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We do better when Dems are in office
Aug 28th, 2008 by Sam

Have you fallen for the Republican mythology that they are better for the economy than Democrats are?  Well, don’t feel bad, because that are the masters of spin.  However, it isn’t true.  Larry Bartels, professor of political science at Princeton University, writes about two facts in the post WWII era in his new book, “Unequal Democracy.”

Alan Blinder, economics and public affairs professor at Princeton and former vice chairman of the Federal Reserve describes these two facts as follows:

  • The Great Partisan Growth Divide – the United States economy has grown faster, on average, under Democratic presidents than under Republicans.
  • The Great Partisan Inequality Divide – over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all

He goes on to point out that Republicans have won five of the seven elections since 1980.

What are the consequences of this great divide?  Well, “eight years of growth at an annual rate of 0.43 percent increases a family’s income by just 3.5 percent, while eight years of growth at 2.64 percent raises it by 23.2 percent.”

Interestingly, wealthy families do about as well under either Democratic or Republican administrations.  However, lower income families have much at stake.

The evidence is clear – poor people do better economically under Democrats.

Jul 7: Sam on “Mark Levine’s TV The Inside Scoop”
Jul 7th, 2008 by Sam

Sam appeared as a guest on Mark Levine’s TV Inside Scoop:

  • Foreign companies buying American – are they taking over?
  • The Obama fist-bump on the New Yorker?  ugly smear or clever satire?
  • Will the price of oil ever go down again?
  • Is Obama a moderate pretending to be a progressive or a progressive pretending to be
    a moderate?
A conservative tells the truth about taxes
Mar 9th, 2008 by Sam

I knew Ben Stein was an actor and comedian.  I did not know he was an economist, pro-lifer, and anti-darwinist.  Go figure.

So, I must confess to cherry-picking.  I agree with what he says about taxes and feel compelled to note it here:

“…the Republican Party (my party and yours) has for the last 30 years or so been operating under ademonstrably false and misleading premise: that tax cuts pay for themselves by generating so much economic growth that they replace the sums lost by tax cutting.

This would be a lovely thing if true, and the best of all ideas, the “something for nothing” idea. In fact, tax cuts lower federal revenue and generate federal deficits. It is also true that they do stimulate the economy and after a long period of years, federal tax receipts go back to where they were before the tax cuts.”

Wow!  A grown up says what needs to be said.  And then he goes on to say:

“[tax cuts] shift the tax burden from us to our progeny and add immense amounts of interest expense to the federal budget.”

“…immense federal deficits in modern life are financed largely by foreign buyers of our debt. This means that the American taxpayer must work a good chunk of the year to send money to China, Japan, the petro-states and other buyers of United States debt. In effect, we become their peons.”

We have to spend money in the interest, and the value of our currence declines which makes imports (oil) more expensive which causes inflation.

In other words, there is no free lunch.

Stein’s challenge to McCain is whether he will:

“…keep up the (latter-day) Republican game of make-believe. You can propose still more tax cuts, create still more deficits and add to the debt, and say to yourself, like Louis XV, ‘Après moi, le déluge.’

or do what is necessary: tax the rich.  Why the rich?  Because they have the money.  Again, Stein:

“To put it even more starkly, the government — which is us — needs the money to keep old people alive, to pay for their dialysis, to build fighter jets and to pay our troops and pay interest on the debt. We can get it by indenturing our children, selling ourselves into peonage to foreigners, making ourselves a colony again, generating inflation — or we can have some integrity and levy taxes equal to what we spend. “

No surprise that a Republican wants to balance the budget.  The surprise is that he doesn’t think spending is going to decline.  And, he acknowledges that we have to pay for some social programs.  Nary a mention of ‘starve the beast.’  Nothing about how the old people should have saved for the dialysis machine.  Huh.  Now, I don’t know how far he’s willing to go on this social program thing.  But, this was a bit of a surprise.

Stagflation: you heard it here
Nov 9th, 2007 by Sam

Lots of headlines saying “US economy to slow,” like this one on the BBC website.  When even Ben Bernanke, the Federal Reserve chief is chiming in, it’s time to pay attention.  He said that there was likely to be more

“financial restraint on economic growth as credit becomes more expensive and difficult to obtain”.

Now, doesn’t that mean interest rates are going up?  Isn’t that what makes credit more expensive??

And yet later in the article, it says “Some analysts say that the comments make it more likely that there will be another interest rate cut before the end of the year.”  Well, ‘In particular, it’s his comment that the FOMC (the rate-setting committee) expects growth to slow noticeably in the fourth quarter and expects sluggish growth in early 2008,’ said Dustin Reid from ABN Amro in Chicago.”

And then later they talk about inflation – yes, they are worried about inflation.

So, inflation + a shrinking economy = stagflation, if I remember from high school.

Now, they aren’t saying anything about a shrinking economy.  And I’ve read reports about how the economy is doing well by other measures – productivity is up.  Well, what is productivity?  Output divided by number of workers.

Well, we think we can measure output.  But, are we accurately measuring workers?  What if the reason our productivity numbers look so good is because we have millions workers who are not being counted?  Because they are not here legally?  What if the productivity numbers are bogus?

I’ve only seen stagflation mentioned a couple of times in the press in the last months.  But, I have a hunch that we’re going to see more, and that we’ll find out those productivity numbers are a little, shall I say, unrealistic.  Don’t get me started on the US dollar….  China’s going to diversify its currency holdings??  Stay tuned….

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