Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
The Horror Movie That Is Fiscal Responsibility
John T. Harvey, Contributor
Forbes
You know that incredibly frustrating feeling you get in horror movies when you see someone exploring the dark, dusty mansion alone, walking from room to room armed only with a flashlight, and you say to yourself, “Noooo! Don’t do it! Get the hell out of there or you’ll be killed!!!” Many economists have that feeling right now. It could not be more obvious that we desperately need an increase in the demand for goods and services, yet both Democrats and Republicans (though not to the same extent) are calling for “fiscal responsibility” in the form of reduced government spending. Idiots. You might as well give Freddy Krueger a key to your house and turn off all the lights.
Contrary to what the right tends to argue, the problem today isn’t that taxes are too high (they are at one of our lowest levels in history) or that regulations are strangling business (ditto). Nor is it the case, as the left often says, that lazy, greedy corporations are just sitting on funds that they should be using to create jobs. Firms are being perfectly rational and reasonable in doing this. They know damn well that there is no point in hiring when you can’t sell your products. And they are right because, the fact is, the real problem is a lack of demand. The private sector cannot consistently generate sufficient spending to make profitable the hiring of all those willing to work.
In situations like that we face today, we need a sector of the economy not dependent on profit to step in: the government. They face no budget constraint and can never be forced to default because 100% of the debt is owed in something we (not the Chinese!) make: dollars. Thus, whenever we are at less-than-full employment, the federal government must step in and generate the demand that will cause entrepreneurs to go on the hiring spree we so desperately need (these issues are explained in much more detail here: Why You Should Learn to Love the Deficit, The Real Reason Unemployment isn’t Falling, and The Big Danger in Cutting the Deficit).
And yet, what we hear from both sides of the aisle in Washington is that we need to be fiscally “responsible.” Those saying this are just plain ignorant, have an ulterior motive, and/or want to score political points by playing on the notion that the government is lazy and wasteful, “But not me!” None of these alternatives is especially comforting. I often wonder, incidentally, if people remember that firemen, police officers, soldiers, Marines, sailors, airmen, FBI and CIA agents, astronauts, et cetera are all government employees–not exactly a who’s who of slackers. Meanwhile, the private sector includes such luminaries as those who brought us child labor, mining towns, and the financial crisis. Both the private and public sectors have their share of hard-working, decent people, and folks whose self-serving actions bring pain and misery to society at large.
Read more: http://www.forbes.com/sites/johntharvey/2012/06/01/horror-movie
Forbes
You know that incredibly frustrating feeling you get in horror movies when you see someone exploring the dark, dusty mansion alone, walking from room to room armed only with a flashlight, and you say to yourself, “Noooo! Don’t do it! Get the hell out of there or you’ll be killed!!!” Many economists have that feeling right now. It could not be more obvious that we desperately need an increase in the demand for goods and services, yet both Democrats and Republicans (though not to the same extent) are calling for “fiscal responsibility” in the form of reduced government spending. Idiots. You might as well give Freddy Krueger a key to your house and turn off all the lights.
Contrary to what the right tends to argue, the problem today isn’t that taxes are too high (they are at one of our lowest levels in history) or that regulations are strangling business (ditto). Nor is it the case, as the left often says, that lazy, greedy corporations are just sitting on funds that they should be using to create jobs. Firms are being perfectly rational and reasonable in doing this. They know damn well that there is no point in hiring when you can’t sell your products. And they are right because, the fact is, the real problem is a lack of demand. The private sector cannot consistently generate sufficient spending to make profitable the hiring of all those willing to work.
In situations like that we face today, we need a sector of the economy not dependent on profit to step in: the government. They face no budget constraint and can never be forced to default because 100% of the debt is owed in something we (not the Chinese!) make: dollars. Thus, whenever we are at less-than-full employment, the federal government must step in and generate the demand that will cause entrepreneurs to go on the hiring spree we so desperately need (these issues are explained in much more detail here: Why You Should Learn to Love the Deficit, The Real Reason Unemployment isn’t Falling, and The Big Danger in Cutting the Deficit).
And yet, what we hear from both sides of the aisle in Washington is that we need to be fiscally “responsible.” Those saying this are just plain ignorant, have an ulterior motive, and/or want to score political points by playing on the notion that the government is lazy and wasteful, “But not me!” None of these alternatives is especially comforting. I often wonder, incidentally, if people remember that firemen, police officers, soldiers, Marines, sailors, airmen, FBI and CIA agents, astronauts, et cetera are all government employees–not exactly a who’s who of slackers. Meanwhile, the private sector includes such luminaries as those who brought us child labor, mining towns, and the financial crisis. Both the private and public sectors have their share of hard-working, decent people, and folks whose self-serving actions bring pain and misery to society at large.
Read more: http://www.forbes.com/sites/johntharvey/2012/06/01/horror-movie
12 replies
= new reply since forum marked as read
= new reply since forum marked as read
what has happened to countries that embraced austerity?
