September 02, 2008
Structurally Changing Economy
Few off Wall Street are paying attention, but, there are fundamental structural changes taking place in our economy, that are going to require new economic models, metrics, and updated economics education if anyone is going to manage the economy well for Americans. The consumer backbone of our economy is yielding to exports and business consumption, even as the consumer’s role in products and services shrinks.
This dual economy referred to in the above link, is just an overview. Poverty is rising across America as American schools and State education budgets are increasingly forced to cut back spending on education. Additionally, in many regions of the country, the number of students qualifying for free or reduced fee school meals is rising dramatically. The Census Bureau's American Community Survey, reports 38 million Americans living below federal income standard defining poverty in the last 12 months and rising. That number will surely rise even higher for the 2008 year.
Even if unemployment were not rising, which it is, millions of Americans are poorer each year due to rising inflation of food, energy, transportation, health care, and education costs at a time when wages have failed for decades to keep pace for millions of American workers. The one bright spot would be the falling cost of housing, but, credit to buy lower cost housing continues to become an ever greater hurdle for Americans. Credit is very tight for American consumers, but, very available for American assets to be purchased by foreign investors.
America is being bought at an incredible rate by foreign investors. The Carlyle Group is a case in point. But, the risk of buying American assets is also going up as investors get ever more nervous about our economy and the growing debt carried by federal and state governments. More than half of all American states are now in the red with their state budgets.
The buying up of American real estate and businesses and toll roads and a host of other profit producing assets by foreign investors with the money to lend, has a number of potential short term upside benefits in shoring up American businesses needing to sell, and long term downside risks. The rest of the world is little different than America when it comes to the mingling of the wealthy capital owners and politicians in government. And as we have witnessed here in America, when government gets too chummy with wealthy business interests, many negative things can happen to markets, consumers, and the wage earners.
The more America relies upon foreign capital to salvage itself and borrow from, the less autonomy and independence we have in making decisions for ourselves and in our own best interests. As millions of credit card customers with interest rates as high as 32% know, when you are in debt, you don't get to dictate the terms. The same will be true of America if the wholesale auction of American bankrupt business and ventures and infrastructure and real estate is not halted and pretty darn quick. It is easy to see why those in financial trouble, whether they be corporate or individual, would sell to whomever was making an offer of rescue. But, in the long run, at this expanding rate of sale of American assets, American independence and autonomy are being sold too without hardly anyone being aware of it.
A few on Wall Street are talking about the potential for a global economic depression in the future as a direct result of the ever widening wealth gap in all the major and upcoming economies in the world and a potential default of a major debtor like the United States. Just as a few folks were warning us back in 2006 about what was coming as a result of the housing markets and lack of mortgage product regulations and oversight. Seems far fetched when only a few people with good minds and education discuss calamitous potential outcomes, and so they are largely ignored until the reality sets in, which is of course, too late to take corrective action.
And then there is consumer debt also making coming into investor's risk assessments. Though the consumer contribution to gross domestic product is shrinking, it still accounts for more than 60% of all economic activity. If the consumers continue to default on mortgages, and file bankruptcy due to medical expenses far beyond their ability to pay, at an increasing rate, and wages continue to undermine consumption spending at the same time credit card companies increasingly pull back credit from consumers while raising their interest rates toward 32%, the consumer base of the American economy could unravel. And if it does, there will be little warning for most Americans.
Health care is about to become the fastest growing sector in our economy as the baby boomers retire and live many years longer with longer term medical care needs. Yet, despite this fact, nursing shortages and medical technicians and even doctors in some specialties, continue to act as an anchor on that ship going forward. If these manpower shortages are not addressed, the malpractice rates will rise dramatically, and so will health care costs, even faster than they currently are, bankrupting ever more millions of Americans as the years unfold.
Ironically, American corporations and business are doing OK in this environment. Growth for American manufacturers was flat in the last quarter, which means they are holding their own despite the serious contraction in our economy on other fronts. Largely this was a result of a strong export market.
As American businesses focus increasingly on the expanding middle classes of other nation's and their insatiable demand for middle class products and especially services, American companies will increasingly provide employment in foreign markets, and provide nation's consumers with more products produced in foreign nations and serviced by employees in those foreign markets. In other words, the American worker and consumer are likely to become less relevant to American business health and wealth.
The same naysayers who argued the current mortgage financial crisis and credit crunch could not possibly happen when I wrote about its coming, here at WatchBlog in 2006, will no doubt now try to argue that this is a short lived situation and all will be well next year. But, as then, these naysayers speak without comprehension of the changes in the fundamental structure and foundation of our economy which are taking place at this very moment.
American wages must go lower. That is because Americans are now competing with labor at half or less the cost in places like China, India, and Malaysia. It is because we are paying foreigners directly for daily consumables like oil, which amounts to a net transfer of more than a half trillion dollars overseas each and every year. Nearly 3/4 of a trillion dollars in the last fiscal year. That money is not returning to the United States to be circulated amongst workers and consumers. It is a net transfer of wealth from America to foreign nations as T. Boone Pickens rightly points out in his commercials to sell America on increasing his profits through government investments in his alternative energy industries and stocks.
And as American wages go lower, the quality of life and the opportunities available to Americans will diminish for growing numbers of citizens and their children. We have passed the point of being able to prevent this. Our task going forward to is minimize the damage and slow the rate at which American's lives are diminished financially and in terms of opportunities for our children.
These issues bear directly on who voters elect to Congress and to the White House this November. For those we elect will either be ignorant of what is happening and what is coming, or they will they address these issues and work to minimize the consequences. The thing I cannot shake from my mind is this. It is these politicians currently in office by and large, who have brought us to this point. It would be the gravest of decisions by American voters to choose to send these same politicians back to government to perform as they have up until now.
America absolutely needs a dramatic change in leadership in government. We need leadership who gets it, and understands what we are facing here. If those we send to elected office this November believe our economy is fundamentally sound and will bounce back largely on its own, they will not tackle and work to minimize the negative consequences that will befall 10's of millions more of Americans in coming years.
Sending the same politicians who either didn't understand what was happening, and likely still don't, or who didn't care since they were wealthy and the wealthy will do alright regardless, or were never educated and intelligent enough to grasp economics in the first place, is the worst possible thing Americans could do themselves and their children's future. Voting for change, means voting some new representative in office, and putting the old politicians on notice that they are next if things don't improve by their next reelection campaign.
Posted by David R. Remer at September 2, 2008 03:52 AMWhile I do not think we are doomed to an economic depression, I agree we are going to see a flat or receeeding economy for the next couple of years.
There is always the possibility that some will choose political expediency over wise economic policy and push us into a worse situation.
Posted by: googlumpuugus at September 2, 2008 08:07 AMDavid “there are fundamental structural changes taking place in our economy, that are going to require new economic models, metrics, and updated economics education if anyone is going to manage the economy well for Americans.”
Are there any nations out there that has went through these fundamental changes and can serve as an example David, or is our boat in uncharted waters without a Captain?
Posted by: j2t2 at September 2, 2008 09:50 AMNot with a whimper or a bang, but a fire sale.
Posted by: Max at September 2, 2008 11:37 AMDavid,
As Americans elected to change from an Industrail Society to a Service Based Economy some 30 years ago, I do believe that the Left and Right will find that the Forces at work in the Market have grown up. So why American Baron T. Boone Pickens and others understand what needs to be done by “We the People” I do believe that My Peers do not want to get into a debate over the Argument of Stupidity held by the Youth of the 60’s and Silver Spoons of the 70’s.
So why Presidential Elect Obama and McCain may have the Vision of the Democratic and Republican Civil, Political, and Religious Leadership of America. I do see the need to continue supporting causes like VOIDNOW.org and at Pickensplan.com for he Betterment of Mankind.
Posted by: Henry Schlatman at September 2, 2008 12:11 PMj2t2, difficult question. Being as large an economy as we are, and being the world’s cop and largest military spender in the world, we are in fundamental ways in uncharted waters.
That said, there are some models out there worth looking at and taking cues from. Brazil’s for one. They are taking their natural resources and striking a balance to preserve them, while at the same time converting some of them into products beneficial for their own society and export as well, ethanol from sugar cane for example. They have been creating wildlife and habitat and aboriginal off limits zones while adjacently using these as a lure for tourism. In other words, they are a rapidly growing economy that has used their brains and science to bring the nation and its efforts together, instead of allowing cultural diversity, religion, and greed pull it apart.
Malaysia and India are investing heavily in education which is allowing them to compete in the service and increasingly technological fields of medicine, and manufacturing. Provided that the world economy hangs together, Malaysia and India may outpace China’s economic growth over the next couple of decades as China reaches counterproductive capacity in its over-crowded societies and wealth gap problems between urban centers and suburban and rural communities.
We should be taking lessons I think, in how to avoid and reverse China’s problems coming on their horizon.
The EU has something to be learned by its ability to overcome differences amongst its individual member nations, similar to what we are facing between our various states, red and blue. If the U.S. could reach a point where the red and blue could agree on some of what our future should look like in realistic terms, we would have common ground for making advancements in meeting our common challenges like entitlement spending, federalism and states rights, and insufficient revenues to pay our way without choking subsequent generations financial opportunities.
There was something to be said for the post Civil War 40 acres and a mule to be granted to freed slaves, though we never implemented it as we should have. But, the concept was sound, to provide the people with the means to self-sufficiency and encourage such economic self-sufficiency with policy that rewards it.
At the heart of that concept however, is the educational capacity to make good on the opportunity to be more self-sufficient. America’s cultural and social struggle over the shape of education in America prevents any such measures from being implemented on a national scale.
I know of no other nation in the world as diverse as ours is culturally, ethnically, and religiously, which has accommodated a vast middle class without that middle class tearing the political fabric of the country apart. Though Ireland is an example on a vastly smaller and less complicated scale demonstrating that it can be done if the mutual will is there to make it happen.
We are nearly the last remaining democratic republic on earth. And if it proves to be historical fact that parliamentary or more direct democratic approaches to government survive better than our democratic republic fares, it will in all liklihood be too late for the U.S. to make such changes and still reap rewards from them. But, this system we have now, in which the people’s interests and future general welfare are being sold out to the highest special interest bidders, is just compounding and delaying our ability to solve our own problems and challenges.
It may prove to be true, that the oldest modern democracy will be the first to collapse under the weight of representative government that does not represent the nation, nor the general welfare, but, the welfare of the insider elite players at the power brokering table. That is of course up to the voters to decide. The can allow this to continue to its logical irrevocable conclusion, or they can take back democracy for the people by ousting incumbent politicians in record numbers.
But, I see no evidence of the latter happening on a grand enough scale yet, to be overly optimistic.
In summary, I would have to say we are indeed in uncharted waters, much like we were at the brink of the Civil War facing dissolution of the nation. The perception that things are getting incredibly worse will have to precede the many different sides in this growing internal conflict to become willing to make fundamental changes in order to restore the union.
Posted by: David R. Remer at September 2, 2008 12:42 PMHenry, certainly can’t hurt, and might just help. There is always the Butterfly effect in which a butterfly of the right size at the right place at the right time on the African continent flaps its wings whose small creation of wind catches other small currents and the butterfly’s addition becomes the catalyst for a hurricane that washes the Eastern Seaboard of America or the Gulf clean.
In other words, one never knows when one’s small efforts may trigger the growth of ever greater ones which create large forces for change that benefit many.
Used to be a fascinating TV series by Edmund Burke I believe called Connections, which tied the little insignificant events of history together as the butterfly wing flaps which wrought sweeping changes and evolutions in human society, and without which, such improvements might not have occurred for decades or centuries later, if at all.
Sometimes all it takes is one person’s idea being spread to the right person who can carry it forward in a manner that appeals to great many.
Posted by: David R. Remer at September 2, 2008 12:55 PMToo late, David. We are on the non-reversable march to globalization. The very wealthy will never feel it, as they don’t care if the dollar is only worth a penny, as long as they have all the pennies. I don’t know how we could have diverted it, because isolationism surely was not the answer. Our economy is inexorabley tied to the world economy now, and no power on earth will keep us from becoming a third-world nation.
Think resourses: We have zero true farm land left. It has all been over chemicalized and disked into dust. The dust has washed downstream into deltas that also collect polutant runoffs from farming and industry. Those deltas will never be of use to humankind. Think ores and minable minerals The only thing we have in abundance is coal. Coal turns our air into unbreathable muck. Think trees. We have clear cut virtually every old forest in America and replanted pine, then overpopulated to the point that there aren’t even enough pine to sustain our needs. We have to import plastics and compounds to replace the wood. We have already sent every major manufacturing facility overseas, and cannot even make our own national banners.
Our government has become so corrupted that it cannot see what is necessary, and the little it can see interfers with it’s quest for more power or money. Please name an individual who still has ideals and is not ashamed to bring them up. I can think of about five. If there are so few with ideals left, how can replacing the ‘ins’ do us any good?
America is a has-been. You heard it here first…
Posted by: Marysdude at September 2, 2008 02:21 PMDavid:
Nice article. Many have predicted the housing crunch. Many have seen it coming for years. It is part of a normal process.
It is also normal for the financial industry to contract from time to time. This is a much needed correction.
I disagree with you that a depression is certain.
Economics goes up in curves around a mean. We are currenlty growing a little under the mean however the last quarters GDP growth was pretty close.
Americans have taken advantage of cheap interest rates and have leveraged themselves out pretty far. Now this trend is reversing which is a good thing. Of course we are moving to a more export driven economy.
Brian Westbury a noted economist shares the following on todays economy:
“Real” (inflation-adjusted) median family income – the income of the family right in the middle of the income distribution – hit $61,355 in 2007, an all-time high. This was an increase of 2.1% versus 2006 and the third consecutive annual increase.
The last all-time high was set in 2000. As a result, family incomes in this cycle have followed the same, down, and then up, pattern seen during every recession and recovery in the past 30 years. It took until 1986 to beat the record high set in 1979, and it took until 1996 to beat the record high set in 1989. In other words, the fact that it took seven years to reach a new high is normal.
Family income, according to the Census Bureau’s definition, does not include fringe benefits, nor does it include the value of Medicare or Medicaid benefits. Despite these exclusions, the inflation-adjusted median earnings of full-time workers soared in 2007, rising 3.8% for men and 5% for women.
The most shocking part of the report, at least for those who have bought into conventional wisdom, is that in 2007 inequality among families declined at the fastest pace in 45 years. The share of income earned by the top 5% of families declined to 20.1% in 2007 – the lowest level since 1995 – from 21.5% the year before. The share of the bottom 20% of families increased to 4.1% from 4.0%.
I disagree with you about American workers incomes need to fall. Supply and demand what it is there are three strong reasons why American labor is more in demand. These are higher fuel cost. (takes more fuel to move goods from around the world to sell here), Higher labor costs in China, India, as well as a lower dollar. All of these reasons and more make it a time when US workers are more competitive relative to our trading partners.
This should make it less likely for jobs to go overseas and more likely for US workers to compete here.
Also with boomers beginning the retirement process that will slow the growth of our labor markets, making workers more in demand.
We are in a slow growth patch that seems likely to continue for a while. The financial world will finally get it’s act together and we will be on to the next crisis. Such is capitalism. It’s all pretty normal stuff.
Now that we have gone through the tech boom, the real estate boom and the commodity boom, I wish I knew where the next one would come from!!
Posted by: Craig Holmes at September 2, 2008 03:25 PM>Now that we have gone through the tech boom, the real estate boom and the commodity boom, I wish I knew where the next one would come from!!
Posted by: Craig Holmes at September 2, 2008 03:25 PM
Craig,
See Marysdude above for the next boom…
Posted by: Marysdude at September 2, 2008 03:35 PMCredit Card industry is the next bubble to burst. The rates they are charging are unsustainable and forcing borrowers who otherwise could remain solvent and making payments each month, into bankruptcy, with a big shove by medical inflation and housing devaluations.
Posted by: David R. Remer at September 2, 2008 03:43 PMIf the China calling in its debts doesn’t hit first, David.
It is hard for the government to lecture on rampant borrowing…
Posted by: Rhinehold at September 2, 2008 04:32 PMDavid,
What politicians do you propose that we vote in office? It is virtually impossible to vote in an independent or third party. As long as you have leaders like the ones in the senate and house, no one will ever vote against their party.
Liberman is an example of a democrat who went against his party and look at how he is hated by the Democratic Party. Are you proposing that BHO is the agent of change? He is as liberal as they come and will fall in line with everyone else on the left.
DRRemer, fees at public schools in the suburbs now add up to as much as tuition was when I was in high school. There is a news story here today on the Rev Meeks of Salem Baptist Church, http://www.sbcoc.org/web/index.html , wanting kids from Chicago to enroll in New Trier instead of their local schools. It looks like his church could set up a pretty nice school, if they were intererested in spending their money that way.
I have no credit cards, only a debit card.
Housing prices need to come down to more affordable levels, but no one wants the value of their property to decrease.
Posted by: ohrealy at September 2, 2008 07:24 PMOldguy, you may be surprised by Obama. It is entirely possible that he took the only route any agent of change could possibly take to arrive as president in the White House. Once there, change becomes possible.
As many have observed, being an agent of change coming from a third party or independent candidacy like Ralph Nader, does not get one into the White House with the power to make changes happen.
It is no more untenable than McCain proposing to change things for the better after long decades in the Congress. Less untenable, in fact, for obvious reasons.
Ohrealy, I hear you about school fees. When I was in H.S. all extra-curricular activities essential to students exploring where their talents and desires lie, were covered in my parent’s property taxes, and state taxes. Not so today, and that is a bloody shame and restriction of opportunity on 10’s of millions of American families.
Posted by: David R. Remer at September 2, 2008 08:50 PMCraig said: “Nice article. Many have predicted the housing crunch. Many have seen it coming for years. It is part of a normal process.”
Not before the summer of 2006, I don’t believe. If I am wrong, please provide a hyperlink. The conditions for the housing crunch did not exist prior to the post 2004 election period when Bush and Greenspan launched their ownership society plan to dramatically increase home ownership.
And the evidence of the rapid escalation of demand for housing combined with indefensible low Fed interest rates of 1%, did not begin to surface until the very end of 2005 to early Summer of 2006. Then those who could see it, began to write about it and issue forth the warnings, which no one in government heeded for a split second. The opportunity cost of Iraq, perhaps.
Craig, it is a false logic that retorts with economic fluctuations in response to fundamental systemic changes in the attempt to argue that nothing will change substantially from the past. The very fact that we are witnessing fundamental systemic changes means there are changes coming that won’t revert back.
The Soviet Union experienced this with the end of the Cold War and economic collapse. China experienced this when they opened the door to capitalist formation and relatively free market enterprise. These were fundamental systemic changes and Russia and China can never return to the economy they were once so ideologically fond of.
Japan is another country who has allowed fundamental systemic changes to occur in their society and economy, and while not nearly so dramatic, that society is now confronted with a future of growing individualism and factionalization. Provided there sense of tolerance for difference continues to grow as well, this does not bode ill for Japan. But, it is highly debatable whether tolerance for individual differences will grow or meet with stern repression and social engineering attempts, the latter having become Japan’s true forte’.
Transitioning from a global economic giant to the world’s most deeply indebted nation and people, means there are aspects of our former economic experience which will never be seen again. Just what those are specifically and likely to be are only now being researched and debated. But a consensus is forming that it will mean less autonomy and independence in managing our own affairs, with the host of previous alternatives we have always enjoyed.
Many of these changes in our future however, need not be negative, but can be very, very positive in the long run for quality of life in America. But, whether such benefits are created from dire circumstances depends almost entirely on who we the people elect to chart that future course.
A global recession is now daily talk in the financial and economic media. If that occurs, it is the debtor nations who shall suffer from it the most in lost options, alternatives, and opportunities. And that spells the U.S.A. in spades if history is any guide as to which nations suffer most from global recessionary periods.
The reason oil prices are dropping is due to the global cuts in economic growth due to global reduction in demand for all the activities and products that attend or require oil. This peak price and demand which finally forced consumers globally to cut back on consumption of everything in response, is the trigger that set global recessionary tendencies in motion.
It could have been prevented. It was seen well in advance. But, leaders the world over, with only a few exceptions, failed to act individually and in concert to avert that trigger being pulled. Such is the vulnerability of human political systems in the modern world. And the U.S. being the most dependent upon foreign creditors and borrowing will now suffer the most and perhaps the longest in terms of options and opportunities going forward.
Posted by: David R. Remer at September 2, 2008 09:19 PMDavid:
On predictions of a housing bubble you said:
Not before the summer of 2006, I don’t believe. If I am wrong, please provide a hyperlink
Here are too many to mention just google “housing bubble 2005” actually google “housing bubble 2004”
My favorite sourse is PMI insurance. If you look in their quarterly report they have a map of the United States and have been tracking the bubble for years. There really isn’t a huge “national bubble”. It’s mostly confined to four states. Those being California, Nevada, Arizona and Florida. There are housing issue nationwide. it’s just that the crisis is pretty much a four state crisis.
The reason oil prices are dropping is due to the global cuts in economic growth due to global reduction in demand for all the activities and products that attend or require oil. This peak price and demand which finally forced consumers globally to cut back on consumption of everything in response, is the trigger that set global recessionary tendencies in motion.
Of course. that is what happens whenever a price is too high. People stop using the product. It is simply called demand destruction. Very normal. The best research I have read has long term oil in the $70 $80 dollar range. Of course oil is a commodity, meaing it is volitile.
Another part of the equation is the dollar has been rising.
A global recession is not that big of a deal. Of course it is if you are the one that gets hit. But recessions are normal. They occur just like hurricanes “occur”. It is simply a part of being human and in economics. It is called a business cycle.
I think you are right that we need to hold people accountable. Spending is the biggie.
People adjust. Already boomers are delaying retirement, which is something that needs to happen. Boomers are healthy and able to work, and there are jobs for them. Actually, many industries are seeking to try to retain older workers, to prevent retirment.
It will all balance out.
Posted by: Craig Holmes at September 2, 2008 10:09 PMCraig, thanks for the google term. I just checked it out. First, many of those references are to European housing bubbles. Those pertaining to the U.S. reference property valuation growth from 1995 to 2005.
The point you are missing is that a housing price bubble is not what caused this contraction in our economy by itself. If housing inflation were the only problem, it would have self-corrected without enormous impact across the rest of the economy and sectors as what we have witnessed.
The self correction would have taken the form of dropping home sales over an extended period of time without the effect of increasing capital for loans and liquidity and financial institution balance sheets for the most part. Quite opposite what we have witnessed since the Fall of 2007.
The current contraction involves far, far more than a glut of over-expensive houses on the market. It involved increasing portions of uncollateralized loans made to home buyers, deceptive lending practices, and marketing to people who clearly could not afford to buy what they were buying, resulting in an escalating foreclosure rate which revealed the uncollateralized nature of about 3/4 of a trillion dollars in mortgage loans.
This goes way, way beyond a normal supply and demand rebalancing due to pricing homes beyond the reach of buyers. It involves making homes available to buyers which were clearly out of their income’s reach going forward. That is an entirely different issue with far graver economic and financial consequences.
My article in 2006 addressed far more than just rising home prices. It addressed the government’s and consumer’s diminishing capacity to rescue our economy in the next recessionary period. That was the big issue.
If it were just rising home prices putting homes out of reach of buyers, that would have self-corrected without much ado over the course of several years of contracted real estate activity, with ample liquidity to allow that correction to proceed in an orderly and relatively benign supply-demand correction fashion.
Your google references DO NOT reference government debt as a limiting factor in rescuing the economy, nor the diminished capacity of consumers through consumer debt to rescue the economy, nor the corruption of the home borrowing process and hiding uncollateralized mortgages in hedge fund packages being invested in by banking and financial institutions around the globe.
No, none of that was evident in 2004 or 2005. The Housing bubble referenced in those years was a simple supply - demand pricing imbalance obviously due for a correction in the near future. If that were all there was to it, the rest of the economy would be fairing far better than it is today.
Then, there was oil inflation. That wasn’t being factored in either in 2004 and 2005. But by late 2006 it was becoming a factor for concern. The confluence of events that portended a dramatic assault on our economy and American consumers did not become evident until 2006.
Posted by: David R. Remer at September 2, 2008 10:30 PMRecessions, Craig, are no big deal PROVIDED one can recover from them and grow healthily shortly thereafter. That is not what is happening here. We are going to emerge from this contraction with far less potential to reach previous peak growth capacity. And debt and the cost of borrowing is the limiting factor.
Dick Cheney doesn’t know a deficit or debt from his butthole. They do matter in times like these when borrowing to stimulate the economy without large downside risks is an easy fix to recessionary pressures. But, today, the downside risk of borrowing grows more enormous with each 10 billion dollars borrowed, in opportunity costs to invest in education, jobs, technology, border security and to maintain the entitlement programs, and in interest payments adding directly to an ever increasing debt by replacing principle payments.
$9.65 Trillion Dollars national debt, Craig. I remember when you argued we would never, ever see that kind of growth in the national debt under a Bush presidency. You argued, if I recall correctly that the growth in debt was due to 9/11, Katrina, and Iraq. But, combined they only account for 1/3 of the rise in our national debt under Republicans, Craig.
Your were wrong then to put such faith in so called conservative Republicans. And you are wrong now that this is just a normal cyclical rebalancing of a fundamentally healthy economy, as McCain puts it.
The fundamentals are changing, and not in our favor, but, in favor of the foreign investors to whom we keep turning to bail ourselves out of one financial and economic crisis after another.
Posted by: David R. Remer at September 2, 2008 10:39 PMDavid:
What I argue is that debtis only a problem on a relative basis. Federal debt will never become an issue as long as it more or less grows at the rate of GDP. In times of war or economic difficulty it is understandable for debt to rise at a faster rate than the economy. However debt then needs to grow at a slower rate during times of plenty.
I have never argued as you said that about the Bush presidency, or defended Republicans. You will be hard pressed to fine partisen viewpoints in my comments on economics.
You will see my conservative viewpoints of economics. For instance, I do believe taxes need to be continuely cut and adjusted. The reason is that tax rates are fixed. I want to keep federal taxes at about 20% of GDP. If taxes are not cut, because of inflation marginal tax rates go up.
My reasonling for keeping expenses where they are is simple history. The last 50 years of growth have been very good. We have another economy with which we can look at to compare, (ie Europe) Gradually, over time our economy overtakes Europe.
I believe our economy is going to change. We have debated that a great deal. I have consistantly argued that economic curves turn, and our economy will turn to meet economic realities before depression occurs.
Here are some of my predictions over time:
1. That economic growth will follow the median growth rate, sometimes above and sometimes below.
2. Contrary to pessimist, we will muck through.
3. Boomers are going to work much longer than projected. They are capable, and healthy, and there are jobs for them.
4. The coming fiscal crisis will be solved by many small solutions instead of large ones. I will loose the battle on keeping taxes as low as they are. However, they will not go to the extremes of Europe.
5. The age wave will not cause a depression. As evidence, we can look to Europe and japan that are already at demographic levels that we will see in the future. Non are in a depression.
By the way, how about this for a bumper sticker:
“My candidates inexperience is better than your candidates inexperience.”
Posted by: Craig Holmes at September 2, 2008 11:21 PM
drill oil, natural gas, clean coal, nuclear, fund clean technology &become energy independent.then close the borders to illegals so we dont pay for them as well.do these & watch our economy grow! the question you really need to ask is do you choose someone who has & will reach across party lines to get things done or the one who thinks their way or no way because they know no better.its not about party its about country!
Posted by: benhed at September 3, 2008 04:00 AMDavid,
Why America does face many issues leftover from the 20th Century I do see the changes that are going on in the Market as a good thing. And why Marysdude and others worry about Globalization, I can find no one on the Left and Right of Society who will let me be Non-Human. So as far as I can say to J2T2 and others, America is headed into unchartered waters.
Because wny My Peers and the Children of the 21st Century can build a “Better World” than imagined by Our Democratic and Republican Civil, Political, and Religious Leaders of America. Without getting into a long drawn out debate, the Elders and Powers-that-Be should ask their Grandchildren what they think of making Every Human on Earth Economically Viable and Financially Independent.
Posted by: Henry Schlatman at September 3, 2008 09:19 AMDavid:
I think it has been too long since we have discussed economics. I have never put my faith in a party or person. My arguments have been that our system, our American system is self correcting. It does however have it’s limits in that it can only change so fast. That is why y2k was not an issue. We had time to adapt.
Economic curves are constantly turning. Already, our system is changing to meet future economic needs. For instance for the record, Bill Clinton was far better than George Bush on economics. The ideal economically seems to be split government.
We are adjusting as a world economy to some huge changes globally. We have just come off of one of the greatest economic booms the world has ever seen. Such rapid growth (over the median again) should follow below average growth. Oil prices of course should go up when world growth expands at above average rates for a while.
What is great about world growth is that the numbers of people in abject poverty have significantly dropped. Of course very lately this may have a temporary reversal has food prices have risin, but still the trendline is very promising.
The credit crunch created by a world savings glut, (too much savings), will correct as well. Whenever we have too much of anything, waste usually follows. Over supply of world savings will necessarily create oversupply of credit.
It is not hard to predict a global slow down. It’s created because of a global boom the last several years. It’s simply called “reversion to the mean.”
David -
As an economist, I can say that this is fringe opinion at best. At every moment of human history, there have been doomsayers; you are welcome to be the doomsayer of the hour.
But keep this in mind: all the other doomsayers were wrong. Humans on planet Earth are wealthier, more numerous, healthier, and more peaceful than at any time in recorded history.
The increase in inequality exists, but is overblown: the poor are getting better off, and so is the middle class. They’re not bettering themselves as fast as the rich, true, but they’re no worse off than they were 10, 25, 50 or 100 years ago.
I won’t go down your list of facts and disprove them all - but I would refer you to the Bureau of Labor Statistics for hard data. Also, if you want to know my opinions in depth on international financing and debt, I’m happy to provide a paper I just completed on the topic (which buttresses a few of your claims).
One more thing: may God save us all from economists who want to “manage” the economy!
Posted by: Chops at September 3, 2008 01:33 PMIt is a globalized world, and trying to deny it is like trying to, well, like trying to keep the ocean out of New Orleans. Eventually it will come in, and the longer you try to keep it back, the worse it will be.
Instead of trying to protect America from this inevitable globalization, why not try to stop having an America at all? In a global society, what good are nation states?
Already, there is a strong movement for internet-based government. I say, bring it on. After all, nations are the cause of warfare and terrorism. If we get rid of them and create a global society (which doesn’t deny the possibility of unique cultures), then the future looks bright.
Posted by: Torri at September 3, 2008 01:39 PMChops,
Why I do not believe that the “Real Economy” will never be managed by Man, I do see your concren of letting the Elite manage Society’s Wconomy. However, I do understand the need to control and guide the Forces in the Market so that the Hierarchy of Society can exist in harmony.
So, why you may not see the growing gap between the Rich and Poor. And even though the means to excell a citizen from poverty to the President exist in America, I do believe the Futures in the Market will be very different than those who has been on the books for the last 100 years.
For why the Children of the 21st Century may not be allowed to build a 128 Giga Watt Society in the next forty years. Seeing that the Children of the 22nd Century should have no problem utilizing that much energy, I do believe the technology exists that will see the Black Gold of Man give up its thorn over the next forty years.
Posted by: Henery Schlatman at September 3, 2008 01:55 PMCraig said: “What I argue is that debtis only a problem on a relative basis. Federal debt will never become an issue as long as it more or less grows at the rate of GDP.”
And your comment completely ignores the inconvenient truth of the entitlement obligations expanding far, far beyond GDP growth, as deficits and debt.
Your argument focuses on what is convenient to your argument, rather than the totality of the reality facing our nation and people. Just as you did when you tried to argue in 2006 that the current debacle would not occur. But, it did, and it continues. Fed’s hands are tied, Congress is gridlocked, and the erosion of our economy continues with the Beige Book report released just an hour ago, with almost NOTHING positive to say about the nation’s economic sectors.
I love the way the optimists continue to push off the recovery just another quarter, quarter after quarter, year after year, as the quality of life for the majority gets worse, poverty rises along with crime and explosive growth in the underground blackmarkets along with our national and consumer debt loads.
The fundamentals are changing and our children’s future is worsening, and the limited in vision continue to argue that as long as they are drawing breath, everything will get better. It is truly ironic in a Greek Tragedy sort of way.
Posted by: David R. Remer at September 3, 2008 03:03 PMChops, you are a Republican supporter. I understand your need to defend the worsening of our economic condition under Republican rule, and assert it is not as bad as non-Republicans measure it logically and rationally and mathematically. I understand your need to avoid the Beige Book report of this afternoon.
I understand the glass must be half full in order for you to continue supporting trickle down economic theory which has so failed our nation’s people and is failing our children’s future.
Thankfully, the polls demonstrate that the number of folks of your view are dwindling into an ever smaller minority. Fortunately for America, as things worsen, greater numbers of people actually raise their heads and open their eyes to reality rather than bury their heads in the sand for political motives.
Thank you though for chiming in. I am sure there are several of your party who will agree your Party deserves four more years to complete the devastation left unfinished by the Republican controlled Congress and Pres. Bush.
But, fortunately, the majority of Americans are seeking a realistic approach to our nation’s challenges, not some archaic trickle down mechanistic model that has proven again and again to be a failure for uplifting the lives of 100 million Americans, instead making them very much more worse off.
Posted by: David R. Remer at September 3, 2008 03:12 PMDavid,
I’m glad you think polling numbers are a good indicator of the direction of the economy, as opposed to economic data. I’m glad you aren’t bothered by facts in your quest to paint perceived economic problems as linked to political administrations.
I’m glad so many Americans agree with you: when President Obama is elected, and the economy is in the crapper two or three years hence, we’ll have stronger evidence that economic policy can’t do much good, but can do much ill.
In sincerity, though, I’m glad that my workplace is not like Watchblog. Instead of talking past each other, professors from opposing parties agree that the only way to determine an issue is through rigorous, theoretically sound, empirically tested scholarship.
Posted by: Chops at September 3, 2008 04:08 PMChops, the economy will be in the crapper for the next 50 years and will have little to do with who is elected on Nov. 4, and everthing to do with who has been elected to Congress for the last couple decades and who was elected president in 2000.
Economic data is profuse in this article, guess you missed it. Polling is a snap shot in time, and relevant only for that moment in time.
If you think you can put an economy into a laboratory and hold all variables constant and controlled save one to test it, your comment on economics is in serious need of an economics 101 text book.
There are physical sciences and social sciences. Social sciences like economics can only be empirically inquired into through probability and statistics; not rigorous controlling of all variables save the one to which the Null Hypothesis is applied.
Posted by: David R. Remer at September 3, 2008 04:25 PMDavid and Craig -
The subprime mortgage crisis was foreseen in 2003. The attorneys general of ALL FIFTY STATES tried to alert the White House of the looming predatory lending problem, and the White House shut them down and nullified ALL legislation states had passed to try to regulate the industry. After that, the banking superintendents of ALL FIFTY STATES joined the attorneys general in protesting the White House’s action. There protests, as you can see, were to no avail.
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
A month after Gov. Eliot Spitzer wrote this article, he was charged with consorting with prostitutes. Now why the FBI was investigating prostitution when we have murderers and terrorists aplenty…is up to speculation.
Posted by: Glenn Contrarian at September 3, 2008 04:37 PM
“But, fortunately, the majority of Americans are seeking a realistic approach to our nation’s challenges,”
A good example of this is the large majority of Americans yelling drill, drill, drill!
In America, the majority of our teachers come from the botton third of college graduates. The opposite is true in countries that excel at educating their children.
As long as we have a society in which the primary criterion for selecting a career is ones financial gain rather than how one can best contribute to society, I see very little incentive or opportunity for creating a better society.
As long as the population is propagandized and bribed into believing that hedonistic mass consumption is moral, I see very little incentive or opportunity for creating a better society.
As long as the American people continue to chant, we are the greatest, smartest, wealthiest, most powerful people on earth with the ultimate way of life that the rest of the world is jealous of, I see no incentive or opportunity for creating a better society.
There is a slim but possible chance that a total collapse of our economy would provide the opportunity and incentive for us to create a better society but, I have serious doubts about it.
Posted by: jlw at September 3, 2008 05:07 PMGlenn, you comment makes the same mistake as Chops.
What you say about the predatory lending practices is true, but, that alone, was insufficient to create the economy wide contraction we are now experiencing. The predatory lending practices of themselves did not cause this contraction.
The combination of Greenspan’s holding interest rates at 1% despite indications that would cause some serious inflation 18 to 36 months out, plus the housing valuation bubble (largely spurred on by the collusion of local taxing authorities and developers), and the predatory lending practices were all three needed to create the brink of staglfation that now faces our country.
And, the predatory lending practices discussed back in 2003 were characteristically different in some ways than their evolution by 2005 and 2006, where clear selling of homes to those who would not be able to afford them became rampant with the advent of 1% Fed interest rates held there for a very long period of time.
Of course, there was a 4th element, the bundling and selling of mortgage backed securities without full disclosure, but, that problem predates the Clinton administration at its roots, and simply did not pose a problem until selling those securities became a problem (i.e. the credit and liquidity crunch.)
So, the root causes were: 1) lack of oversight and checks of the non-banking financial sector, 2) putting a political agenda (ownership society) ahead of sound economic policy (interest rates that would fight off inflation), 3) failure to heed the warnings backed by evidence in 2006 to avert the coming contraction and financial sector meltdown, and 4) the dramatic rise in oil prices in 2006 and beyond causing a rush to equity loans (already underway) pushing marginal income earners to the brink of insolvency and requiring a dramatic expansion in personal unsecured debt.
Net result: dramatic rise in business and personal bankruptcy rate and defaults on all manner of loans, leading to unemployment rises, and deficit spending by the government through tax rebates to stave off a severe recession, and the government being forced to underwrite Freddie Mac and Fannie Mae corporations with tax payer deficit dollars. All in all, one helluva mess causing millions of workers to see their hours cut back or be layed off, millions more to file bankruptcy, and millions more to dip into retirement savings to stay afloat and attempt to maintain their standard of living in this inflating economy marked by stagnant wage growth (except for the upper 5% of wage earners).
Posted by: David R. Remer at September 3, 2008 05:34 PMjlw, you raise a very fundamental philosophical issue with the question of vocational choice.
Vocation is always first a necessity in an industrial or technological society built upon division of interdependent labor. But, in times past, choosing one’s vocation based on its inherent satisfaction factor completely apart from wage compensation played a much large role than it does today. More people as a percentage of work force pursued vocations they loved or respected than do today. Hence, the satisfaction factor with vocational choice when compensation is removed from consideration, has dropped dramatically. For decades, quality dropped as well, (though it appears to have made a comeback as management compensatory actions have been taken to shore up quality factors, but at a competitive cost in terms of the global marketplace).
This is one of the reasons America has simply got to move toward dramatic improvements in its educational systems for K-12 and beyond, making education more accessible, and geared more to student needs rather than administrative and budgetary needs. When people choose a vocation they are motivated to by talent or respect for it, compensation is less important provided it is sufficient to keep a worker and family in the Middle Class strata they are accustomed to.
With compensation for the average worker dropping below inflation growth rates, and the downward pressure on wages by global workforce competition, this becomes a very much more important consideration for maintaining a quality oriented and productive work force going forward.
Posted by: David R. Remer at September 3, 2008 05:45 PM
David:
And your comment completely ignores the inconvenient truth of the entitlement obligations expanding far, far beyond GDP growth, as deficits and debt.
Assuming we extrapolate the current trends indefinitely, of course things get rough. But just when does that happen in economics? Oil prices are heading which way? When we could not afford gas at $4 or $5/gallon demand destruction occured.
It’s a trend. Besides Germany, Italy and Japan are near where we will be in 20 or 30 years demographically. They are doing “ok”. It is their future that is really at risk.
You have said you predicted the Real Estate and finanical mess long ago. Here is my prediction. The entitlement mess will moderate over time as the problem is worked on. One way or another. We will be ok. (tired of using the word fine)
Posted by: Craig Holmes at September 3, 2008 06:33 PMCraig, the baby boomer retirement is here, NOW, driving up federal costs this year.
Oil is still more than 200% of just a couple years ago. And it will remain elevated in perpetuity, provided there isn’t a global recession or depression, already discussed as potential this year among economists.
I don’t say I predicted it, I wrote about it, provided the link, and you were around to respond that the glass is more than half full, just as you are doing now.
You can entertain what you wish about the future, but, you can’t change the record of the past, Craig. In your usual fashion, you dismiss all the evidence, refuse to extrapolate its import, all in order to maintain your view that the world is flat and the center of the universe, because that is what political authority teaches.
It amazes me that you can discount the preeminent economists hand picked by a Republican president who have for years now discussed and warned of the consequences I discuss in this article. Their names are Greenspan and Bernanke. It amazes me what lengths people will go to preserve their views in the face of overwhelming evidence to the contrary.
Such rigidity however provides for the explanation of why America can’t, and won’t, heed the warnings and take prophylactic action which has any cost attached to it.
Truly a remarkable phenomena of a species which dares to call itself intelligent and rational despite its entire history of irrational and emotion driven events of self destruction, other destruction, social destruction and now, planetary destruction to varying degrees.
And just a little objectivity and evaluation by a majority is all that is required to avoid such consequences, now that democratic institutions are in place in most of the world. Yet, that objectivity and evaluation eludes the majorities. Truly remarkable.
Posted by: David R. Remer at September 3, 2008 07:21 PMAmerica is a has-been. You heard it here first…
Posted by: Marysdude at September 2, 2008 02:21 PM
Jimmy Carter said it better, in a less blunt way and both he and you are wrong.
Every election cycle we hear of economic doom unless certain policies and changes are made. My eyes are bleary and my brain numbed by all the pompous claims and dire expectations above.
America has succeeded all these years and economically surpassed every other nation in the world because of our individual work ethic, ambition, freedom from unnecessary government regulation and interference, and personal freedom to succeed or fail on our own merits. To paraphrase the Rev. Wright, our chickens are coming home to roost. Our chickens have been the failed liberal attempts to transform us into a socialized nation of dependence upon government.
Failed liberal policies have hamstrung our vital industries with environmental quackery and these same policies have bloated our government social expenditures with many advocating even more.
We have become so hostile to our corporations, thru high taxation and regulation that many have chosen to leave our shores. And yet we hear calls for even higher taxes and outright theft of the profits of those same companies. We fail to prevent millions of illegals from entering our country to further strain our limited resources. We litigate and stall attempts to increase our own energy supplies while sending nearly $700 billion overseas each year to purchase foreign energy.
What we have witnessed over the past few decades is national “suicide by politician”. Pandering politicians have imbued in some a lust for “new rights”, never intended by our founders. In a scramble to be all things to all people, for government to be the engine of growth rather than the individual, our elected representatives have endangered our American dream.
I assure all of you that the American dream is still alive and well and will overcome all attempts to turn it into a liberal nightmare.
Posted by: Jim M at September 3, 2008 07:22 PMWhat some of you people don’t seem to understand, is that your Government is a criminal conspiracy. The corruption of your system is simply awesome. The politicians do not work for those who elect them, but for those who finance them. That is why the US spends as much obscenely on the military as the rest of the world combined and why is starts dishonest wars, not least the recent spat in Georgia. It is why the system has been gamed to facilitate the sharks on Wall St, why Glass Stegal was repealed. It is why the Banksters were allowed to sell crazy mortgages and then package them off as securitised assets, with Disneyland valuations, ably assisted by the corrupted ratings agencies.
The fact is that the banks are insolvent. They will not lend to each other, because the game is musical chairs. Whoever is left standing when the music stops( or in this case holding the debt), will lose. Hedge funds using highly arcane derivatives that few, if any understand, have created a massively unstable system. Americans don’t seem to get it. The government is a criminal conspiracy, in league with Wall Street and the military industrial complex. The greed and corruption of all of these people has left them blind, morally and economically, as their insatiable lust for more is given full throttle. This cannot end well. At best, we are looking at a depression perhaps to rival that of the 1930’s, and that’s if we are lucky. It may be topped off with a nuclear exchange with Russia as the insane and evil beltway demons pursue their demented ambitions.
Posted by: Paul in Euroland at September 3, 2008 08:52 PMJim M, the current hardship caused to 10’s of millions of Americans today in this economic contraction and inflating prices, is not a projection of anyone’s imagination contrary to what some notable Republican supporters would misrepresent as a “mental recession”.
Amazing, even in the face of harm to fellow Americans, your comment demonstrates no understanding of their plight, no empathy for their suffering, nor acknowledgement of the conditions or persons who created these hardships.
Really, truly, amazing! Must be that ‘compassionate conservativism’ we used to hear so much about.
Posted by: David R. Remer at September 3, 2008 09:01 PMPaul, only if McCain & Palin are elected. There is still hope. :-)
Posted by: David R. Remer at September 3, 2008 09:03 PMSorry David, I can’t agree with you. It doesn’t matter who you vote for, the government always wins. Meet the new boss, same as the old boss. Obama is a creature of Soros and Brezhinski, the latter of whom is a pathological Russophobe. I know it’s not, pardon the expression, “Kosher” to say these things, but didn’t Hillary, Obama and all the rest have to genuflect and bow and scrape to AIPAC? Did you know that Palin had an ungently arranged meeting with that same organisation to be vetted? It’s not who votes that decides. There’s only one party, the War Party. The only hope you guys have, and you’re not going to take it, is to vote for the independents across the board. Dr No was the only mainstream candidate who was clearly an American patriot, but that didn’t sell when there were so many snake oil salesmen and women around.
The whole system is gamed, and the only prospect for systemic change is severe and perhaps total collapse, in order to drive the man and woman in the street to really begin to challenge the corruption.
Posted by: Paul in Euroland at September 3, 2008 09:21 PMSorry, Paul, but, Independents don’t have a integral and cohesive agenda to solve anything.
And I will not accept that we are doomed simply because we have not yet revolted successfully against the corruption in our system. Giving up is no answer either.
Onward!
Posted by: David R. Remer at September 3, 2008 11:40 PMJim M,
Then why have corporate profits been higher than ever for many companies until the recent recession? Are you saying the Republican Congress and President of the last eight years have hamstrung the corporations?
David -
That’s exactly it - hardcore conservatives (which thankfully make up a minority of the Republican party IMO) seem to believe that empathy is a bad thing. The old Indian saying of ‘may I not criticize my neighbor until I have walked a mile in his moccasins’ is just so much claptrap to them.
My neo-con friend is like that - “I’ve got mine, so why should I care one whit about who doesn’t have what I have?”
Posted by: Glenn Contrarian at September 3, 2008 11:48 PMPaul, with all due respect, how is this
This cannot end well. At best, we are looking at a depression perhaps to rival that of the 1930’s, and that’s if we are lucky. It may be topped off with a nuclear exchange with Russia as the insane and evil beltway demons pursue their demented ambitions.
any different from religious “end of time” rants?
I realize it’s easy to get depressed with the stupidity and insanity of Washington from time to time, but that’s no reason to drink the Kool-aid.
Glenn, Sarah Palin would be like that too, as she accepts tax dollar subsidized quality health care as VP, but, would work diligently to prevent ordinary Americans having that same quality health care in return for their tax dollars.
The hypocrisy has to be half way to heaven its getting pile so high.
Posted by: David R. Remer at September 4, 2008 01:02 AMgooglumpuugus,
end of time rants are based on perhaps the most obscure part of the Bible. Some christians have been expecting end times since the resurrection of Christ and his ascension into heaven. To date, as we all know, they have been disappointed.
However, do the math. Examine history. Can’t you see the parallels between today and 1914? Can’t you see that an apparently relatively minor event in an obscure place, led to world wide conflagration? Can’t you see that full spectrum dominance, Nato expansionism, US unilateralism and wars of aggression (pre emptive wars, the supreme international crime, according to the Nuremberg Crimes Tribunal) can only lead to massive blowback by those being targeted?
What is NATO for anyways? Wasn’t that the organisation set up defensively to protect from the anticipated Soviet threat? Didn’t that threat dissolve nearly 20 years ago? The fact is that NATO now serves the dual purpose of propping up the military industrial congressional complex and locking in European nations to American hegemonic expansion. Read Brzezinski’s book “The Grand Chessboard; American Primacy and its Geo-strategic Imperatives” This is about global dominance, and the other players are now drawing their lines in the sand. The game is now on, they have their new cold war, and given the imbalance in military tech, the Russians have said that use of “US Smart Weapons” will be replied to with nuclear ones. We are on a hair trigger. The inmates are in charge of the asylum, and the hoi polloi are distracted and divided to ensure their disengagement from the real issues.
There is inevitably a price to pay for this hubristic insanity and evil, and sooner or later the piper must be paid. The truth is that it doesn’t matter who you vote for, they are all bought and paid for by the same narrow interests, and those are the interests they will serve, to the detriment of all else. And their greed and hubris is so overwhelming, they cannot see what is in front of their noses. This will all end in tears, weeping and gnashing of teeth.
Posted by: Paul in Euroland at September 4, 2008 08:17 AMDavid R. Remer says, “Jim M, the current hardship caused to 10’s of millions of Americans today in this economic contraction and inflating prices, is not a projection of anyone’s imagination contrary to what some notable Republican supporters would misrepresent as a “mental recession”.
David, my reference to “suicide by politician” covers the elected leaders of both parties but, not the philosophy of both parties.
Properly laying the blame for economic contraction and inflating prices should involve both dems and reps. How can anyone say that our national government has not, and is not, spending enough money on the disadvantaged? Take a look at our inefficient and bloated social programs. Take a look at our failing schools. Do we really need to spend more on these failed liberal policies? Is more money the answer? Is more government going to bestow upon our citizens equality of results?
The tired old liberal mantra suggesting that only more and bigger government, only higher taxes and more spending, only more federal regulation, can solve our problems is false and indeed, extremely harmful to those upon whom our largess is awarded.
Tell me David, have you ever heard a liberal politician propose a solution to a national or state problem that didn’t involve spending someone else’s money? Is this year’s crop of liberal politicians any different? What brilliance does it require to just throw money at every conceivable group that simply believes it is deserving?
David, can you really ask me and others to believe that we don’t have enough federal, state, local and private agencies helping the disadvantaged? Are we really not spending enough on needed and worthwhile causes? Will just one more trillion be enough?
The dem leadership is putting forth a budget to spend more money. Never mind who they intend to plunder or the justification used for that plunder, just tell me why it is that the answer is always to spend more money.
Liberals talk about oil addiction and want more taxes. Liberals talk about health care and want more taxes. Liberals want more jobs and want more taxes to create them. Many republicans have abetted, aided and enabled these liberal spenders and I am just as angry with them.
The magic wand being waved about by Obama and his liberal friends to solve all our problems is merely a promise to spend more taxpayer money. Oh, I know, Obama will only spend the taxpayer money collected from those who deserve to have their assets and wealth stolen. As Fred Thompson said in his Tuesday night speech, they believe they can take water from only one side of the bucket. If the rising tide lifts all boats, then the lowering tide lowers all boats.
Posted by: Jim M at September 4, 2008 01:48 PMDavid:
It amazes me that you can discount the preeminent economists hand picked by a Republican president who have for years now discussed and warned of the consequences I discuss in this article. Their names are Greenspan and Bernanke. It amazes me what lengths people will go to preserve their views in the face of overwhelming evidence to the contrary
David:
We have been debating a long time. We have been through this before.
Greenspan’s position is nearly identical. In his recent book he outlines growth rates for our economy over the next couple of decades that are pretty reasonable.
I don’t have any problem with either Bernanke or Greenspan’s position as they are pretty mainstream.
Posted by: Craig Holmes at September 4, 2008 03:37 PMCraig, again, you cherry pick to reinforce your viewpoint. Recite for me please, Greenspan’s assumptions in painting that future. He does speak of those assumptions, which you now so conveniently ignore, and many of which have failed to prove themselves in the current reality we find ourselves in.
Posted by: David R. Remer at September 4, 2008 10:07 PMSorry David, I have been enjoying the presidential race.
You were the one who brought up Greenspan. In his recent book “the age of Turbulance” he paints a picture of the future that is within historical norms. After looking at just about every issue you and I have debated from the federal debt to entitlements to the trade deficit etc etc he concludes:
Which brings us to our bottom line. Couples with the projected .5% annual increase in hours worked between 2005 adn 2030 that follows the demographic assumptions cited earlier, a sloghtly less than 2$ annual average growth i GDP per hour implies a real GDP growth rate of slightley less than 2.5% per year, on average, over the past quarter century. That compares with a 3.1 % per year, on average, over the past quarter century when the labor force growth was considerably faster.
My thoughts are very much in line with Greespan and Bernanke as they are both mainstream which is near the mean, which is where I am at!!
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