Levellers

Faith & Social Justice: In the spirit of Richard Overton and the 17th C. Levellers

Fiddling While Rome Burns!

Not only are the Republicans trying to block economic recovery (with the “moderates” stripping the bill of everything it takes to actually create more jobs while the conservatives want to kill it altogether), they also keep saying, “Slow down! Let’s take more time on this!” But this is fiddling while Rome burns, Nero.  The current recession ALREADY entails more job losses than either of the previous two.  It’s a snowball going downhill and soon it will be too late to stop or reverse it.  If the moderate version of the stimulus passes it will be too little and will need additional work before June.  If it all fails, we could repeat Japan and be in recession for 10 years!  Below is a chart of current job losses compared to the 2 previous recessions–all while the Republicans in the Senate keep blocking anything useful.

This ought to be a poster in front of the Senate Floor and on the screen of every news show while the “debate” rages on about how infrastructure and education are “wasteful spending,” food stamps are “evil socialism,” and how we desperately need more tax cuts for the rich!  I’m so angry I could scream.  I need to stop blogging and start praying now.

February 8, 2009 - Posted by | Uncategorized

9 Comments

  1. Michael, you are letting media-driven panic get the best of you, and you are returning to the partisan-blinders level of rhetoric of last fall — the apocalyptic rhetoric where the republicans and wealthy are the children of darkness and the Democrats are the children of light. In the last few posts, you have accused the “rich” of not caring for the poor or the health of the nation. You have said or imply the Republicans don’t want to save the economy like the Democrats do. This is nuts. Why don’t you just say “you are either for us or against us”.
    Everyone agrees on the aid and tax credits to the poor and extensions to the unemployed. They simply believe certain types of spending are partisan projects and not as useful in creating jobs right now, so they cut certain spending programs (which will reappear in future legislation). This has increased the level of tax cuts on a percentage basis. That’s bipartisan legislation. Change we can believe in.
    You also are assuming a Keynesian solution. Not everyone is on board there. This whole idea is untested that massive amounts of spending by the government will stimulate the economy in a crisis. It is not clear it worked in the 30’s until spending went to 50% of GDP in WWII and a good chunk of the workforce was employed in foreign warfare. That is not going to repeat. Japan’s spending also proved useless til this day essentially because of high savings rates.
    The problem is not a fall in aggregate demand that the gov’t can make up for. It is the insolvent banks just as in Japan that will cause saving to continue. Banks won’t lend and people are saving because of uncertainty not because of lost jobs(98-99% of the people who were employed a few months ago are still working). The root of the uncertainty is foreclosures and what that means for the banks. That should be more directly addressed. Throwing more debt onto the national balance sheet is like throwing gas on the fire, or trying to sober up with another beer. It will solve nothing just like the thirties and Japan. And it is not moral since it is stealing from the faceless future people who must pay for it with future slower growth, more future poor, less future capital to invest in productive enterpises.
    Much of this is cyclical and the “rough edges” should simply be smoothed out to ease the transition not cure it. It is creative destruction. We do not need the pitchfork and Mugabe sentiment you are flirting with (Marie Antoinette reference, really?). The business cycle still functions. My parents are old, out of work but looking, and my wife just switched jobs because of a layoff in the home-building industry and many jobs were available. Wages are still increasing, inflation is decreasing or mildly deflating somewhat, jobs are being created in useful industries(that was underreported in the employment report), capital being redeployed. Now is not the time for the Bush-like “shock doctrine” tactics that Rahm Emanuel explicitly wants to employ.

    The Democrats will get their way on many issues in the coming years, but much of this spending is partisan projects. Even the useful “infrastructure” projects will likely employ many illegals and simply funnel money out of our economy to Mexico losing the stimulative effect(I know we can’t admit this in polite company). Laid off 55 year old GM workers and younger financial employees are not going to be putting insulation in schools and building windmills I guarantee. We have a mismatch of supply(too much housing, autos, and financial services) and demand (not enough ???) to the economy right now. Providing a bunch of CCCorps(my Grandpa did it) dig and fill in the holes won’t cure squat. It simply takes labor and money away from those ventures which the economy does want right now. Why weren’t many of these projects done previously? They were shelved because they were not found to be economically useful to taxpayers or investors. This is like Japan paving the countryside and calling it ‘infrastructure’. The options are not ‘this plan or nothing’. It’s ‘this plan’ or the many thousands of business projects which don’t have names but are economically viable and are better than re-sodding a public lawn.

    Aid to the poor and return of tax receipts to the economy are good. Corporate Tax carry back of losses is even more useful for creating jobs. The personal tax refunds will be spent or saved. If saved then banks can lend them to those who can usefully spend them in our economy if the risks seem favorable to all involved. Lowering debts is good right now with our terrible savings rate in any case. How can you morally advocate more of a debt binge? You are taking a moral stance on (or making an idol of) Keynesian economics which remains unproven for this situation. One can disagree with the stimulus plan and still love God, the poor, and country.

    Comment by stan | February 8, 2009

  2. You would flunk Econ 101.

    Comment by Michael Westmoreland-White | February 8, 2009

  3. I’m an accountant, so don’t tell my boss.

    Comment by stan | February 8, 2009

  4. Well, accountants are to balance books, so I can see why you don’t like deficit spending–but every business knows that sometimes deficit INVESTMENT is necessary.

    Comment by Michael Westmoreland-White | February 8, 2009

  5. Accountants lawyers and bankers – birds of a feather?

    Comment by Paul | February 10, 2009

  6. Yes Paul we all have an education. And understand negative net present value makes most of these “investments” a waste which is robbing the private sector of future jobs. There is no free lunch.

    Have you seen this graph on a percentage of workforce basis? It’s how educated statisticians look at numbers to make relevant comparisons. If you do, you’ll see it is not unlike other recessions which we didn’t ‘stimuate’ ourselves’ out of. This is fear-mongering.

    For the graph google ‘job losses graph’ and you’ll find it rather quickly with this one.

    Comment by stan | February 10, 2009

  7. Michael,

    You wrote to stan…

    “You would flunk Econ 101.”

    This is honestly a pitiful response that really means you simply cannot back up your argument in the face of a man who clearly is more educated in matters of economics than you are. You admitted as much in one of our previous discussions where you pointed out that you got all of your economic training from a couple at your church.

    Look, we’ve got to get this right, not just accept what is placed before us. If Obama is serious about fixing the economy why did he allow hundreds of ridiculous and non-stimulating earmarks to be a part of the original bill? Even he has admitted there were previous mistakes made. What would have happened if we had adopted those?

    Now is the time not to panic. One cardinal rule in investment is that no one ever made a dime panicking. Now is the time for due dilligence and bi-partisanship. We need more give and take if we want this to work, not simply signing off on the first thing that comes across one’s desk. I fear your partisanship has blinded you once again. Now even the moderates are idiots to you.

    Comment by D.R. Randle | February 10, 2009

  8. As I understand it, the earmarks that are of concern to people are really pocket change in this package. That doesn’t mean one can’t be upset about them, but in all seriousness, what are we talking here? $200 million for some pet program or other? That’s still a small fraction of one percentage point of the entire package that’s being proposed.

    I think better objections need to be brought up than that if we’re going to take seriously the call to stop all this. As it stands, Democrats in Congress are bending over backwards to include tax cuts and cut spending for the sake of Republicans, and they’ve done so from the beginning. What I find disturbing is how, in such a situation, there’s such an incredible lack of generosity on the part of many (not all, of course) Republicans.

    Comment by Evan | February 11, 2009

  9. Those 1% earmarks have been removed, too. It looks like the final package will be under $800 billion (which may be too small), but cut out some of the tax breaks and put back in some of the infrastructure projects. So, maybe this will do some good after all.

    Evan, have you noticed the different attitude between the GOP governors (Crist of FL, Schwarzenegger of CA, Pawlenty of MN, etc.), who are in favor of the stimulus and stress the necessity of acting quickly with the attitudes of GOP leaders in Congress (Boehner, McConnell, etc.) who are dead set against it. The latter are the fiddlers who are blinded by ideology. The former, the governors, actually have to get results for people and have to be far more pragmatic.

    Comment by Michael Westmoreland-White | February 11, 2009


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