It’s time to stop digging. The hole is deep enough!
“There is not in all America a more dangerous trait than the deification of mere smartness unaccompanied by any sense of moral responsibility.”
- Theodore Roosevelt
Now doesn’t that say it all about the geniuses at Citibank, Lehman, WaMu, General Motors, Ford, Chrysler and the other failing organizations?
I don’t think that there is any way to save this economy by giving money to its failing organizations. We must follow the advice of John Maynard Keynes and engage in government spending to repair and improve the infrastructure, develop new modes of energy production, and put people to work at useful employment. We have been in trouble ever since some malignant policy thinker developed the idea that America could become an information society. What bullshit!
That information crap happened about the same time Milton Friedman, hereinafter referred to as “He whose name shall not be mentioned,” came up with the idea of Monetarism. Just keep the money supply flowing evenly and the market will take care of everything else. That worked just great, didn’t it? Add to that fiasco the policies of Robert Lucas, whose name should be blotted out along with the Amalekites, who came up with the idea of rational expectations. Yep, Bob figured that everything was going to be fine because business would automatically do the right thing to protect its investors. Boy, was Alan Greenspan surprised when that theory turned out to be a lot of hooey.
Listen, Keynes’ basic idea was simple. If you want to keep people working when things slow down, as in a recession or a depression, the government has to spend money. This is because the private sector, which is worried about where its next meal is coming from, won’t invest enough.
As we are seeing daily in our current situation, there is a dearth of investment. Consumers are buying fewer products, we are bleeding jobs, and businesses are failing left and right. The only solution is for the government to spend money on public works projects and environmental engineering, infrastructural improvements and repairs and the like. If the government doesn’t start spending money on these things, we are going to be explaining to our grandchildren about what it was like to live out the great depression of the 21st Century.
Anyone else with a better idea?
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25. November 2008 at :
You apparently have not read your history. The New Deal supposedly created jobs, on the backs of Americans. Where do you think that they got the money to put people to work? They got money for the WPA levying excise taxes on alcoholic beverages, cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, and radios.
This meant that middle class and poor people financed the WPA when they bought juice for their children, margarine to cook with, and every time they listened to FDRs fireside chats. Yes, to hear FDR’s “Fireside Chats,” one had to pay FDR excise taxes for a radio and electricity!
Even the government at the time acknowledged that excise taxes “often fell disproportionately on the less affluent.”
In 1937, revenues from excise taxes exceeded the combined revenue from both personal income taxes and corporate income taxes.
It wasn’t until 1942,World War II, that income taxes exceeded excise taxes for the first time under FDR. In 1942 everyone went back to work making parts for the war, people finally had money again. It had nothing to do with WPA.
We have spent 4.3 trillion dollars on the corporate bailouts. The U.S. deficit, adding unfunded Medicaid, Social Security, Medicare, veterans’ pensions, corporate bailouts, and similar obligations, this figure rises to a total of $63.4 trillion.
Where are you going to get enough money to pay for your so called work programs? WPA and other programs of the day, did not bring us out of the depression. They didn’t work then and they certainly will not work now.
25. November 2008 at :
This is such a tough one, because I’ve read compelling arguments for and against the New Deal. It may not have worked at the time, but it did build the transportation infrastructure that made possible a tremendous amount of our later progress. That “last mile” of the Internet revolution is nothing compared to the real last mile of roads that connect everyone’s housing to the reset of the country. In this sense, there would be no Jeff Bezos without Huey Long. We need some similar level of investment now in a non-carbon energy infrastructure if we’re going to compete for the next 50 years.
25. November 2008 at :
you did not read the orignal post. The original post said, …”If the government doesn’t start spending money…”
Apparently you and the person who posted the article are for a bigger government that spends money. Hasnt the Government spent enough? How much more do you want them to spend? Spending trillions of dollars on bailouts is not enough for you, you want the government to spend even more? Where do you suggest that we get all of this money? Cash strapped taxpayers?
You are right, it did not work at the time. There may have been a long term benefit. But the goal was to get out of the depression, which did not happen because of the New Deal. Hoover tried and failed with his New deal and so did FDR. Now you want us to spend more money we dont have, raise the taxes to pay for a New New Deal that will not work?
You keep spending money the government doesn’t have on the backs of poor and middle class families. Have you learned nothing from our history?
26. November 2008 at :
In response to Brett: You say that the policies and actions of the New Deal did not end the Great Depression and had a financial cost for the people of the United States. You’re right, perhaps what the New Deal did was to inspire the people of the United States to tough out the Great Depression. There were millions of people without work or jobs to go to and it gave them hope that they were going to come out alright. Many of them were given jobs and the return of their self respect. There was no revolt against the Republic in the United States and our rights as citizens remained the same, and in some respects were enhanced. As FDR said,
“Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men.”
This was at the same time in America that Father Coughlin was spewing hate out on the radio waves to 3.5 million dedicated listeners (It seems that Rush Limbaugh had a father after all). Coughlin was a fascist whose Christian Front, developed in 1934, later became a mouthpiece for the Nazi’s in America. The point is not that we had spewers of hate in America, but that they never got a foothold and FDR and Eleanor Roosevelt were a good part of the reason.
Perhaps we were lucky to have Eleanor Roosevelt, who fought tirelessly for the rights of all people, especially the “Negros.” At a time when Father Coglin preached hatred of the Jews and the “Jewish, Communist led conspiracy, ER spoke of tolerance and understanding. She and FDR took were concerned with the well being of every citizen of the US for as he said,
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
ER went all over the country looking to see how people were doing. David Bumbaugh of the Unitarian Church in Summit, New Jersey has written of ER things that might apply to the New Deal since she was its visible face across the country,
“It was Eleanor Roosevelt who traveled the length and breadth of this country, visiting miners and farmers, laborers and slum-dwellers, the helpless, homeless and unemployed, north, south, east and west, bringing their pain and their suffering and their need back to a White House which might, otherwise, have remained isolated.”
She also fought for the rights of Black People and of the threatened Jews of Europe. She was the New Deal.
What did the average person feel about the New Deal and FDR. When the train carrying FDR’s body from Warm Springs Georgia to Hyde Park, New York was nearing his home, a reporter came upon a man who was crying and asked him “Did you know the president?” “No”, the man answered, “but he knew me.”
It is true that the Great Depression was not ended by the work of the New Deal, but the Republic was saved. We had better consider carrying out the same types of programs today if we want to keep it alive.
26. November 2008 at :
“There is not in all America a more dangerous trait than the deification of mere smartness unaccompanied by any sense of moral responsibility.”
- Theodore Roosevelt
Now doesn’t that say it all about the geniuses at Citibank, Lehman, WaMu, General Motors, Ford, Chrysler and the other failing organizations?
—-
Regarding your intro quote… Clearly, these guys were not that smart!
26. November 2008 at :
Good points above, JF.
As to Brett’s points about the excise tax, given a choice between buying food and paying an excise tax I think the answer is clear for unemployed people facing real hunger. Worrying about an excise tax is a luxury for people who have jobs and savings.
I also agree with many who say the oligarchs have raided our treasury and given the taxpayers almost nothing in return. We’ve saved nine large banks, plus Fannie and Freddie, but lending is still at a standstill and the average person is worse off than they were a year ago, and still looking at an even bleaker future.
26. November 2008 at :
Since you ask I have a number of issues with taxes in this country. Being an Englishman I long suspected that our competitive tax rate and creaky public services were not exactly the envy of our Western counterparts. Imagine my surprise when I landed here and got a real taste of government arse-f**king.
I lose 40% of my wage packet to deductions. I understand that I am paying for a variety of public services and wars and of course, I pay for health insurance.
Now where I come from, you either get the NHS for which the cost is shared and treatment is free or you get private insurance if you want a better standard of service and you or your work pays for it (most decent companies include it these days). And there, insurance means just that - insurance. If you get ill, you are INSURED.
So can anyone explain to me why I pay insurance here out of necessity and then when I need treatment, I pay again ($300 for a cat scan, $100 for a blood test etc…). What was my INSURANCE for? I don’t get it????
Someone please tell me why we pay for insurance and then we pay again for treatment. And then someone tell me why i’m taxed approx. 7% more in NY than London. And then someone tell me why the properties I’m looking to buy have an annual tax of between $10-15,000 (Council Tax in the UK? typically about $2,000 annually). And this country’s national debt keeps rising?
To answer your question I didn’t get a tax refund (despite the fact that I support a family entirely). And Josh - you know I’m not an investment banker so I don’t earn astronomical sums but I guess i’m, still earning too much.
EJ
26. November 2008 at :
“I understand that I am paying for a variety of public services and wars ”
LMAO
26. November 2008 at :
EJ: I do wonder where the taxes go. I think they go to government pensions and medicare. There are no garbage cans on my street corners in Long Island City, so a walk down the block every day is a great reminder than someone else is getting the services I’m paying for. At least we get trash pickup.
26. November 2008 at :
Brett, Others-
Let’s assume Brett is right, that the New Deal failed and the war got us out of the depression. That argument, that the war machine is what really saved us, is not an argument against the New Deal, but one that says that the New Deal was only a good start. Compare 9% of GNP in federal expenditures in 1939 to 40% of GNP in 1944(Thanks to Wikipedia New Deal entry). Why doesn’t this imply that we just needed a higher order of superlative level of spending than the New Deal offered? Sure there are other things that go along with winning a just war that help ensure prolonged spending, like hope for the future, lots of boffing and birthing and so forth, but productive jobs paid for by government spending acted as fertile ground for people to act on their new hopes and dreams.
(Aside >> We need a new catalyst for hopes and dreams. << Aside over.)
So I’m for a new New Deal. How will we pay for it? Deficit spending and eventual adjustments to the tax code. I’m leaving that as a black box. I can’t imagine there isn’t enough historical data out there to come up with at least a few quantitatively backed ideas about optimal tax and government spending recipes.
As for Joel’s original commentary, I think that perhaps the US automakers should be allowed to fail, but the only way i wouldn’t see that as being absolutely devastating to the US economy is if they failed after the new New Deal was already in place, looking for new hires.
26. November 2008 at :
I agree that it’s insane to give more money to the people who fucked up the spending of the money.
I think the reason that people are so pissed about all of this is only half because the government’s doing this. I think the other half is because they’re realizing that there’s nothing else to be done, because these jagoffs and gov’t have got the economy over a barrel where there are no other solutions considered because — except for the heresy of taking direct ownership — they’ve constructed a scenario where there is no other solution. So there’s this feeling of impotent rage
3. December 2008 at :
I particularly agree with your points about the need to keep people working, even if it doesn’t actually improve the overall economy (in fact, even if those same people are financing their own jobs via taxation). The key to a stable society is jobs. We see all over the world the consequences of a large mass of (especially) young men with nowhere to go and no hope of improving their living standards. So if for no other reason, this would be enough for me to support WPA-like programs no matter how they’re financed.
Ideally they should be financed by yanking the tax rate on the highest incomes back up to where it belongs, where it was until very, very recently in this country. Yes, we in the middle classes pay enough. The uber-rich can certainly spare it, and I just don’t buy any argument about trickle-down economics or disincentives. They may have some validity, but the effect is just not enough to offset the arguments in favor of those with the most contributing more of their share.
I am not as adept at throwing out historical statistics as others, but I know it’s the best-kept secret in America that the highest tax bracket has experienced an unprecedented windfall/abdication of public responsibility in the last few decades.
As for bailouts, I’m no fan of the American auto industry. I think it has driven itself to this point and ought to fail, but I can’t quite stomach the consequences of that failure if it were to be total. So I’d like to see them save the one (or combination) of the Big Three that is most financially viable and let the other(s) go to mitigate the market signal sent by such a rescue. Maybe you’ll get saved if you f@#& up, but then again maybe you won’t.
Despite the general consensus that letting Lehman fail was a mistake, I think that overall message was important. As for the banking sector, I’m only in favor of bailouts to the extent that I cannot perceive the extent of damage to our entire financial edifice that removing such a load-bearing wall such as Citi would cause. As much as I appreciate Josh’s point about the bullsh$t of the information economy, the fact is that is what currently generates wealth in this country. We are not building things anymore, or mining things, or what have you, and we’re not going to go back to doing so.
I like to think we can still invent things, but for the most part we operate on an intangible economic plane and we’d best not forsake anything that can keep our white-collar workers afloat. Who is it that you think is going to be building all this great government-financed infrastructure? Are you going to go out and get a job fixing bridges? We need those jobs, but we need to hold on to information jobs just as much, if not more, unless you want to see what it really means to lose the American middle class.
8. December 2008 at :
what part of the rich can just pack up and leave don’t people understand? spending irresponsibly (which is certainly what we are doing) on failing business models and then hoping that the rich will bail us out is a pathetic business plan.