05-12-2011, 08:46 PM
No support so far for supply side economics.
Consider this:
Life experience since 1980, or thereabouts, debunks supply side economics. GHW Bush even called it "Voodoo" economics. Rightly so.
Interest rates are at historical lows; cash in corporations and in wealthy individual hands is at record levels; unused capacity is at a very high level; actual tax rates are at historical lows; businesses have greatly improved their inventory management systems; productivity and profits are, in many cases, at record levels; CEO incomes are at all-time highs.
All the ingredients are there for increasing supply; and yet...
Businesses won't spend because they can't use the capacity they already have, and productivity and profits are just great, thank you very much. No point in making something they can't sell. The borrowing they are doing is rolling over more expensive debt for much cheaper debt, which is a bargain.
We have a financial crisis, not a cyclical business recession. The problem is not supply; it's DEMAND. The vast majority of people don't have money on the margin, and many don't even have the basics. 1% of the people can make the vast majority of the money, but they can't spend nearly enough to power the economy for the other 99%.
The 8 million jobs lost from 2007-2009 averaged approximately $25-30/hour. Job gains since then, as meager as they are, have averaged about $11/hour. McDonalds hired 62,000 people in April. They turned down over 900,000 other applicants. The jobs aren't there. At any price. If all people who really needed work, or who would rather work full-time instead of part-time were added to the official unemployment total the unemployment rate would be 15-17%.
And yet, all the conditions are there to create supply. But businesses are either unable or unwilling to do it.
This situation cries out for a wholesale, national "project(s)" to put people to work doing critically necessary and otherwise useful work. There has never been a better time or need in my lifetime to invest in our infrastructure which has deteriorated so badly. We have depreciated it beyond safety in many cases. It's an investment in the future. And many who are receiving safety net money now would actually have an opportunity to contribute and create real worth for the economy. The effects would be almost immediate because DEMAND would increase, and the capacity of businesses would be better utilized, which would foster more profits. The engine would get started.
Henry Ford understood. He paid his workers well because it created DEMAND.
There are a number of other areas in which I believe we should invest, but I don't have time right now to flesh it out. I'll just add one more example: This is the best time since the end of WW II to make major investments in critical areas of our educational system. We practically drag bottom in the industrialized world in literacy.
We could transform this country. Why not?
Consider this:
Life experience since 1980, or thereabouts, debunks supply side economics. GHW Bush even called it "Voodoo" economics. Rightly so.
Interest rates are at historical lows; cash in corporations and in wealthy individual hands is at record levels; unused capacity is at a very high level; actual tax rates are at historical lows; businesses have greatly improved their inventory management systems; productivity and profits are, in many cases, at record levels; CEO incomes are at all-time highs.
All the ingredients are there for increasing supply; and yet...
Businesses won't spend because they can't use the capacity they already have, and productivity and profits are just great, thank you very much. No point in making something they can't sell. The borrowing they are doing is rolling over more expensive debt for much cheaper debt, which is a bargain.
We have a financial crisis, not a cyclical business recession. The problem is not supply; it's DEMAND. The vast majority of people don't have money on the margin, and many don't even have the basics. 1% of the people can make the vast majority of the money, but they can't spend nearly enough to power the economy for the other 99%.
The 8 million jobs lost from 2007-2009 averaged approximately $25-30/hour. Job gains since then, as meager as they are, have averaged about $11/hour. McDonalds hired 62,000 people in April. They turned down over 900,000 other applicants. The jobs aren't there. At any price. If all people who really needed work, or who would rather work full-time instead of part-time were added to the official unemployment total the unemployment rate would be 15-17%.
And yet, all the conditions are there to create supply. But businesses are either unable or unwilling to do it.
This situation cries out for a wholesale, national "project(s)" to put people to work doing critically necessary and otherwise useful work. There has never been a better time or need in my lifetime to invest in our infrastructure which has deteriorated so badly. We have depreciated it beyond safety in many cases. It's an investment in the future. And many who are receiving safety net money now would actually have an opportunity to contribute and create real worth for the economy. The effects would be almost immediate because DEMAND would increase, and the capacity of businesses would be better utilized, which would foster more profits. The engine would get started.
Henry Ford understood. He paid his workers well because it created DEMAND.
There are a number of other areas in which I believe we should invest, but I don't have time right now to flesh it out. I'll just add one more example: This is the best time since the end of WW II to make major investments in critical areas of our educational system. We practically drag bottom in the industrialized world in literacy.
We could transform this country. Why not?