I was thinking yesterday about the statement made to me that I needed to understand Keynes and his macro-economic model in order to understand why spending is what the government must do in order to get us out of trouble. I have always whole-heartedly disagreed with that statement. As I often have acknowledged, I am not an economic guru, but I think I am a pretty smart fellar. I am well educated (as far as formal schooling) and well read (my friends all say I spend too much time with my head in a book). I try to take a realistic look at the situation and see where it makes the most sense to make a move. Now, our invited guest, who yesterday for some reason did not come and reply back to what I had written, obviously thinks this makes me dumb. But I think on a “macro” level, we might all benefit from having this conversation. I am not going to research out the wazoo for this, I am going to simply say what is on my mind, and let everyone have at it.
Before I go down the two paths that the two major parties seem to believe, allow me to say up front that in an ideal world I would not have government doing anything. We all know that I am no fan of government intrusion into the free market. A free market without government intrusion runs itself perfectly. Every time. It self corrects. It has good times and bad times. But it always works. Without fail. I am willing to argue that point if someone wants to argue it, but I don’t think anyone can show anything that refutes that argument.
The problem is that we have not had a free market for a very, very long time. Somewhere way back when, some politicians saw something happening to the economy that wasn’t good (a market correction, which while not profitable is always good). They didn’t want a bad economic situation happening on their watch and thus being blamed on them. So they found a way to manipulate the market so that the “bad” situation could be pushed out to the future, where some other politician would have to deal with it and thus take the blame. Thus the idea of manipulating the market was born, and has thrived ever since. In the hundreds of years since that time, politicians and economists have realized that manipulation of the free market can provide many things… increased control over the population, control over what is produced and who produces it, and partisan image control.
I covered in detail in the “March Towards Socialism” series the major culprits who began using control of the market for political gain and social change in US history. Each successive administration has continued the trend, each adding more levels of manipulation and control, countered with breaks and allowances, to maintain control and push off the inevitable “crashes” like the one we find ourselves in right now. This isn’t about partisan politics. I have always maintained that both parties do it, albeit in different ways (while oddly each doing the exact same thing). It is a broken system that has resulted in a government far too large, too intrusive, and too corrupt. It has resulted in an economy with so many levels of bullshit that it becomes impossible for anyone to even fathom the idea of going back to a truly free market.
In that way the politicians have already won. Over two hundred years, they have constructed a system that is far too complex to eliminate in one fell swoop without completely upsetting the apple cart and causing chaos. One of two things must happen in order to get back to “free”. Either we will 1) take another 100 years of concerted effort to slowly dial back the intrusions, working our way backward from where the market intrusion began, or 2) manipulation will continue until it can no longer be sustained and the collapse will be massive and sudden and horrible. I wish for #1 but I honestly fear that #2 is what we will see happen. I don’t think it will be nearly as soon as some, such as BlackFlag, see it happening, but I do believe it is the course of the future on some timeline, be it in a year or a hundred years.
So there is no question where I stand on what I would LIKE the market to be. But that is not the situation that we find ourselves in, my friends. If the collapse ever happens, we can then apply that thinking, but for now we have to deal with what we’ve got. And what we’ve got is a system that has massive complexity and layers upon layers upon layers of controls. The government has us, pardon the expression, by the balls. So the question then becomes, if we have no choice but to have the government take some sort of action that will be best for economic growth in our current reality, which philosophy is the right one to make things work? The Republican party has one philosophy, while the Democrats employ the opposite philosophy.
The Republican plan looks something like this: In order to stimulate the economy, the right move is to take care of the wealthy, the producers and industries, and then allow that money to work its way down in the system. The upper levels use their money to create jobs, which filters the money down to the lower levels. To do this, they often use the message of tax cuts for the businesses and wealthy. A basic principle, put the money in the hands of the upper economic brackets and allow it to “trickle down.” They usually claim tax cuts for everyone, although that isn’t what happens. Their rallying cry seems to be that the best thing to do is put the money in the hands of the people, who will use it more wisely than the government will use it.
The Democrat plan looks something like this: In order to stimulate the economy, the right move is to take care of the lower income people, the workers and the consumers, and then allow that money to work its way up in the system. The lower levels will spend their money on products and services, which filters its way up to the higher levels. To do this they often look to increase taxes for the businesses and wealthy. A basic principle, put the money in the hands of the lower economic brackets and allow it to “trickle up.” They usually claim tax increases on the wealthy, although that isn’t what happens. Their rallying cry seems to be that the best thing to do is put the money in the hands of the people, because the wealthy are too evil to trust to do the right thing.
The Problem is that they are both full of shit. Big business and the wealthy are in complete control of Washington DC, both the Democrats and the Republicans. Republicans, despite their claims (Read My Lips… No New Taxes, Bush the 1st), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks. They have no choice, of course, because getting re-elected costs money, and the poor can’t pay it. The Democrats, despite their claims (95% of Americans will not see one dime of tax increase, Obama the Messiah (He Lies!… zip it Wilson)), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks. They have no choice, same damn reason. We saw those big tax increases for all of us under George HW, and we have already seen more legislation that will increase the tax burden on all Americans from the Obama administration in 9 months than we saw in the last 8 years.
It seems to me to make sense that the wise thing to do is not punish the wealthy. The wealthy have the means to fight back against an over-reaching government. And by fight back, I mean they can hide their money, move their businesses overseas, and simply avoid the trap that government has laid for them. And if all else fails, they can simply pay off government officials at the highest levels (the 535 most corrupt people in government are the most paid off) to get a break one way or another and retain the wealth that they have. Despite the claims of “caring about the people” from Democrats, we have seen again and again that they don’t care one bit. Despite the claims of the same from Republicans we see the same thing. We watch the stories again and again from both sides of the aisle. Corrupt politicians getting caught being corrupt. The only difference is that they rarely have to pay a penalty.
It also seems to me that if the government is going to give someone a break it should be the working Americans, as they need it the most. The bottom half of the economic spectrum is barely surviving (Because of government, NOT because of corrupt business practices, it should be noted). And the least the government that completely screwed them can do is help them out. The problem is that government has them right where they want them… dependent. So as long as they do survive, government is going to do nothing that will help them to actually decrease the dependency on government. Despite the claims of “giving people a hand up” from Republicans, we have seen again and again that the plight of everyday Americans only worsens. Despite the claims from Democrats of the same we see the same thing. We watch the campaigns again and again from both sides. Each claims that this time they are going to change the fortunes of those on the low end of the economic spectrum. Sadly that has been the campaign promise EVERY election for the last 50 years.
So let’s forget for a second that the two parties in power are both full of crap. Let’s forget that the Republicans are a corrupt bunch of yahoos who use fear to make Americans feel that we need them to protect us from abroad and from those evil, redistributing Democrats. Let’s forget that the Democrats are a corrupt bunch of yahoos that use class warfare to gain power so that they can then ignore any issue that will actually solve a problem and who will protect us from those evil, money loving Republicans. Both parties are full of crap. That is a given.
What is the path forward for economic prosperity, in a nutshell. I know we will get down to some real minute details. But on a macro level, is it better to take care of the wealthy and have the wealth trickle down, or to take care of the poor and have the wealth trickle up? I look forward to the discussions on this. But be prepared. I will be lurking and will challenge both sides. As a disclaimer, for any who aren’t aware. I am a fiscal conservative at heart, so we know where I lean, but I lean there more for less taxes collected from EVERYONE than because I want to see the wealthy “taken care of.” What I would like everyone to do on this exercise is take off your partisan hat, and talk on regular people level. Which is the right way, and why?