Editor’s note: This op-ed is by Tom Evslin, an author, entrepreneur and the former stimulus czar under Gov. Jim Douglas.This piece first appeared on Evslin’s blog, Fractals of Change.
“To dig holes in the ground,” paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services,” wrote John Maynard Keynes in The General Theory of Employment, Interest, and Money. Of course, since Keynes was an economist, there was an on-the-other-hand: “It is not reasonable, however, that a sensible community should be content to remain dependent on such fortuitous and often wasteful mitigations when once we understand the influences upon which effective demand depends.”
Many people assumed that a “job” was something at least semi-permanent such as what you get when a new factory opens nearby. In fact, Stimulus had several definitions for jobs, but this wasn’t one of them.
Unfortunately, much of the economic rationale for the two-thirds of the Stimulus Bill which did not consist of tax cuts seems to have been based on Keynes’ first sentence minus the part about “paid for out of savings” – Stimulus (aka The American Recovery and Reinvestment Act or ARRA) was financed by increasing the national debt. Trouble is that, if you borrow money to hire people to dig holes in the ground (and presumably to fill them up again), all that you’re left with is disturbed dirt and debt, not a “real national dividend of goods and services” as Keynes claims. When you spend government money – just like private money – you need to concentrate on value created, not the number of people employed. Ultimately greater economic value leads to a more robust economy and more jobs. In the short term, debt-financed jobs which don’t create value damage the economy and reduce future employment.
In a laudable attempt to make the government accountable for the results of its expenditures, Stimulus law and regulation called for counting jobs “created or preserved”. Many people assumed that a “job” was something at least semi-permanent such as what you get when a new factory opens nearby. In fact, Stimulus had several definitions for jobs, but this wasn’t one of them. All were measures of short-term employment. You can read more about the many ways to measure jobs and my attempts to explain them to Vermonters in How Many Jobs Were Stimulated?, which I originally published on my state blog while I was Vermont’s Chief Recovery Officer responsible for reporting this data to the feds and explaining it to our citizens.
Measurement is an important part of management. It’s true that you get the results you measure and reward. We weren’t asked to count the jobs that were lost as businesses waited to see whether they or their competitors would get “free” government money, nor could we have done that measurement if we tried. We weren’t asked to count permanent jobs, nor could we have. We weren’t asked to measure the impact that the dollars we spent today would have on jobs available tomorrow. We weren’t asked to measure the value of service received by the public for the dollars we spent. We didn’t measure the effect of paying people not to work. We were measured against other states in how many “jobs were created or retained”; and there was some debate over whether a high number of jobs per million dollars meant that were doing well or badly – after all, if you create a lot of jobs per dollar, it may be because those jobs pay less well than jobs created or retained by other states.
Stimulus didn’t literally hire people to dig holes and then fill them up again, but much of the money was aimed at preserving public-sector jobs and salaries. The intellectual rationalization for this way laid out in an Obama Transition Document which is cited and summarized in a May 2009 report from the President’s Council of Economic Advisers. This table of assumptions from the report tells much of the story:
Table 4
Let’s forget the absurdity of treating all spending in a category as equivalent and just subject these numbers to a thought experiment. If they are literally true, we can get down to zero unemployment by just having the government hire anyone who needs a job and raising taxes by whatever amount is required. Assuming no government overhead (yeah, sure), increasing taxes by the $92,136 required to fund government spending to create one job will only raise taxes enough to cost about two-thirds of a job somewhere else. We just keep doing that and everybody lives happily ever after. Socialists do believe that works; history doesn’t support their view (just ask the Chinese).
By concentrating on counting “jobs” rather than what those jobs provided or created, we got short-term jobs we could count (those funded directly by government) at the expense of other jobs which may actually have been lost because of Stimulus and at the expense of building value for taxpayers. On the other hand, we probably got better value from Stimulus than from TARP, which concentrated on saving bankers’ jobs and salaries and was accountable to no one.
There is a role for government spending in the economy – obviously. There is even a role for counter-cyclical spending. More on what could be in future posts in this series which begins with Confessions of a Stimulator.
Related post, “How many jobs were stimulated.”
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Evslin continues with what is essentially a big lie – tax breaks (as in allowing folks to ignore their social responsibility to a common government) have led to economic growth, but there is absolutely no evidence to support this. As a matter of fact recent history proves Evslin’s assertion to be wrong – period.
When our most recent liar in chief W. Bush handed out huge presents to the fabulously wealthy with the whining acquiescence of congress, the tax breaks were not only paid for out of borrowed money but they were dwarfed by an even greater amount of borrowing that occurred to pay for war and the rest of our government.
The exact same is true for Ronald “I never saw a poor person I liked” Reagan who’s infamous tax breaks for the fabulously wealthy were paid for with borrowing that too was dwarfed by borrowing for war and the rest of our government.
Not only would Evslin have us ignore these twin realities, he would have us ignore the fact that after less than reasonable tax increases during the H.W. Bush and Clinton administrations our nation’s finances actually started to look reasonably good.
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So, adding to the national debt and providing lots of people with employment on one hand versus giving away billions to the richest among us so they can invest it in the stock market or keep it in banks (obviously, they don’t need it to live). Seems like an easy decision for me to choose the former.
I agree with Rama, who has proved that tax breaks to the rich provide prosperity for all? No one!!
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The new report by the Public Assets Institute addresses this question in a larger context here: http://publicassets.org/publications/reports/state-of-working-vermont-2010/
- and without the cynicism reflected in the oblique slap at publc sector workers (“Stimulus didn’t literally hire people to dig holes and then fill them up again, but much of the money was aimed at preserving public-sector jobs and salaries.”) and silly remarks about “socialism”.
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Rama:
The number I used for dollars of tax cuts required to “create or retain” one job come from Obama’s Council of Economic Advisers (link above), not from Bush or Reagan. Frankly I don’t have much faith in the science behind any of these numbers and quoted them only because they were some of the logic behind Stimulus.
That being said, I think economic success depends on having a private sector which is considerably larger than the government sector (which the private sector has to support) and having a private sector which is not dependent on government for either grants or bailouts (ala TARP). IMHO the government sector, which I was recently part of and which includes government supported businesses and nonprofits, has grown proportionally too large and business has grown too dependent.
BTW, it doesn’t help the rational discussions we need to have to characterize opinions you disagree with as “lies”.
Happy New Year
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Tom, I am so sick an tired of hearing the same old crap passed on as “but of course it’s true” fact. The reality is that tax cuts, especially those for the already rich, have never been shown to improve national economic conditions.
I think you know all this, Tom, and that is why I stated your claim was a lie as opposed to mere misleading sophistry.
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Tom, above you wrote “Frankly I don’t have much faith in the science behind any of these numbers and quoted them only because they were some of the logic behind Stimulus.”
But yet you use these numbers to support your argument.
What definition would you apply? (I stick by my own.)
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Paul:
The report by the Public Assets Institute (which people should read)certainty draws different conclusions than I do. From a methodology point-of-view, I think they erred in measuring from the peak of the dot.com boom (end of 1999) to the employment trough of the last recession (end of 2009) and I think they underestimate the strength of the Vermont economy. Our highest regional unemployment rate is lower than the national AVERAGE unemployment rate. People who want to find jobs in Vermont can find SOME job.
I actually agree with their conclusion that the targeted incentives to specific industries and businesses which have been part of our economic development policy are NOT effective. Without affecting the total budget, I’d take all the money being spent on these incentives and use it to reduce corporate or personal taxes. That requires no bureaucracy to administer,gets government out of the role of picking winners and losers, and I believe would encourage more businesses to locate and grow here.
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As a long time critic of our business “incentives,” I agree they should be eliminated. But to use the funds for tax cuts makes no sense. The continued assertion that lowering state taxes will help create jobs is completely without foundation. State taxes are a tiny cost for all but a handful of businesses and are dwarfed by other costs.
The point of the PAI report (and one I’ve advanced for years) is that the best strategy is a combination of investments in infrastructure, workforce education & training, and quality of life.
Lowering corporate taxes provides no gaurantee that the savings to business owners would be invested in VT. And even more so for the personal income tax. The richest Vermonters make their money from investments, most of which are outside of Vermont. Reducing their taxes is likely to have little if any impact on employment in Vermont.
And if all that is true (and I think it is), lowering taxes simply creates a larger budget gap, which leads to more calls for spending cuts, and so on. Grover Norquist lives!
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Ruth:
I’m not in favor of “giving money” to to the rich as TARP and many grant programs do. However, money invested directly in the stock market and businesses or indirectly through banks (which shouldn’t have been bailed out) is what makes the economy grow and creates jobs. The question is whether we try to take more money from the rich and do this investment through government or allow it to happen in the private sector. I’m for the latter, provided that we don’t shield private investment from failure which is a key part of the process.
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The fact that the Obama administration didn’t request or require more critical analyses of stimulus spending doesn’t excuse the Douglas administration for never undertaking any critical analyses of its economic development policies and programs. And when the legislature (finally) asked for some performance data (UEDB), the response from the administration was woefully inadequate and of no use to legislators when it was most needed.
Re. concern about the size of the private sector: Trickle Down didn’t stop or slow investment, but trade policies encouraged greater capital mobility. As a result, lots of jobs have been created; just not here.
Mr. Evslin would have us believe that the answer is to shrink government. Some of us can think of different solutions that won’t further punish American families.
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Tom Evslin, you are absolutely correct. This is not the time to grow government spending.
The Public Assets Institute, a pro-government spending organization, recommends in an article “State of Working Vermont in 2010″ that Vermont issues bonds to create jobs. Well-connected people and organizations will get first dibs at any money raised with bonds.
Numerous studies document, see internet, that adding one person to a government payroll causes 2-3 people in the private sector to lose their jobs in a no-growth/slow-growth economy which we have right now. It is unwise thinking to propose to grow government and reduce the private sector.
An example of unwise government policy:
According to a December 2009 VT-DPS white paper, about $228 million is required to build 50 MW of feed-in-tariff renewables. Only 35% of the $228 million would be supplied by Vermont sources, the rest by non-Vermont sources, such as PV panels from China and inverters from Germany. According to the white paper, there would be spike of job creation during the 1-3 year construction stage (good for vendors) which would flatten to a permanent net gain of 13 full-time jobs (jobs are lost in other economic sectors) during the operation and maintenance stage. http://publicservice.vermont.gov/planning/DPS%20White%20Paper%20Feed%20in%20Tariff.pdf
A wiser policy would be for Vermont to provide energy efficiency incentives directly to the bottom 90% of households; the lower the household income, the greater the incentive. The energy efficiency incentives would speedily lead to:
- an increase in the efficiency of house envelopes, appliances, lighting, heating and cooling systems
- the replacement of old, polluting, inefficient wood and coal stoves and oil furnaces with new, clean-burning, high efficiency ones
- the exchange of old gas guzzlers (20 mpg or less) with new high mileage (35 mpg or more) vehicles; the higher the mileage, the greater the incentive.
Current programs winterize about 1,000 houses per year at a cost of about $10 million. In Vermont, there are about 100,000 households with incomes less than $50,000/yr and likely living in energy-hog houses and driving gas-guzzler vehicles. A tenfold increase of weatherizing houses, 10,000 houses/yr, would make their houses more habitable in winter, reduce their energy consumption and CO2 emissions and provide thousands of jobs for at least the next ten to fifteen years.
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Mr. Hoffer:
Thanks for your comments; thoughtful as usual. I’m glad we agree on at least one point.
The money needed to buildout Vermont’s broadband and smart grid infrastructure is in hand – thanks to Stimulus. Although I have doubts about the national efficacy of both these programs in Stimulus, there is little question that they will be very good for Vermont given the high-level of funding we received and assuming that we execute competently and don’t get in our own way. We do take care of our roads and raised the gas tax to do that with tri-partisan support. We do a lot of government-sponsored job training; I’m dubious about its efficacy and not sure why businesses shouldn’t pay to train their own workers.
The point of all the above is that I disagree with the PAI and you that we need to be spending even more on infrastructure. I think we need more investment from the private sector. That investment is inhibited although not totally squelched by our relatively high tax rate in the upper brackets. We could induce more investment with a lower corporate rate. We are in competition with other states. BTW. if you doubt whether corporate taxes are important, ask the Vermont renewable energy community which fought extraordinarily hard for credits against that tax and calls them essential. I’d rather lower that tax across the board rather than target breaks to politically favored industries and I’d “pay for” that tax cut by eliminating targeted grants and credits.
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Mr. Evslin
We all want more investment from the private sector. But the private sector doesn’t invest for the public good; it invests for profit. That means businesses don’t invest in public infrastructure that benefits everyone. [and I'm not sure the renewables example is germaine; I suspect the guaranteed rates were much more important that than the tax credit]
As for the rest, it is patently false that “we take care of our roads.” Vermont has substantial deferred maintenance.
But it’s not just roads & bridges. Where is the commitment to rail? Where are the plans for effective mass transit in Chittenden County?
And I fear you are ignoring other types of critical infrastructure. For example, it is well known that we have serious shortages of affordable housing (a gap which will not be closed by the private sector). And guess what, building homes buys a 50-year asset and creates jobs.
Likewise energy efficiency. Jim Douglas resisted the all fuels efficiency bill because it was “too expensive.” But (according to the report by DPS’ own consultant) it would have saved $490 million for residents & businesses and – yes, here again – created jobs.
As for the connection between state corporate tax rates and job creation, you have not provided evidence to support your view. Businesses expand when demand exceeds the firm’s capacity so they need more workers and/or equipment. State taxes are just not a serious impediment in most cases.
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Here we go again: The call to shrink government. Almost always, non-specific as to what programs or Departments to eliminate. The Douglas Administration and his ilk used nonsensical, across the board reductions that were more of a paper trick than a reduction of government olbligation or required services. The result was often only a replacement of state workers with untrained “temps” and/or private contractors. The “Shadow Government.” Look at the “Challenges for Change”, specifically, the cuts and “efficiencies” in Human Services. The result was a colossal failure. Services were delayed or denied to the most needy. In the end the state had to hire 20 new classified positions. This is emblematic of the outgoing Administration’s policy to shrink government. People struggled to obtain food stamps while the Governor enjoyed an enormous, tax payer funded, meal allowance.
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Wow. The effect of lowered taxes for the wealthy on the broader economy isn’t even in question. So yes, I’d agree it’s a “lie” to say that it leads to economic growth. The only other explanation is ignorance.
Any idea, Mr. Evslin, what the rate of economic growth was in this country in the ’50s and ’60s and even ’70s, when the top marginal tax rate was 90 percent and then 70? Did you notice what happened to economic growth during the GW Bush administration?
And first and foremost, there’s this: “TARP, which concentrated on saving bankers’ jobs and salaries,” which either you know very well is false, which makes it a lie, or you don’t know, which makes you amazingly ignorant.
You appear to be a captive of a kneejerk ideology, not an objective observer of facts.
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How about this “Thought Experiment”. If lowering taxes increases jobs and revenue, as conservatives argue, then the lower we make taxes the more jobs and money will flow. So let’s cut taxes to absolute zero and then there will be endless jobs and money for all. Sounds like utopia except of course for the fact that the trickle down theory is wrong, has always been wrong, and always will be..
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Mr. Hamlin,
It’s incorrect to say it’s a “fact” that supply-side economic theory is wrong and always will be; it’s actually an opinion. Here’s what a fact looks like: U.S. Census Bureau data show that from 1981 to 1989, the so-called “decade of greed” under Reagan, every income group, from the poorest to the richest, saw gains in real income.
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Granting that Census data, like any other, can be sliced and diced to prove different points, this statement is still false. More later, but for starters, according to Census data I’ve seen – and an analysis by the Economic Policy Institute – American workers at or below the 50th percentile saw their wages drop. Workers in the 60th and 70th percentiles saw a scant increase, and the people who really made out were in the 80th percentile and above.
Annual median household income fell or stagnated for much of the 80s, with a bump in between 83 and 86 and another at the tail end of the decade. This was also the era that witnessed a rapid growth in overall poverty and a widening of income inequality.
Care to guess which decade really rocked, in terms of wage growth across the board? That’s right, the Clinton era, right after “the biggest tax increase in history.”
As I said, more later, in a separate post.
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Based on what I read here, I come to the temporary conclusion – subject to change with additional evidence presented – that Mr. Evslin knows even less about socialism than he does about job creation.
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I can’t help but add these thoughts:
1. Mr. Evslin sets up a straw man version of socialism when he asserts socialists – I’m not one, btw – like the idea of creating unproductive work in order to keep people employed and happy. No, socialists want a world where people can work, make enough money to meet their needs, build up some savings, have a measure of security. Capitalism could give a rat’s behind about creating jobs, per se. Job-creation is only valued as a part of a system to increase profits. Nothing wrong with that, per se, except that, when those profits are largely held at the top, as they have been increasingly since 1980, millions of people doing necessary work do not have the means to live. Second, capitalism believes in maximizing profit to the point of ignoring all other concerns. That justifies killing jobs or moving them to take advantage of cheap (exploited?) labor. What happens to those people who lost jobs if new jobs aren’t being created? The rest of us, working through government, have an obligation to make sure people aren’t suffering, our brothers’ (and sisters’) keepers, if you will. Capitalists like to scoff at that obligation – the “nanny state” – until, of course, things go wrong in the market, and their institutions need bailing out. Then, socialism sounds just fine.
2. Speaking of make-work, for decades, even as the need for the huge military machine has declined (and that’s assuming we even needed it in the first place), we have poured billions, probably trillions, of dollars into maintaining a military industry, and the argument has been – I heard this often in my years on Capitol Hill – that we needed to have that capacity ready, just in case. So we subsidized many corporations and thousands of jobs to produce goods we really didn’t need. Heck, if you just took the money we spent on Star Wars – a system that has never, ever worked – you could make a decent dent in the deficit.
3. Several other writers have pointed out that our economy was much healthier in earlier years, when taxes were much higher – and, we might add, income distribution better – than they are now. I would note that other industrialized nations – Germany comes to mind – with much higher taxes and a much, much stronger social safety net – are recovering much better from the recession than we are.
4. The Recession, btw, was not caused by Big Government; it was caused by Big Business, which flim-flammed its way to wealth, abetted by Republicans and conservative Democrats, leaving the rest of us to suffer in the wreckage. To add insult to injury, the champions of Big Business who work in the Government made damn sure their friends got completely bailed out, while doing everything in their power to prevent Government from acting effectively to help the rest of us.
5. Finally, Moody’s noted last fall the private sector was sitting on $1.8 trillion dollars it refused to invest. The general excuse was that conditions were too uncertain, too risky. Ironic, given that one of the excuses for a few people piling up wealth was that that was their reward for being risk-takers.
Capitalism is perfectly happy to allow millions of people to suffer to benefit a few. It is the role of government to take steps to ameliorate that suffering and provide some measure of security while “the few” are partying. It is also an appropriate role for government to take steps to prevent these kinds of meltdowns, by setting rules for the conduct of commerce.
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Mr. Fairbanks,
I love your posts, despite disagreeing with much of what you say, because they’re thorough and force me to do more research. Regarding your enumerated points:
1. I think it’s inaccurate to suggest that capitalists scoff at the obligation to care for those less fortunate; in fact, they take this obligation very seriously and, rather than trust vast government programs that are accountable to lobbyist-lubricated special interests, they would prefer instead to fund charities of their own choosing, whose balance sheets are transparent, and who must ensure that their operations are top-notch and efficient or risk losing donors. The government is not the best means of caring for our brothers and sisters, precisely because of its lack of accountability relative to private sector charities (which would be FAR more robust and well-funded were they not competing with the federal government, which can force people to fund it regardless of its outcomes or lack of transparency).
2. No argument with you on the military bloat.
3. The fact that the U.S. economy performed well when marginal rates were 70% or 90% is, I contend, irrelevant. Ditto what works in Germany (or any other nation, for that matter). At its core, economics is the study of human behavior, and how humans react to different stimuli – tax increases or decreases, regulatory burdens, ranges of product choices, etc. – is going to vary widely depending on circumstances. So it should be no surprise that *reducing* income taxes from 90% to 70% at the margin creates an entirely different result than you’d get by *increasing* marginal rates to that same 70% from 40%. The same goes for comparing ourselves to Germany… without sharing a history and culture with Germany (or Canada, or Britain, or France…), comparing what works over there with what could work in the U.S. is of extremely limited utility, at best, and totally useless at worst.
4. Business alone didn’t cause the recession; the government’s lack of appropriate regulation and oversight contributed, as did its assumption of some of the market’s risk. The bailouts were an unmitigated disaster and virtually guarantee that, despite government’s protestations to the contrary, it will always be there to bail out its pals. It’s pathetic, and I agree with you that it’s nothing less than theft from the American people (apologies if that’s putting words in your mouth, but that’s what I get from your description of it).
And finally, perhaps it’s true that capitalism is perfectly happy to allow millions of people to suffer to benefit a few, but I don’t think capitalists are so complacent. Companies literally compete with each other to see who can garner the best public accolades for the good works they do in the communities in which they work. There are consulting companies that do nothing but advise companies how to have the most impact on communities by doing the most good; business consulting companies like Booz, McKinsey and Monitor have entire practice areas that revolve around nothing but this type of work as shareholders and the public at-large demand responsibility from the folks who provide their goods and services.
This, too, is capitalism at work; consumers voting with their dollars to hold businesses accountable in an immediate and real way.
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Mr. Kheiry
Are you seriously suggesting that corporations should take over the task of meeting the needs of the poor, elderly, and disabled? That they are more accountable than the public sector? That they will necessarily address the most serious problems (as opposed to those that will benefit their image)?
As you said “Companies literally compete with each other to see who can garner the best public accolades for the good works they do in the communities in which they work.”
Exactly. That means they are unlikely to support work that is controversial and may alienate part of their market. And what does it mean for rural areas where there may be little if any corporate presence? And what of the corporations that choose to support the opera company instead of affordable housing? The former is wonderful but I would argue that not all philanthropy is created equal (especially if you’re poor).
And what about corporate giving in service of phony PR such as greenwashing?
And what happens when profits are down? A recent report from CECP found that 60% of companies decreased their giving from 2008 to 2009. What do we tell the needy when this happens?
And what about shifts in giving? Companies are free to change their charitable strategies on a whim (or perhaps for good reason like a huge natural disaster). When that happens, someone loses. The lack of consistency would be very difficult for the non-profit recipients.
There is just so much wrong with your suggestion that it scares the hell out of me.
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Mr. Hoffer,
My apologies for scaring the hell out of you. I don’t think charity should be the sole purview of corporations; there is absolutely a role for government, but I think that role should be limited to handling what the private sector cannot.
By “private sector” I don’t mean only corporations; I mean all organizations that address societal needs, like the Salvation Army, United Way, World Wildlife Fund, Habitat for Humanity, etc.
My view stems primarily from having been a reporter and managing editor for many years, during which I extensively reported on government and the private sector. I saw charities that did unbelievably effective work helping people who were in dire circumstances, and interestingly enough, THAT experience is what turned me toward Libertarianism. The most effective charities were those that refused all government funding and thrived only on donations from companies, churches, and individuals. Meanwhile, I spent time at the Statehouse watching how laws were made, watching how lobbyists shaped legislation, watching how rhetoric of compassion and caring were draped around laws that had nothing to do with either concept.
Given what I saw with my own eyes, I trust the private sector to do what’s right, and to do it with genuine caring, and far less fraud, waste, and false smiles, than government-created entities and programs.
So again, my apologies for scaring the hell out of you; my suggestion wasn’t to turn over all charity to corporations.
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Jamel,
“Comparing what works over there with what could work here in the US is of extremely limited utility, at best, and totally useless at worst.”
Not too sure about that Bess.
I spent a large portion of my life comparing European and American legislations that both worked and didn’t. Many did work.
If you’re Dale Carnigie, you don’t want to compare. But if you’re analyzing governments and mechanisms to improve our society, comparing is essential. Please don’t say it’s “limited” or “useless.”
Mr. Fairbanks was correct to mention Germany.
How can you say “without sharing a history.” Are you serious? For one, we have the longest non militarized border in the world with Canada. For two, we bombed the hell out of Germany not to mention Japan and yes it did too have very much to do with the post war landscape including today’s econmic distress.
As for your number three claim at the end, stick to what you know about. We Americans can learn much from other countries just as they have learned from us, good and bad.
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Great discussion. Thanks for being thoughtful and civil.
Just a couple of points:
1. Jamal Kheiry, John Fairbanks, and I seem to agree that the banking bailout (TARP) was a bad idea. Jane Stein says that I’m either lying or incredibly ignorant for saying that TARP concentrated on saving banker’s jobs and salaries; but that’s what I believe is the truth. Please see Fractals of Change: We’ve Been T*RPed. Many people confuse TARP, passed during the Bush Administration, and Stimulus or ARRA – passed in the first days of the Obama Administration. Stimulus actually has much more to like in it; but parts of it failed badly and I feel obliged – since I was there – to write about both the successes and the failures.
2. I didn’t say nor mean to imply that socialists believe in make-work jobs nor do I use the term “socialist” as an epithet. Socialists do believe that the state ought to be the provider of capital, a major employer, and own much if not all industry and infrastructure. If that were true, then more government jobs would be the answer to unemployment. However, I’m a capitalist and I don’t agree with the premise.
3. It is unacceptable to have “socialism for the rich” and the rule of the marketplace for everyone else. Please see Socialist Senator Sanders Saves Capitalism.
4. Arthur Hamlin, you are right to point out that reducing taxes to zero doesn’t work anymore than raising them to 100% – at least unless you’re an anarchist and want to defund government completely. It’s possible to have too little government just as it’s possible to have too much. I think the government sector in the US (including the shadow government of businesses and non-profits funded largely by government) is too large in proportion to the private sector and that the economy and most citizens will gain by reducing the proportion of the economy spent by government.
Happy New Year all.
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whoops, meant to put links with two mentions of previous posts of mine. We’ve Been T*RPed is at http://blog.tomevslin.com/2010/10/weve-been-trped.html and Socialist Senator Sanders Saves Capitalism is at http://blog.tomevslin.com/2010/12/socialist-senator-sanders-saves-capitalism.html.
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China is adding good-paying jobs, producing goods, accumulating wealth and loaning money.
The US is loosing good-paying jobs, producing services, dissipating wealth (wars?) and borrowing money.
The Chinese, Europeans and Japanese, Tom Evslin, myself, and others, think the US elites, including most of the US Congress, are mismanaging the US economy to the point that most of the benefits of growth go to the top 5% of households and the middle class is being hollowed out to the point it cannot keep itself educated and trained enough to compete with other advanced industrial economies; not a good way to stay competitive, maintain /improve living standards. It is a good way to become somewhat of a banana republic.
These trends are nothing new. They have been going on since about 1960 and accelerated around 1980 as other economies became more competitive.
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The single best measure for the US economy is to raise the minimum wage to about $10 and keep raising it at about 5% per year and cover all workers.
Lower-paid private sector households would have much less need for government programs and the state workers who administer them could get off the government payroll and get a job in the private sector.
This would make the US more efficient.
The next major item is to deport the 10-15 million illegal immigrants. That alone would save the US about 100 billion/yr in government programs.
These illegals are here for the benefit of businesses, to cow the American worker who has to compete with them.
They are not here to help the American worker. The government programs basically are a subsidy for business.
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Tom,
It is not the size of the government sector relative to the private sector that is important, it is what it DOES with the funds and the policies it cooks up.
According to Paul Volckner, only about 25% of financial reform that should have been done actually ended up being enacted.
Having a foreign policy so that people around the world hate us, take up arms against us, is a government misdeed that has led to various wars since WW2.
Other misdeeds are having a public school system that is “training” US students to be in 15 to 20th place compared to other advanced industrial economies AND spending 2 times the amount per student doing it.
Another is having a healthcare system that does not cover about 50 million people and covers the rest at 2 times the cost of Japan and Europe.
I could go on for a while but you get the point.
Willem