Re: Refuting supply-side economics

From: The Trucker (mikcob_at_verizon.net)
Date: 09/20/04 

Date: Sun, 19 Sep 2004 21:03:18 -0700

Some Guy wrote:

> drr0cket@yahoo.com (Bodhisattvacat) wrote in message
> news:<4f2532f6.0409121022.4dbcdef4@posting.google.com>...
>> The idea that paying for tax cuts with deficit spending helps the
>> entrepreneur, is sheer nonsense. As government debt builds, the
>> investor finds it more profitable to buy federal bonds rather than
>> invest in the productive sectors of the economy. The entrepreneur thus
>> is denied the capital he needs to start and expand his business. So
>> that, although he has lower taxes, he is left in a much worse position
>> than he was before.
>>
>> The economy with high public debt becomes sluggish, unwieldy and weak.
>> It is leeched of investment capital and makes businesses a lot harder
>> to expand and develop. The high-tax, no-deficit Clinton economy was
>> able to grow fast, because there was capital available for its
>> development. The low-tax, high-deficit Bush economy is stagnant,
>> because the investment funds are denied the businessman and all go into
>> buying government bonds.
>>
>> I don't know why Democrats haven't said anything to this effect. I hate
>> to be the only person I know who has thought of this obvious fact. It
>> is not a difficult concept to explain to American people.
>>
>> Bush is screwing the entrepreneur, and he is screwing my generation.
>> With $2000 per person per year in added federal debt, America will not
>> be able for long to maintain its vibrancy without going through some
>> very painful times. Reagan had an excuse; he had a Democratic Congress
>> and a Cold War. But Bush has a Republican Congress and two minor
>> conflicts with very weak enemies that together cost $100 billion a
>> year. For him to be running $500 billion a year deficits, is
>> inexcusable.
>
> I posted something along these lines recently:
>
http://groups.google.com/groups?start=50&hl=en&lr=&ie=UTF-8&group=sci.econ&selm=667d0677.0409091223.2d1722b5%40posting.google.com
>
> Probably others have come to the same conclusion before either of us..
>
> The only logic for cutting capital gains taxes as a supply side
> measure rather than reducing the deficit, or even paying down the debt
> is that reducing taxes means that there is less money for the
> government to spend. The Republican thinking might be that this will
> eventually reduce the size of government which is a stated goal of
> Republicans.

There is an element of the Republican party so bent on the destruction
of representative democracy (due to the fact that true representative
democracy results in a much greater degree of socialism (National
Health Insurance for example)) that they hope to bankrupt government.
They hope for and long for a private and public debt that cannot be
repaid.

But tax cuts for capital gains makes sense if you are cutting other
taxes or if you are leaving other taxes unchanged. The objective
of such cuts is to get people out of bonds and into stocks so as
to revitalize the economy.
 
> But what supply sided policies has Bush implemented? None that I know
> of. His tax cut was for the middle class.

No. Only the very first phase was for the middle class. All the rest
went to the top.

> If anything, it was demand
> sided - which was precicely what was needed.

The demand side stuff has been done by Greenspan and not by Bush. The
decrease in the value of the dollar and the consumersism we have
experienced are due to decreased interest rates even as we have had
increased government spending and less taxation.

> Clinton's economy had
> tons of capital because of noexistant deficit,

You have the cart before the horse I see. The Democratic government
of 1992 through 1993 increased taxes on the wealthy and left capital
gains rates alone. This, plus the knowledge that Democrats are more
concerned and adept at managing the economy brought money back from
bonds and into stocks thus financing economic growth. And it was
this growth that reduced the defits and started the country on a
new and better course.

> and it was invested in
> some rather hair brained schemes ( certain tech stocks for instance ).

Then came Newt Gingrich and the prancing pigs with their "contract
on America". The Pugs took both houses of congress and the goose
was cooked. The very first piece of legislation passed by the
thieves was the deregulation of business that allowed the officers
of the company to overstate earnings and create the bubble. This
bubble made the Pugs look good as they then fiddled around with the
"contract". Clinton vetoed this bubble blowing piece of pig dung,
but there were enough Republicans in the Democratic party (mostly
from the south) to override the veto.

> Many of these hair brained schemes didn't pan out and fell apart.

H1B visas were a major part of this. The prancing pigs in the high
towers saw a way to hire degreed computer science folks at a fraction
of what had previously been. Of course they got a lot of dummies
with degrees. A paper tiger.

> People lost their jobs, and spending decreased. The Fed barely
> avoided having do fight deflation.

The Fed started cranking the interest rate upward in mid 99 and did
not stop until the bubble burst. Most high tech people lost their
jobs to H1B visa people. Republicans HATE anything new. Technology
scares the hell out of em.
 
> If anything the economy of the last few recession years resembled a
> very mild version of The Great Depression more than another late 1970s
> / early 1980s stagflation. The recessions may be two sides of the
> same coin - supply sided recessions and demand sided recessions. But
> that is just talking out of my ass.

The current recession is hidden by falsified GDP data. These data
are falsified by understating inflation and the understatement is
accomplished by cherry picking which costs are considered in the
"infaltion" calculation.

> I'm not sure if the War in Iraq helped employment - ammo was already
> stockpiled, and there was no draft. But if the war had blown up, it
> would have probably provided a bigger economic boost. War would have
> made the economy of the 1980s worse because it would divert capital
> resources from needed civilian investments.

When a nation spends its productive output on guns as opposed to
spending such output on infrastructure then the nation is poorer
for it.

> One thing I didn't see Bush do was to implement government run
> infrastructure programs like road repair etc. Really, we are getting
> back on track, and it was probably not neccessary.

As I said: The numbers are misrepresented and cooked.

> IMHO, Bush has actually done well on the economy.

This is amazing!!!!!!!!

How can anyone compare the economy under Clinton with that under Bush
ans come to such a conclusion?

> And Bush did the right thing by going to war in Afghanistan, but
> should have invested more heavily in building it back up again into
> something resembling stable. I can't

I know of very few people that disagree with what happened in
Afghanistan when that government refused to hand over Bin Ladin.

> But I hate Bush for wasting 200 billion dollars *so far* in Iraq.
> That's about $800.00 from every man woman and child in the US to
> fight a war that has nothing whatsoever to do with Terrorism. Iraq
> was not a bastion of terrorists. All fighting that war did was piss
> the terrorists off more by putting more US troops into the Middle
> East.

Well at least you git this part right.

> And since every atrocity ( or action that is CONSIDERED an atrocity by
> the Middle Easterners ) strengthens the terrorists we have played
> right into the terrorist's hands by striking the "innocent" ( of
> terrorism at least ) regime of Saddam Hussein. That's what terrorists
> do, they provoke you into harming innocents to increase their own
> recruitment making them stronger. The best way to handle terrorists
> is to attack them if you can target them exactly, and turn the other
> cheek. Do not let them rise above the level of common criminal by
> considering them worthy of Collective Punishment type reprisals.

BINGO!!!! The Bush administration WANTS to raise terrorism to a very
lofty perch indeed, and they want as much terrorism as they can get
so as to justify their own existence. The silly notion that Bush
attacked Iraq to "finish his daddy's war", is ridiculous. Bush and
his ilk MUST have war even if they must declare war on Frosty the
Snow Man.

> Even peaceful sorts use this strategy of purposely provoking
> reprisals. Consider Ghandi, or MLK Jr. Police beatings of protesters
> etc cause simpathy to sway toward the protesters increasing their
> numbers. War damaged mosques, dead Iraqis, and other collateral
> damage will always work in the 'terrorists' favor.

And in the favor of those who claim to be at war with terrorism.

> Saddam Hussein was a Bad Guy(TM) and he deserved what he got. And we
> did the Iraquis a favor by ousting him, though it remains to be seen
> whether they will appreciate this and be able to form a better state
> than Saddam's. But how many Somali/Sudanese/Congan/whatever 2-bit
> bananna republic genocides could we have stopped for the same money?
> Not that I am saying that we should meddle in 2-bit wars around the
> world - we shouldn't. But instead of forcing me the taxpayer into to
> going into debt for the sake of Iraqis why not let me keep the
> $800.00 and decide for myself whether I want to donate it to the World
> Police Fund. You can bet that neither I nor most of the public would
> donate $800.00 to some poor shlobs in some other country who they've
> never met if given the choice. I don't give the the feed the
> Ethiopans fund either,at least not $800.00!
>
> And Bush is in the pocket of the Christian Right. And Bush pushes
> Patriot Acts . The atheist, card carrying ACLU member in me doesn't
> like him for those reasons either.
>
> So I will vote Kerry, even though he has played his cards close to his
> chest, so as to be the 'Not Bush' candidate. I have no idea what he
> is for and against, but it will probably not be wars, religious
> inspired laws to inhibit my freedoms to commit sins against a God I
> don't believe in, and hopefully, he's smart enough to keep the economy
> headed in the right direction.
>
> And if Bush gets reelected in 2004? Then the Republicans will have to
> run an unknown in 2008. That unknown will run against Hillary Clinton
> with a populist public run health care for all platform and lose. If
> Kerry is elected, Hillary Clinton will never be president. Universal
> Health Care is a powerful issue even for people like me who don't like
> big government.
>
> Now, I have no illusions about public run health care for all being as
> good as private health care paid for by insurance from one's
> workplace. I'm sure Canada Health sucks, and it is just about what
> the US would have if health care were government run. But then again,
> why should the US health care consumers pay for all drug and medical
> device R&D because as individuals we don't have the price negotiating
> power that most other civilised countries do?
>
> I happen to have health insurance. I am better off than a Canadian.

That is probably conjecture.

> But then again, people I care about do not have health insurance, and
> I can not afford to buy it for them. I would sacrifice my own
> private insurance health care plan and take Canada Health for myself
> if it meant those uninsured people I care about could *have* Canada
> Health.

Most of the people in this country would be for what I call National
Catestrophic Health Insurance. This would not cover child birth or
any other ELECTIVE health care. It would not cover colds or athletes
foot or broken bones (vehicular accidents are covered by auto
insurance). But it does cover cancer, heart disease, diabetes and
other financially devastating conditions. Most people would not
even WANT to supplement this with private health insurance. The
insurance crooks get their money with these big problems.

> Therefore as a pragmatist, I must be FOR universal health care in the
> US. Also, as a middle class person who already pays for the
> healthcare of those who can not afford it in the form of higher
> insurance premiums needed to pay for inflated hospital bills cause by
> bad medical debt from treating the uninsured, I would like to shift
> some of that cost to the more wealthy by having healthcare payed for
> by a 'progressive' tax. I might even see a pay hike from a universal
> health care system being implemented since my employer would no longer
> have to pay for it, and I would no longer have to chip in ( except at
> tax time - let's make it a VERY progressive tax hehe )

Very good points.

>
> In summary, I am voting for Kerry because of Iraq even though Bush has
> handled the economy well ( Accidentally? We will never know.. ), and
> despite the fact that I WOULD like to see Hillary Clinton elected in
> 2008 so that the US might get a Universal Health Care system.

I'd like to see Catestrophic Single Payer National Health Insurance
but I don't know about Hillary. 

-- 
"I know no safe depository of the ultimate powers of society but
the people themselves; and if we think them not enlightened enough
to exercise their control with a wholesome discretion, the remedy
is not to take it from them, but to inform their discretion by
education." - Thomas Jefferson.  http://GreaterVoice.org

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