Archive for Economy
Before becoming Ronald Reagan’s vice-president, George H.W. Bush called trickle down theory voodoo economics. He was wrong about that. Zombie economics is more accurate. Trickle down won’t die and stay dead.
“Private wealth creation requires huge investments in commonwealth,” David Cay Johnston told Chris Hayes last night on “All In.” Tax cut after tax cut — primarily favoring the entrepreneurial class — were sold on the premise that they would spur investment and hiring by the entrepreneurial class and lift all boats, as it were. Those tax cuts have instead cut into public investments over the last decade-plus, costing the average family a lot of money, says Johnston.
RALEIGH, N.C. — North Carolina government now faces a $445 million revenue shortfall when the fiscal year ends June 30, state budget analysts estimated Friday, raising more hurdles to Republicans’ efforts to give pay raises to all teachers and state employees.
In fact, Gov. Pat McCrory may already have created a structural deficit.
Rachel Maddow last night explored how Kansas’s massive tax cut has not worked out so well, either. That — “surprise” — if you cut out all the revenue, it leaves a big hole in the state’s budget for funding needful things like the public schools mandated by the state constitution. And — “surprise” — citizens in deep-red Kansas are not so keen on the GOP agenda now that they’re saddled with it. Looking on from next door, neighboring Missouri is thinking the same thing, Maddow reports. In addition, Gov. Sam Brownback’s miracle cure for the Kansas economy seems to have created a structural deficit.
Brownback’s biggest cheerleader is a Missouri version of North Carolina’s Art Pope.
If you’ve been following the nasty, divisive “makers vs. takers” meme promoted on the right, Fox News in particular, add this to what makers “make.”
Some of those makers — you know, job Creators (it is capitalized, right?) — are wheeling and dealing and spending millions on technology to shave milliseconds of high-speed trades. That is, they are investing in speed — milliseconds — digitally running ahead of a stock order to buy it first and sell it to the buyer at a markup when the order arrives. Something like “The Wire” in the movie, “The Sting.” Speculators are boring through mountains between New York and Chicago to put in straighter, shorter fiber-optic cables to make this con work.
Paul Krugman this morning:
What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses — but that’s a hard argument to sustain after a decade in which Wall Street’s crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.
What this game shows is how finance has become a game not of job creation or productively allocating financial resources, but of playing small-time investors for suckers. This is what the so-called makers are in the business of making. And Fox thinks you’re the parasite.
At least Newman and Redford ran The Big Con with more panache.
What’s the matter with eastern Washington state? asks Danny Westneat in his Sunday column at the Seattle Times. It seems that out east of Seattle people really hate their government. Even though the region received far more stimulus money than any other in the country — eight times more per person than the national average.
Rep. Doc Hastings (R-WA 4th District) has spilled a lot of ink railing against the “reckless spending” that benefited his voters. He wrote, “Central Washingtonians know that the way to grow the economy is not to grow the federal government.”
Do they? Because of the top 10 employers in the Tri-Cities, six are the federal government, while the other four rely heavily on federal grants or subsidies. The stimulus meant more than 3,000 jobs at the Hanford nuclear reservation alone and, during the darkest days of 2009, propped up the economy there. When the Tri-Cities finally took a hit from the recession, it was because the stimulus ended.
Hastings’ district is basically a company town — with that company being Uncle Sam.
Dave Neiwert from Seattle-based Orcinus blog comments on Facebook,
I think there is a simple answer to Danny’s question: People on the east side of the mountains have such a deep-seated animus toward all things Seattle (excepting, of course, the Seahawks) and anything associated with its liberalism that they would be willing to cut their own throats to defy it. They don’t understand, or don’t care, that they thrive when Seattle does.
With a little help from Uncle Sam, of course.
Hey Dave, you should visit Asheville. You’d feel right at home.
At Hullabaloo, David Atkins pens more strategy advice for the American left:
If we ever want a country that operates on different ideological footing, we won’t just need to defeat the conservative opposition. We need to change our own tactics–and our own ideas.
Atkins and others are responding to Adolph Reed’s essay in Harper’s Magazine and interview with Bill Moyers. Reed believes that the Left has put too much faith in electing political personalities at the expense of building movement and infrastructure to hold them accountable.
Neoliberals, Atkins contends, buy into progressive ideas on social issues while promoting conservative ones on economic policies and chasing the same big-donor money as the right. This has turned national Democrats into a party “whose organizing principle is that society will be perfected when even a transgendered racial and religious minority can also become a plutocrat or head of state, so long as not too many people are dying on the street …”
G: What I think is really interesting as well is that we’ve seen a separation in capitalism. There is the traditional capitalism of the worker and the factory owner, but now what we’ve seen is the rise of a financial class, which is even harmful to the traditional capitalists themselves.
Prof. H: That’s right. Instead of industrial capitalism, if you look at writers from the 19th century, everybody from Marx to business school professors expected the destiny of industrial capitalism to be to bring finance out of the medieval period into the modern period. The idea was to make banks serve the industrial system. That’s what the Saint Simonians advocated in France. They were the idealists of the 19th century. They developed the idea of investment banking that the Reichsbank and the large German banks did most effectively. It’s what Japan did after WW2, simply because they didn’t have any other source of money except by their ability to create their own credit through industrial banking.
Nobody expected that finance capitalism would dominate and ultimately stifle industrial capitalism. But that’s what’s happening.
All the futurists, even socialists, were optimists about capitalism. They thought it was going to evolve naturally into socialism, with an increasing government role in the economy to provide infrastructure, including banking. Instead, you have governments being carved up. That’s what neoliberalism is. It’s really neofeudalism. It’s a dismantling of democracy in favor of a financial oligarchy, to rule by appointing proconsuls and technocrats such as you have in Italy under Monti or in Greece under Papademos. You have a rolling back of history, and of the Enlightenment. If your college curriculum, your religion and the popular press doesn’t even talk about the enlightenment and about the history of economic thought, you’re not going to realize that what’s happening is a rolling back of the last 500 years.
And based on what’s happening in North Carolina, you thought we were only rolling things back 50 years.
That was the original title for this essay generously published in the Mountain Xpress this week. Click through to read the whole thing. Excerpts:
I’m proud to be a part of a city where people care about each other. One recent study cited Asheville as one of the most generous cities in America, whose residents volunteer lots of time and money to make the world a better place. This is a community that knows we’re all in it together, and that’s why we’re going to be able to rise to the challenges facing us today.
We love living here, but we’re acutely aware of the fact that Asheville has a very high cost of living and very low median household income. Helping us get that median wage up are Living Wage Certified businesses that have made human value and dignity central to their business models. Great businesses like New Belgium Brewing, Linamar and PLI are helping too. The sad fact, however, is that too many employers here pay low wages for an honest day’s work. No one who works a full-time job ought to live in poverty. The city, county, Economic Development Coalition and Chamber of Commerce are working hard and all rowing in the same direction: toward better paying jobs. Asheville is examining our economic-incentive policies to better support homegrown entrepreneurs who pay living wages.
Asheville aspires to be a city of equal opportunity for all. Increasing incomes and offering affordable transportation options are two parts of a three-pronged approach to ensure a thriving city for generations to come.
The third leg of that three-legged stool is affordable housing, defined as spending no more than 30 percent of your income on housing costs. We all want a vibrant city where economically mobile citizens can get a leg up, and where the elderly and disabled can live in dignity. We want an Asheville where residents can save money toward homeownership, business startups, tuition and increased opportunities for their children. Without affordable housing, a big part of our Asheville family struggles just to stay afloat.
When the NC General Assembly political advertisements rain down upon us later this year, you’ll be hearing a lot about the tax cuts being peddled as good for the little guy. Yes, the cuts will further reduce resources for education, mental health, and other important services. Yes, the cuts will give the wealthiest North Carolinians some nice wallet padding, some of which will trickle down into campaign coffers. The thing that NC Policy Watch wants everyone to know is that these tax cuts are actually a tax increase on most of us. Please bookmark this post – you will need it to counter the coming disinformation campaign from the ruling party.
66—percentage of tax cut passed by the 2013 General Assembly that will go to the wealthiest one percent of North Carolinians (“Final tax plan puts at risk what makes North Carolina great,” N.C. Budget & Tax Center, August, 2013)
940,000—amount in dollars of annual income of wealthiest one percent of North Carolinians (Ibid)
80—percentage of North Carolina taxpayers—the bottom 80 percent—who will pay more under the tax plan approved by the General Assembly this summer that also allows the state Earned Income Tax Credit expire for low-wage workers (Ibid)
2,898—amount in dollars of tax INCREASE for married non-elderly couple with two kids with a small business income of $80,000 (Ibid)
262—amount in dollars of tax INCREASE for married couple with two children with an annual income of $20,000 (N.C. General Assembly Fiscal Research Division)
2,318—amount in dollars of the DECREASE in taxes for a married couple with two children with an annual income of $250,000 (Ibid)
23—number of days since state tax deductions ended for retirement income, small businesses, unreimbursed job expenses and college 529 savings plans, all part of the 2013 tax plan passed by the General Assembly