We can’t do anything about the White House for another two years, but I’ll bet that a Speaker of the House other than Nancy Pelosi would be a huge shot in the arm for business confidence.
[Update a while later]
The Lady Gaga economy:
Right now, there’s lots of demand for Lady Gaga, say; but maybe too many houses, cars for sale, and hokey Internet startups.
Economic recovery requires massive spending cuts, deregulation, privatization, tax-cutting, avoidance of monetary inflation, and elimination of government-granted monopolies and favors. But, more importantly, economic recovery requires allowing prices and wages to adjust to market clearing levels. Politicians don’t allow that, so downturn is deliberate policy in a sense. Politicians instead stimulate demand in random, whim-driven ways that create new distortions that harm us later (when they’re out of office, or their earlier misdeeds are forgotten or forgiven).
Such policy prescriptions foster political ends that have little to do with actual economic recovery. Recession is already inevitable if government does not perform its core function of preventing the interest group manipulation that distorts smooth economic enterprise. It’s doubly so when politicians deliberately distort the economy’s workings.
Beyond performing its “classical” functions of maintaining order and thwarting contrived scarcity, government can only serve as a transfer mechanism. Inherently limited in what it can contribute to the real economy, it can certainly subtract a lot.
And it certainly has.
[Update a while later]
The Money Honey weighs in:
You are seeing businesses follow the growth outside of the United States. But absolutely – that is the positive. The reason that they’re not hiring right now is because there is a tremendous amount of uncertainty. And that has everything to do with the policies coming out of this administration. Higher taxes in 2011, higher expenses as a result of health care costs. That’s why they’re not hiring.”
Well, duh.
So Chait and Krugman provide piles of evidence that current investment levels can be entirely explained by low levels of economic demand, and Jonah Goldberg’s rebuttal is to cite Obama’s political aides? And Rand seconds the notion, crediting the Obama aides’ view as “reality” (never mind the economic statistics cited by Chait and Krugman — unlike the hunches of White House political advisors, those numbers must be fantasy…).
Economic recovery requires massive spending cuts, deregulation, privatization, tax-cutting, avoidance of monetary inflation, and elimination of government-granted monopolies and favors.
1993-2000.
1993-2000.
At the end of which the bubble popped spectacularly.
Interestingly enough, Obama has announced large tax credits for “clean energy” firms, and even admits that this is the sort of thing that will stimulate them.
The tax increases slated to take effect in January will destroy all other business, along with consumer demand.
If there were some actual “clean energy” technology of any significance out there, it might be worth trying to promote it (though tax policy isn’t the way). But why isn’t the rest of the economy due equal consideration?
I wouldn’t say there’s nothing that can be done about the white house for another 2 years, just no good and likely options. In the unlikely event of sufficient turnover in the Senate, impeachment becomes an option. We can hope that if congress blocks him at every turn he gives up and resigns. I’ve never heard of a sitting president being indited on criminal charges, but we could see many of his cabinet removed by that means. Assassination risks turning him into a martyr, when we need most of all to discredit him and his policies.
The 90s saw the longest peacetime expansion in history, without any tax cutting to be seen. Instead, it was kicked off by a hike in tax rates. Facts are inconvenient things.
Assassination risks turning him into a martyr, when we need most of all to discredit him and his policies.
Unbelievable.
“The 90s saw the longest peacetime expansion in history, without any tax cutting to be seen. Instead, it was kicked off by a hike in tax rates. Facts are inconvenient things.”
“Kicked off” by a hike in tax rates? Wow, then we should increase tax rates to 100%. That should REALLY get things going.
The 90s boom was fueled by tech growth, which in turn was fueled by an enormous transfer of talent from defense industries into the private sector, particularly internet companies. In turn, we spent a great deal less on defense, and defense spending just dissipates wealth. The only reason we had either of these was the end of the Cold War, a Reagan/Bush accomplishment.
I side with Jim on the Clinton thing.
1993-2000.
While Clinton had many flaws, he did preside over a period of economic growth and unusual government frugality. What is Obama doing now to duplicate that period of known success? He’s not doing spending cuts. I think there’s a good chance we’ll see trillion dollar deficits for the rest of Obama’s reign. Deregulation? Not on his watch. We have stiffer environmental and financial regulations, for example. Privatization? He’s reversing that by having government buy stakes in companies (such as the GM/Chrysler bailout or the massive funds that the Fed put into real estate). Tax-cutting? Maybe in 2009 or 2010, but that much spending is going to result in higher taxes (either directly or through loss of wealth via inflation).
As to elimination of government granted monopolies, I think the greater problem is government granted oligopolies, created via a high barrier to entry generated by regulation and liability. For example, deep sea drilling in the US (as discussed here) is coming under an onerous liability burden that favors big businesses over small.
So here’s a question for Jim. Obama isn’t doing any of the list above that Clinton demonstrated led to a growing economy. So how does Obama’s actions help the US economy?
While Clinton had many flaws, he did preside over a period of economic growth and unusual government frugality.
And what Clinton policy(‘s) led to either of those?
None.
As stated earlier the economic growth of the 90’s was a result of tech growth. Tech growth that Clinton had no hand in stimulating or encouraging.
And how much “government frugality” would there have been if Clinton had succeeded in his healthcare takeover? The frugality was a direct result of his famous “move to the middle” after the dems were whipped in the 1994 midterm elections and the GOP took control of congress.
And how much “government frugality” would there have been if Clinton had succeeded in his healthcare takeover? The frugality was a direct result of his famous “move to the middle” after the dems were whipped in the 1994 midterm elections and the GOP took control of congress.
The parallels to 1994 and this year are a bit eerie, but I said nothing about Clinton’s motives. It is likely that Obama will try to duplicate the Clinton trick in 2011 and 2012 in order to have a chance at winning in 2012.
Uh, Clinton oversaw the reduction in the capital gains tax, the estate tax, and the creation of the Roth IRA.
Jim says, “without any tax cutting to be seen”. More historical revisionism on Jim’s part again I see.
The 90s boom was fueled by tech growth, which in turn was fueled by an enormous transfer of talent from defense industries into the private sector, particularly internet companies. In turn, we spent a great deal less on defense, and defense spending just dissipates wealth.
You just contradicted yourself. The Internet was invented thanks to ARPA defense funding. So defense spending does not merely dissipate wealth. Not if the technology has civilian applications. Defense related spending which later helped fund the regular economy includes canned goods, the Haber-Bosch ammonia process, synthetic rubber, pressurized water nuclear reactors, and yes the Internet.
Even the asinine SDI project trained people with experience in laser and optics R&D which would be employed a decade later into making decent fiber optics.
Today there has been a lot of R&D on isotope separation which could be used in everything from silicon purification for semiconductor manufacturing, to titanium purification for cheaper metal alloys, to nuclear fuel separation.
Other things armies today could use: more efficient powerplants to reduce the logistics footprint, synthetic fuels to enable self-sufficiency in case of a petroleum embargo, advances in medical technology such as growing organs, artificial blood, improved prosthetics.
Even improved battery or fuel cell technology would be interesting for the military. You can power vehicles or exoskeletons silently with it, as well as electric weapons.
All of these technologies have civilian applications.
What dissipates wealth is starting non-defensive wars on the other side of the world, throwing platinum plated munitions at mud huts.
The Internet was invented thanks to ARPA defense funding. So defense spending does not merely dissipate wealth.
It doesn’t follow Godzilla. You have to take into account collective defense spending, not just the microscopic portion that happened to do something you liked. After all, there’s absolutely no way the DoD will spend hundreds of billions of dollars on things with as high a return as their APRANET spending.
Also keep in mind that the internet likely would have been created anyway, after all, a lot of it, even in the old days came from commercial networks that connected up to the internet (eg, FidoNet, BITNET, the WELL). The network effect (that is, “Metcalf’s Law” or a single large network has greater benefit than a collection of smaller networks of the same collective size) would in itself encourage the development of the internet.
The economy of the 90’s was tech led and the shrinkage of the military contractor ranks had essentially nothing to do with it. One key element of the tech economy of those days was the yeasty growth of startup companies fed by ready access to venture capital and a surging IPO market. Regulatory changes, including, but not limited to, the changes to accounting rules requiring expensing of stock options (a pet project of Mr. Obama’s good friend and backer Warren Buffet, by the way), has virtually destroyed the VC business and reduced tech IPO activity to near nil. And then there’s Sarbanes-Oxley. If the 90’s are going to come back, the regulatory barnacles imposed by Democrats in the meantime will have to be swept away first.
What dissipates wealth is starting non-defensive wars on the other side of the world, throwing platinum plated munitions at mud huts.
If this had actually occurred, you might have a point, but it didn’t and you don’t. The war (and it is one war, by the way, just as WW2 was one war and not the North African War, the Pacific Island War, the Sicilian War, the Italian War, the French War, etc.) started, as I dimly recall, when some people living in mud huts started throwing aluminum-plated “munitions” at a pair of steel towers. It is a war against aggressive Islamic tribal barbarism. It will end when our enemies are no longer aggressive, no longer Muslims or no longer tribal barbarians. Any one of the three will do.
Post hoc ergo propter hoc. Fallacies are convenient things.
Mr. Eagleson, the problem with your analysis is that Islam IS aggressive tribal barbarism, turned into a religion and extended beyond its original tribe.
Which means that your comment collapses into “when our enemies are no longer Muslims.” At least that set of enemies. Actually, at the moment they are the only enemies the West has (if despite geography one includes Japan). Russia and China (and possibly India) are currently competitors, but not enemies.
You missed out a fourth option, which could be said to be part of the “no longer Muslims” option. The same option Rome used to eliminate Carthage as an enemy.
Dick: The invasion of Iraq had nothing to do with 9/11. I was actually in favor of the war on Afghanistan to knock down the Taliban and Al-Qaeda. However doing “nation building” in Afghanistan is pretty much futile. Especially when there is no viable strategy into doing it at all. Just doing a punitive expedition would have been cheaper.
The 90s boom was fueled by tech growth, which in turn was fueled by an enormous transfer of talent from defense industries into the private sector
So if we cut defense spending today we’d get another tech boom?
The 90s saw the longest peacetime expansion in history, without any tax cutting to be seen. Instead, it was kicked off by a hike in tax rates. Facts are inconvenient things.
Bullshit. The economy took off after the Democrats lost the House and the Republicans 1) killed the possibility of further Democratic tax increases and 2) forced Clinton to go along with their cut in cap-gains tax rates.
In the real world, as opposed to your imagination, the longest peacetime expansion in history lasted from early in Reagan’s first term to late in W’s second term.
The Internet was invented thanks to ARPA defense funding.
Which had about zero to do with it’s subsequent growth and commercialization.