08 August 2011

Insane proposal.

The better answer—the only road back to fiscal sanity and AAA status—is to reverse the economic policies of the late Bush and Obama years. The financial crisis followed by the Keynesian and statist revival of the last four years have brought the U.S. to this downgrade and will lead to inevitable decline. The only solution is to return to the classical, pro-growth economic ideas that have revived America at other moments of crisis.
What could be more ridiculous than trying something that worked in the past?

"America Gets Downgraded. A spend and tax policy mix always leads to economic decline." Editorial, Wall Street Journal, 8/8/11.

1 comment:

Zenster said...

The only solution is to return to the classical, pro-growth economic ideas that have revived America at other moments of crisis.

The one problem with such a strategy is that America, largely, no longer has anywhere near the ability to implement "pro-growth economic ideas" which it once had.

This goes to the heart of an essay I am currently writing about historical differences between the "Robber Barons" of yesteryear and the super-rich of today.

Due to their predominant involvement with industrialization the Robber Barons, however crooked they may have been, actually managed to create a degree of overall wealth and not just enrich themselves. The key word here is "create" in that the creation of wealth is driven by three, and only three, relatively simple functions. Namely: mining, agriculture and manufacturing.

All the rest consists of "service industry" activities and they are, by and large, an economic shell game in that money changes hands but no wealth is actually created. Such financial hand-waving is not productive. As one waggish economist put it; "A healthy nation's economy cannot be based upon giving each other haircuts."

This is a crucial difference with respect to the vast bulk of modern wealth creation in America. No one is building anything or extracting much in the way of natural resources. Instead, many of the super-rich have become that way by gaming the system or interposing themselves in financial transactions.

This sort of cleverness does not invent microprocessors or genetically engineer vaccine-producing bacteria. It merely stands in the way of commercial activity and acts as a ticket taker or toll collector. Most any third-rate intellect can install itself in such a role.

Be that as it may, none of this does diddly-squat towards America regaining its industrial preeminence. Quite the opposite, in fact. These sort of money grubs are so incredibly shortsighted that their financial tunnel vision encourages such damaging practices as off-shoring of manufacturing and relocation of corporate headquarters to foreign tax shelters.

Elsewhere, other internet authors have already noted the lack of allegiance shown by trans-national and global corporations. When this is combined with political leadership that has a "me first" attitude ― one that is entirely opposite to any notion of public service ― the net results are just as often devastating.

When this is so, special interests gain an unprecedented foothold in the corridors of political power while the electorate is harnessed in service of the state. This blatant tyranny is already happening in the way that taxpayers (i.e., tax producers), are being made to foot the bill for ― not just the entitled class of tax-consumers ― but the entire top-heavy superstructure of federal government.

Where the Hell any growth is supposed to occur in such an intensely parasitic environment beggars all belief.