Sunday, August 7, 2011
The type of Economic System that doesn't work at least in America and other countries can speak for themselves. is what we've been doing the last ten years, which is called "Cowboy Economics". Which is a system where you don't regulate the economy well if at all and then when "Too Big to Fail" company's fail and go down. The Federal Government steps in and only then to bail these company's out IE TARP of 2008. You essentially let people behave badly and then bail them out with people who've played by the rules. But you don't even pay for your Bail Outs, you rob people of the future by borrowing the money to pay for the bailouts. And then you also cut taxes so far as well as Tax Loopholes, where the wealthy are essentially paying less in effective Tax Rates then the Middle Class. Where you also has a Fiscal Policy that you want government to do big things but you don't want to pay for them. Because raising taxes in America are still very unpopular, almost as unpopular as socialism as an ideology. And you don't want to cut government either to pay for your Government Expansion. Because you might have to cut popular Government Programs and that could hurt you politically. We have ten years of evidence of this and to a certain extent we are still doing the same things today. One of the benefits of the Debt Debate is we are moving away from a discussion of how much we can Borrow and Spend and moving towards a discussion of how much we can afford. And how to pay for it and what we can no longer afford and what we need to cut back on and what needs to be reformed and how.
The Economic System that does work is called American Capitalism, its not European Capitalism or Chinese Capitalism or Japanese Capitalism. But American Capitalism where have vast Economic Freedom but where we regulate the economy well to prevent people from unfairly abusing innocent people. Where everyone pays taxes based on their ability to pay, with the wealthy paying the most and go down from there. But where are taxes are low enough to encourage people to work hard and earn a good living, get a good education and so fourth. Where we have an Education System that educates everyone well enough to go out and get the skills that they need to be Self Sufficient and successful. And where we have a Safety Net that catches people who fall so to speak but gives them a hand up so they can get themselves on their feet. This is the Economic System America had from the 1940s or so up until the last ten years or so. That made us the number one Economic Power as well as Military Power in the World. Because almost everyone would be able to to a shot at making it in life on their own and not be dependent on Public Assistance.
Its not that America needs to scrap its Economic System and move to some type of Socialist Economic System thats common in Europe. That Democratic Socialists in America would like to see us move to. Its that we need to get back to American Capitalism the system that made our economy what it was just ten years, we need to go back to what works. And scrap what we now have ten years of evidence to know what doesn't work.
Click on the link of the blog to see Socialist Economist Richard Wolfe on the American Economy
Its hard to argue that the 2009 Recovery Act was a success, if you look at the fact that today's Unemployment Rate and Economic Growth is both lower today then it was in late 2009. When the "Great Recession" officially ended but we would be a hell of a lot worse off without the Recovery Act even though its not a success. But why wasn't the Recovery Act successful, because it wasn't big enough and wasn't targeted properly. Which is what happens when you legislate in Crisis Mode and you try to and I'll clean this up, fly by the seat of your pants. Without a gage to tell you where your going and how to get there but the fact is we needed something like this but it should've been done better. I argued in a blog in early 2010 at the one year anniversary of the Obama Administration as well as during President Obama's first 100 Days that the Recovery Act wasn't big enough and not properly targeted. And if your going to have a Borrow and Spend Economic Policy which I'm generally against, except in an economy this bad where no one has any money to spend. And the Federal Government is the only one capable of printing money with their control of the currency. That you should borrow as much money as it takes to deal with the "Great Recession" to get Economic and Job Growth going again. Instead of borrowing 45B$ for infrastructure, that you should borrow about ten times that, to fix a lot of these projects that the Core of Engineers said has to be done. That instead of cutting taxes and regulations and expanding Lending Authority for Small Business in the Summer of 2010. That you do that during the Heart of the "Great Recession" and this is not Monday Morning Quarterbacking on my part, I wrote this in a blog on this site two 1/2 years ago. This idea of a National Infrastructure Bank that has a Bi Partisan bill in the Senate that would be Self Financed. And prioritize a lot of these Infrastructure Projects, should've been in the Recovery Act and we could've borrowed the money to start it up and it would've had a two year Head Start and up in running right now. And be taking care a lot of this work and putting a lot of people back to work today and our Unemployment Rate would've fallen.
And because the Recovery Act was badly designed, today we have an economy thats as bad or not much better then when the "Great Recession' started. And we are left with a bad economy and National Debt and Deficit that have to be dealt with at the same time. Partially because of the Recovery Act but also because of a lot of bad Fiscal Policy's that the Obama Administration inherited from the Bush Administration. So we are in a situation today in the Summer of 2011, where we have to both, stimulate the economy and pay our bills and cut our costs. The Debt Deal of last week is a solid start but should've been a lot better and hopefully Round Two of Debt Reduction will be a lot better and more balanced. But as we are doing this we need to put people back to work and spending money again, which is the easiest way to pay down our debt with Economic Growth. A National Infrastructure Bank, Free Trade, and Energy Bill more targeted Tax Cuts to encourage Consumer Spending. Would be a good start and we can pay for all these things as well, without hurting the economy.
Click on the link of the blog to see a video on Stimulus and Austerity