Firstly I need to provide The Link to the story from the NY Times regarding John McCain's economic policies. Lets hope I relearned the HTML properly as I went in and did it myself. (Who is blogspot to tell me how I should link anything.)
Todays post is a continuation of economic policy reviews based upon NY Times policy summaries. Todays subject:Hilary Clinton
Good Things: Hilary is a fiscal conservative. It says it right in the middle of the article. Thank goodness too.
Bad Things: Government more active role in economy correcting "excesses." "They add that reducing the deficit is no longer sufficient, because today's problems have less to do with the size of the economic pie than the way it is divided." Her belief that she really has to manage the economy.
Really Bad Things: Response to subprime lending mess.
Why its really bad: If "the patient" is the US economy "the patient" is not dying. "The patient" has a cold. Maybe even the flu. Even if the "patient" was seriously ill the best "doctor" would be the federal reserve system. Ill abuse the metaphor one more time to equate intervention here to over prescription of drugs with dangerous side effects.
Could go either way: Her response to executive pay. Recognizing that laws on executive pay would probably not do much good. It not really that big of a problem. Its troubling to be sure but if you reduced executive pay to levels where they would not be as troubling every American might see an extra $100 a year. Not really a huge structural problem.
Allowing Bush tax cuts to expire. Good if used to reduce deficit bad if used to "pay for other proposals"
I guess my main line of criticism is that todays inequality problems are not all that serious and that the government may not be able to solve them without creating more serious problems. We are currently lucky enough to live in one of the freest and most prosperous eras and areas in the world and in history. Im not at all convinced that "we are in great need of a total overhaul." Equal opportunity should be the goal. Not total equality.
5 comments:
As you are more qualified than I am in these areas, I wonder when you possibly will allow for fiscal policy to prevent recession.
Consumer confidence is low. The MCSI is around 78. The RBC CASH index is at an all-time low. The Fed has cut and cut and cut. Not giving people tax cuts may make you feel like the responsible uncle who takes things seriously, but come on, Scrooge! Gimme some money so I can buy some new rims!
How to get out of the bind: once you're super sure and ready to use government intervention, you've passed the time when they would have been effective. And when *that* time comes, guess who will be on the front lines saying, "This stimulus package is ineffective and irresponsible for future Americans."?
Executive pay is not the problem- it's a symptom, and one that resonates with voters. The difference between productivity growth and take-home pay is troubling. The growth in income disparity is troubling. Throwing your hands up and saying, "tough luck pal, that's the way the world works" is not an acceptable answer- especially because the playing field is tilted to begin with.
"Equal opportunity should be the goal. Not total equality." Give me a freaking break, Harrison Bergeron. I'll let you know when the government thugs are coming to make you wear all gray clothing. Until that time, you should develop a better understanding of fairness. Productivity gains going to people who aren't responsible for them and who don't need them in the first place is THE DEFINITION of unfair.
I would say that the appropriate time for fiscal intervention would be when it becomes clear that monetary policy is not going to be effective. But you have to remember that the goal is sustained growth and stability through the long term and that sometimes a minor recession just cant be avoided without doing greater harm. What's wrong with being a responsible uncle who withholds toys and instead makes contributions for your college fund?
I want to be absolutely clear that I am not arguing that fiscal intervention is always wrong. Im not. Im not going to say that making the call for fiscal intervention is easy. Its not. Given these I think it would be most productive to constrain the arguments to the current situation. You have done well by citing that consumer confidence is low. However I would respond that a better leading indicator of recession is unemployment and new claims for unemployment benefits, which do not look particularly dire. Consumer confidence is vulnerable to unwarranted gloomy news stories and mob economic understanding. The justification for a $150b fiscal stimulus package is lacking.
How can we avoid the problem of passing a stimulus package too late when there are wrongheaded people who argue against it? The simple answer is that we will never be able to ensure that every person (nor every educated and knowledgeable person) agrees on economic policy. Given that I think that its best that we constrain ourselves to the current situation. I would suggest that we are currently doing a pretty good job of managing the economy but the CURRENT proposed fiscal stimulus package is unnecessary.
Why do we believe that it is essential that the Fed be insulated from politics? I think we can agree that one of the reasons is that because economic policy is complicated those who have a limited understanding can do significant harm. This intervention may be an example of this.
The world is not perfect and I think its problematic for people to be buying Cadillac's when others dont have enough food or have inadequate health care.
However, income inequality in itself is not a problem and is to be expected in capitalist societies. The problem is that money can distort meritocracy by unfairly denying opportunities to deserving individuals. I dont think that people who buy Cadillac's should be legally restrained from doing so. I dont think restraining executive pay or focusing on that symptom is productive, even if it resonates with voters and is politically expedient (Being able to cast anyone who opposes it as a oppressor or unconcerned with the problems of the "common man" sure can be convenient.)
I would ask of you why are workers accepting raises lower than the increase in productivity? What is the real problem here? You seem to believe that evil capitalist overlords are oppressing workers and making it impossible for them to get their fair share. I dont see any evidence for that. Maybe thats an unfair characterization of you views. This conversation would benefit greatly if you clarified your position.
The point is that productivity in the United States has increased and there isnt an easy way to determine exactly how much came as a result of harder work and how much is a result of increases in information technology. Some increases in productivity are reflected in lower price levels. Even after better economists than I have built elaborate models and decompose the sources of productivity growth there are residuals that can't be attributed to anything in particular. However by allowing employers and employees to negotiate and agree amongst themselves what work shall be done and what compensation should be received is the best bet for ensuring a fair system.
Do you believe that equal opportunity should be the goal or dont you?
Getting melodramatic and attempting to trivialize my point with a mocking reference from science fiction literature is an offensive act. Furthermore I find your implication that I am "throwing up my hands and saying tough luck" is also an unfair characterization which you know to be unfair. I expect better from you David.
Jordan, will you be my gentleman lover? I agreed with everything you have said in this post.
xoxoxo
I apologize for my poor grammar.
NOW can we use fiscal policy?
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