From the “I’ll believe when I see it” department:
The governments of what were the richest countries in the world may be broke, but what is interesting is their response to this: the plan is not to make themselves rich enough once again to do all the things that they used to do, but to rethink the whole enterprise so that government never again finds itself so extravagantly overextended.
On this side of the Atlantic, there is now a broad understanding that the social democratic project itself is unsustainable: that it has grown wildly beyond the principles of its inception and that the consequences of this are not only unaffordable, but positively damaging to national life and character…
If ordinary citizens are to be expected to take back more control and moral responsibility, then some pretty basic things will have to be on the table. First, they must be allowed to keep significantly more of what they earn. The lowering of taxes cannot be a vague intention or a pious hope. It is a sine qua non of a more self-reliant, independent, morally resourceful private life. (And, contrary to the androids’ argument, lower taxation does not conflict with cutting the deficit: in fact, lower rates of tax will increase growth and revenue.)
Note: it might be the case that tax cuts will enhance revenue, but that should NEVER be the argument for tax cuts. I’d rather tax cuts dramatically reduce revenue, if for no other reason, than to force the shrinkage of leviathan.
And this is a perfect example of how ingrained statism is: “they must be allowed to keep”. Seriously, “allowed to keep”, how about must not steal so much of their wealth? That language implies that we’re allowed to keep more, as if the fundamental basic right of property, ownership of one’s self and product, is now a state privilege. We’re allowed to keep more? Gee, thanks.
And speaking of leviathan…
Boo hoo hoo, such a sad thing to read:
Well, I wouldn’t call them “jobless”, as that implies the recently booted actually did something useful enough to be called a job. I don’t think lording over us, imposing one’s will upon us, and harassing us with myriad of laws, taxes, and regulations, then enforcing such measures counts as a job. In fact, peaceful removal from office sounds like getting off way too lightly.
And from the “This isn’t anything at all called capitalism department” (and the same article):
Former Clinton press secretary Joe Lockhart, who runs the Glover Park Group, was a bit more optimistic. In 1994, when the Democrats lost the House for the first time in 50 years – and the Senate as well – the lobbying and political strategy business was a lot smaller and foundations hardly had a presence. “The industry is much bigger than it was in 1994,” he said, and the “corporate footprint in town is bigger.” So each potential employer may not be filling many slots, he said, “but there are a lot more of them.”
So, there is a much larger footprint of rent seekers. Not surprising as government has grown by leaps and bounds the past decade. And, if nothing else, it disproves the spurious notion that somehow we’re a free market economy. It certainly disproves without any doubt, that the last decade and a half was an unregulated, laissez faire, system.
On another note, let’s put to rest once and for all the myth that consumer spending drives an economy. (I know, this data is simple, and easily accessible to even the most enlightened, credentialed, and honored. I mean, I bet they even have internet access in the bowels of the NY Times.)
From the Bureau of Economic Analysis (government data, so it must be true!!) NIPA tables:
Table 1.1.5 GDP
Gross Domestic Private Investment
Let’s put a few things into perspective. In the last decade, consumer spending has increased by 37%. And today, there are fewer people employed than a decade ago. Unemployment is officially 9.6%, but the more accurate number, U6, shows over 17%. And some estimates put it around 20% when one counts those that have dropped out completely. 2008-2009 saw a mere 1% drop in consumer spending, yet GDP (which is hardly the best measure of economic well being by the way) plummeted. If spending drives an economy, then, this is hardly the data I’d want to sell that idea with.
Investment (and of course the malinvestment, but in a the wrong manner) drives an economy. Jobs don’t magically appear with more consumer spending. In fact, Austrians know that consumer spending is the last act in a long chain of events, the many and various stages of production, which results in satisfying consumer wants. Investment declined precipitously, and that’s the problem.
It’s actually only half the problem, as much of the investment was of course monetary expansion, credit bubble induced, driving a boom which invariably busts. But that’s already been covered here, and far better here. It’s clear, and something even a nobel prize can’t change, that economic growth is driven by business investment. Real investment, supported by real savings matching consumer time preferences, is the only way to improve economic well being and the standard of living.
Spend all you want, it won’t matter. In fact, it’ll only make things worse.
On a final note, there’s three things the newly elected party in congress can do to convince me they are serious.
1) immediate vote on repeal of obamacare
2) end of baseline budgeting
3) across the board, 5% real reduction in spending on everything
Obviously, they’ll be fighting both the senate and the president. But they can draw a line in the sand, so to speak. And that’s far from all, but given the political reality and entrenched bureaucracy, it’ll at least be the first real step.
There’s much more to be done, for example:
-eliminate the departments of: commerce, education, energy, transportation, HHS, HUD, veterans affairs, interior, labor (this one HAS to go!!!), agriculture
-audit, then eventually eliminate, the Federal Reserve, and move towards once again a gold standard and 100% reserve system. (Perhaps nothing at all, a system of free banking, but that’s an altogether more complicated and esoteric point, one I’m not willing to, nor qualified to, take a stand on.)
-repeal of legal tender laws
-eliminate the IRS
-eliminate the capital gains tax, corporate/business taxes
-require that any bill or spending program be constitutionally authorized (cf. Pelosi’s “are you serious?”)
-phase out all entitlement programs
-end the wars of empire. I am not a “purist” libertarian, as I understand that sometimes defense and national security isn’t always black and white. Sometimes, to quote Thucydides, “human nature being what it is”, not everyone is going to see non-aggression from the same point of view. But unending wars and nation building, needs an abrupt end.
I’m sure there’s more. But until they prove to me that they really are serious, I’m not holding out hope for change, or something like that.