Ideas Whose Time Has Passed.
What’s holding our economy back? Republicans came back with the boilerplate notions that taxes and regulations were costing companies too much, so they are choosing not to hire. Really? They’ve never been making more money. Answer me this: if corporations are getting record profits, making more money for everything they sell, and they aren’t hiring, then is our problem really what they say?
The rational, evidence based answer is no. But that won't stop many Republicans, because it's been practically pounded into their heads from day one. Government is too big, taxes too high. It's a fact for them that can't be falsified by anything so liberal as actual studies and numbers.
Liberal policies worked! For several decades, we didn't allow banks to get too big to fail. Why? Because back in the 1920s, they did get too big to fail, and many did. Bank runs and collapses were a common component of the economic troubles of the Depression. We fixed that with the FDIC, and though the events of the last few years killed quite a few banks, few consumers actually saw their money disappear. Some would call a program like this socialism nowadays, or suggest that it made the banks more eager to take risks, but the truth is, it's really neither. It's a means of making sure that the disasters of a few don't become the disasters of many. Besides, if the FDIC has to bail out your customers, you don't get to hang around. You're done, your bank is kaput.
It used to be that if your bank went under, you could expect your money to go away with it. Notice that of all the things people worried about with the collapse of the financial system in 2008, few worried that people who had put their own money in wouldn't be made whole. The main concern was that the finance of commerce in America, and the jobs that came from that, were at risk of being snuffed out.
I think it can be boiled down to a culture of corporate laziness. We're not going to make profits by making a product that sells well, or works dependably. We're going to fight any attempt to force us to take greater care with our products. We're going to fight raising wages for our workers, even as we promote greater and greater reliance on debt financing so those lower or stagnant wages don't keep people from buying more and more of our products.
There's another sort of slideshow from the same author, and it smacks down quite a few assumptions about how we got in our current situation.
This is not merely about whose to blame. To be quite honest, quite a few policies Republicans led on were still voted for by Democrats. Thing is, though, those Democratic Party votes don't make these policies liberal. The Democrats have had an identity crisis over the past few decades, many of them conceding to Republican policies as a way to adapt to the change in politics that Reagan and later Gingrich brought about. The Bush Administration changed this trend.
As well it should. From the point that the Bush Tax Cuts were signed into law until their renewal in December 2010, the grand total of movement of jobs under its auspices is 1.829 million. If we look at a ten year window instead, including the Obama years, it gets better: 948,000 jobs.
Better? Well, we're talking about a negative movement here, so smaller is better, naturally.
Giving the job creators around 1.285 trillion dollars bought us a loss of about 1.8 million jobs. Or, if we got for the full ten years, and add Obama's repairs, 950 thousand lost. Ah, but you say, what if we only look at the job increases?
For the window of the tax cuts that we can all agree are the Bush Tax cuts, no two ways about it, we have 9.971 million jobs, then, on the positive side of the equation. That includes, by the way, 1.405 million jobs under the Obama administration. So, 8.566 million under Bush's tax cut. If we're kinder, and add the five months after the renewal, we get 10.852 million. The Bush years still remain 8.566 million, though.
What were the numbers for the previous years?
23.979 million was the net gain for that decade before, from June 1991 to May 2001. Net. Just counting the positives, we have 24.683 million. about a third of that occurred in the years when the Democrats lead Congress. 29% net.
Let's go 10 years back from that. From June 1981 to May 1991, the economy created 16.910 million jobs net. If we only count the positives, it's 21.848 million jobs.
How about the 1970's? This might surprise you: 20.039 million net, 23.599 million positive. Or maybe the 60's? 17.464 million net, 19.119 million positive. The 50's? 5.831 million net, 13.256 million positive.
Finally! Something close!
Now many folks point out the 40s as an ideal in terms of stimulus, where for other reasons than merely economic, the government basically funded the employment of millions of Americans out of deficit dollars. What were the results? 11.770 million jobs net, 20.759 million positive. Mind you, this is before the Baby Boom takes place in earnest.
Notice something yet? During the decade in which Republican policy and politicians dominates, job growth is at its lowest for any of the ten year samples I produced. The economy tanks not once but twice, and never really recovers the way it did in times past. We can talk about whether the Democrat's model is a bit old, this liberal has no problem with modernization. But have Republican policies truly made Democratic ones obsolete, or merely unfashionable?
I think the evidence makes it obvious: unfashionable. The Republicans can sell the living hell out of a system that lets people keep more money, exercise more freedom, avoid bureaucracy, etc. But selling something and making it work, as any victim of a used car salesman can tell you, isn't always the same thing.
The GOP's full of fine promises, that Wall Street can regulated itself, that tax cuts can improve growth, and thereby recover the lost tax dollars and avoid deficit. But they don't deliver, and I don't think they're about to start.
They talk about change, but has the change they've already implemented been for the better? Most definitely not! Some certainly will benefit from their policies, and they are paying handsomely now to ensure the politicians' gratitude. But beyond that, most of us will not profit by this. They'll wrap our heads in mythology, trying to obscure the truth that the simplest means of bringing back jobs and the most direct work best, so they can sell you on policies that don't really benefit you.
If you want to continue making this mistake, I guess I can't stop you, but just look at those numbers up there, and ask whose policies really benefit the economy, really cut deficits.
Our ideas, if you really think about them, aren't all that complicated. Don't deleverage when unemployment remains high! Save your austerity for times of prosperity, when less people need government's help, and more people are paying in. Create jobs in order to reduce unemployment. Don't kill jobs when you're trying to create them. Regulated the dummies who couldn't keep the market straight themselves, break apart banks when they get too big to fail. Follow the scientific consensus when trying to decide what to do with energy and the environment, rather than depending on those whose vested business interests would have and do have them telling you self-serving things in order to keep their rather lucrative businesses going like they always have.
Don't just vote out of some emotional pique you might regret later. Actually look at the decision you're making, the costs you've already incurred. Understand the depths of the hole we are in as a people, and how we got there.
Posted by Stephen Daugherty at June 26, 2012 1:33 PM
If you actually tried to explain your party’s mediocre performance at job creation and economic stewardship, you’d probably end up in a sobbing heap Conspiracy-theory laced fantasy is your only defense against that mental breakdown.
You can talk about drivel. And that’s all you do. I prove my points, by laboriously exploring the job creation records going back over decades of recent American history.
The numbers speak for themselves. I don’t have to dress them up in fancy rhetoric. Your Tax Cuts, your frenzy of deregulation didn’t grow the economy faster, or jobs, just the fortunes of a few.
As for Cloward-Piven? It’s not the programs for the poor that are the primary driver of rising costs. It’s the entitlements most average people expect, and which your party has been raiding trust funds for. One could more easily argue that Republicans instituted Medicare reforms without offsets early in the last decade in an effort to bankrupt it, than that Democrats would seek to further strain the system with their costs.
Case in point, Obamacare’s reforms actually added to the long term solvency of Medicare by nine years, without adding any additional cost to taxpayers. Does that sound like the behavior of a group of people trying to break the social welfare system in order to forward a socialist agenda?
It’s bunk, and I’m pretty sure, with your friend Beck’s track record, that whatever he’s interpreted off the paper vastly overstates it’s influence, or even its visibility. Republicans have done more with their spending and tax cuts to implement such a strategy than any Democrats have, and that’s the weird irony of it.
I think the main reason Republicans accuse Democrats of trying to intentionally destroy the economy is that they have to live down having inadvertantly come close to doing so themselves. They have to also live down having had to compromise their principles in order to bailout the banks and prevent a complete collapse.
They essentially have to sell people on the necessary evil of letting the economy recover on its own, with only a passive tax cut stimulus. But indulging that before in the 1980’s led to both another set of compromises (40% increase in spending, a huge tax hike, and a massive deficit, despite promises), and significant underperformance compared to the predecessor. Net, Reagan only creating about 5 million jobs that first term, over a million of them in one never-since repeated month. His predecessor created ten million jobs in his one term.
I think it’s worth reminding people that folks once forsaked another Democrat over the economy, and after they were done electing him, his policies did little to prevent a much greater economic downturn than anything his predecessor suffered. Only a far stronger domestic manufacturing sector, Interest rates that were high enough to signficantly lower, and a hypocritical spending spree on the military, on deficit dollars, allowed Reagan to avoid his predecessor’s fate. And despite what our friend Billinflorida might say, what both Reagan, and the two Bush Presidents did with tax cuts and rises in defense budgets were essentially Keynesian stimulus. Truly libertarian policy wouldn’t even bother trying to manipulate the economy through tax rates, much less out of deficit dollars.
The real question is what flavor of Keynesian economics works best. It seems that giving people actual jobs and supporting domestic industries does more to improve the economy than slavish devotion to the needs of corporate paymasters. The “job creators” will get their money one way or another. The question is, how much good, how much activity does that dollar do between the point that the government spends it or turns it away, and the point where it reaches the folks who concentrate wealth in our society.
In 2010, Obama was president and the Democrats had big majorities in the House and Senate. Why did they renew the “Bush” tax cuts if they thought they were so useless and stupid. You know they would not have to repeal them; they just did not have to save them.
As usual, your analysis is just simple minded. In the years you mention, we had a world war, vast changes in energy availability. the rise of China, the rise and fall of Japan, the cold war starting, the cold war ending. These are things that make big differences in jobs and other things. Do you really believe that a simple count of jobs every ten years can be attributed to the party who is president. You don’t even take into account who controls congress, except recently when, according to you, having ANY Republicans in congress defeats this Democratic president.
I bet you like to play those simulation game where you get to make the moves and they really make things happen. In the real world, there is a complexity of choices. Not understanding this is actually one of the problems of Democratic leaders.
The short answer is, they promised to maintain the Tax Cuts for the poor and middle class, and a Republican filibuster prevented them from restricting renewal strictly to that. However much they disliked continuing tax cuts to the rich, reducing the amount that the average American had to spend at a time when unemployment was still at 9.4% unemployment was even more unlikeable.
As far as simple-minded analysis goes?
Be my guest. Explain how every other Democratic and Republican President of the last several decades managed to be better job creators, and why, given that, we’re expected to turn to Republicans as the experts.
It’s simple, but why not? We’ve had a decade long experiment in liberating the engines of the economy from government regulation, letting them police themselves. We’ve had this decade to learn what a job creating bonanza the tax cuts were, or were not. Isolating the positive job creation wasn’t merely an exercise in rhetoric, it answers the basic question, “What if this is all Bush’s bad luck, his gains swallowed by economic problems beyond his control?
The plain truth is, economic growth did not continue at Clinton Era paces, much less outmatch his policies. Job growth, even in the good times, the positive months, was slow even before that dark year of 2008. It took Bush until his second term to actually flip to positive cumulative job growth.
We have one indicator after another, even before the Great Recession, that Bush’s economy was a mediocre one.
This is what you would have us, in our dissatisfaction with current circumstances, turn back to.
And no, you can’t argue that this is a return to Reagan policies, because Reagan was willing to raise taxes. Reagan was willing to increase spending and run higher deficits to get himself out of an economic downturn. Reagan was willing to adopt a diplomatic approach to other countries, not criticize that as weak. Modern Republicans have shed the moderation that makes them successful, and the policies they cling to in their radicalism are nowhere near as successful as they would boast they are.
The evidence for that is what I present. But those decadal slices are not the only evidence I have. I can show you growth numbers. I can show you revenue numbers.
The question is, are you willing to listen at all, or are you so wrapped up in your confirmation bias that you can’t be convinced that you’re wrong, even with evidence that plainly states it.
If I’m just playing a simulation game (which I don’t actually do nowadays, I don’t have the time or the patience), then what are you doing? You’re playing a fantasy game, from what I can see, where you can magically attribute skills to yourself you haven’t realistically earned.
Republican fiscal policy failed to compete in terms of growing revenue.
Republican economic policy failed to compete in terms of growth of the GDP.
Republican Jobs policies failed to compete in terms of creating jobs, even if we don’t count the jobs losses.
Why continue or return to any of them? What’s the upside of embracing mediocrity, of embracing policies that are basically job killers compared to any other for the last sixty years?
SD, you are a very silly person.
Your comments about Reagan’s moderate approach are well taken. He was not the caricature right wing conservative that so dominates current conservative thought.
He stimulated the economy during a severe recession (tax cuts and deficit spending). He reversed course and raised taxes when the recession eased.
In foreign policy, he was far less hard line than generally believed. Indeed, he initiated substantial arms control agreements with the Soviet Union (START I and II). He also had the quality of appreciating his erroneous misconceptions and changing his approach. I recently ran across a quote from his memoirs that I found very interesting. It appears to have resulted from a NATO exercise in 1983 that the Soviets thought was a serious effort at developing a first strike capability:
“Three years had taught me something surprising about the Russians: Many people at the top of the Soviet hierarchy were genuinely afraid of America and Americans. Perhaps this shouldn’t have surprised me, but it did … During my first years in Washington, I think many of us in the administration took it for granted that the Russians, like ourselves, considered it unthinkable that the United States would launch a first strike against them. But the more experience I had with Soviet leaders and other heads of state who knew them, the more I began to realize that many Soviet officials feared us not only as adversaries but as potential aggressors who might hurl nuclear weapons at them in a first strike … Well, if that was the case, I was even more anxious to get a top Soviet leader in a room alone and try to convince him we had no designs on the Soviet Union and Russians had nothing to fear from us.”
“SD, you are a very silly person.”
Well, Billinflorida, being a more serious person, do you have any data that disputes SD’s contention that the economy has historically performed much better under Democratic administrations than Republican?
Right, we’ve degenerated down to single lines, no longer than King Arthur’s critique of Camelot.
Good article Stephen. The most significant graph was #10 showing falling wages. The economy runs by demand and demand is a proxy for wages. The long term structural problem for our economy is falling wages and rising income inequality. It’s more than coincidence that income inequality rose right before the Great Depression and before this recent Great Recession.
One of the best explanations of our recent ( last 30 years) economic history can be found here. It is a podcast of a talk by an economist Thomas Palley. It was given for the National Economist Club. Its a narrative that fits consistently with the facts and the historic events. In a nutshell decreased wages from policy changes, tax changes, technological advances and globalization. Decreased wages lead to decreased demand which both are made up for by ever more debt and borrowing ultimately leading to the housing bubble and crash. The bubble and crash were just symptoms of a longer term structural problem of decreasing wages.
The other great point you make is to bring up our record corporate profits. Ask the Obama-haters to explain Obama being a hater of profits and capitalism while he’s presiding over these record corporate profits and watch their heads spin trying to figure it out. Sadly the answer is that record corporate profits do NOT prove a good economy… but it does reveal their supply side economics as the bunk it is. As the propaganda piece it is to entrench the tops hold on wealth and power. You have record corporate profits, a stock market up 50% in 3 years along with extremely low interest rates and low taxes and all these supply siders can come up with to explain away the discrepancies of NO jobs and no growth is a problem with the Confidence Fairies. Their failure is clearly revealed. We really didn’t need to go through another Republican Lead Great Depression to prove these things. Their last Great Depression proved it plenty. Unfortunately this generation has forgotten and will require another great collapse supporting while supporting the supply side propaganda of the elite rich before we finally come to our senses and re-structure the economy around jobs and wages and shared prosperity.
Sure, corporate profits are up, but that is because the corporations are not using American labor any more…they are simply outsourcing everything to China, India, Taiwan, Mexico, etc, and leaving American workers on the streets. They have no interest in creating jobs for Americans,or manufacturing anything here. Try to buy a toy, or an appliance, or clothing,or damn near ANYTHING in any store or outlet and you will find it’s all “Made in China”. The only way we can restore jobs to Americans is to slap tariffs on this stuff and take away the incentives and tax breaks these companies are enjoying to ship jobs overseas.