Wednesday, January 28, 2009

Fiddle While Burning

There was good news in the failure of a SINGLE REPUBLICAN to support the new president's stimulus package, which won in the House 244-188 (11 Dims also voted against it): Obama learns early that compromising with the Republicans is a waste of time. Congressional Repubs are going to go down for the ideas that brought us the crisis in the first place. They will try to take us down with them.

The core Republican idea is that tax cuts are good and government spending is bad. There are two grounds for them saying this. One is "it's your money": is, you earned your salary yourself, supposedly without any help from government or society, so any taxation is either theft or charity. The premise is absurd, since every salary and fortune depends on a whole range of infrastructures, services, and work from other people. Still, it's a philosophical anchor for one of our somewhat backward country's two major parties.

The second ground is that private spending through tax cuts is more efficient than public spending. Various academic studies suggest that this is technically false: higher returns to the economy come from infrastructural investment than from tax cuts that are either saved or spent on consumer items, most of which are made outside the US and will thus export the stimulus. The record of private business is no better, as the bank record with their new government $350 billion shows: they didn't increase leading, but hoarded, merged, bought bonds, all of which were in their self-interest as they define it and not in that of the economy's.

The core fact that thirty years of Reaganism has tried to erase is that firms invest for themselves and not for society. They are legally and financially required to do this. Reaganism asserts that an invisible hand takes investment for one's firm (e.g. in telephone call centers in India or shoe factories in Malaysia) and translates it into maximum wealth for society. There was never any evidence for this, Adam Smith the supposed author didn't say it, and it has now in the real world come completely unglued.

Dims need to be militant on the higher values created by social investment or the Republicans will sink us all as surely as their forefathers did in 1930 and 1931.

1 comment:

Anonymous said...

...please where can I buy a unicorn?