 

Strike Scene, Louis Lozowick, 1934.