Category Archives: Economic Policy

A New Kind of Capitalism

Capitalism can mean dramatically different things to different people. To a Wall Street executive it means being able to accumulate unimaginable wealth. To big business it is a competitive game that must be won at all costs, even at the expense of the public interest. To a small businessman with a great idea, it means being able to turn his passion into an occupation, and enjoy the freedom of self-employment. To many, it is a system that has increased the standards of living for millions. To its victims, capitalism is a monster whose greed leaves many behind, and even commits great crimes against helpless citizens. Which view is correct? All of them.

If by capitalism we mean creating markets that meet the needs of the public, allowing the best ideas and products to succeed through demand, then this is a highly democratic system that should be encouraged. If capitalism means “greed is good,” and we should look out for our own self-interest at all costs than this is a very anti-social, destructive philosophy that must be tempered.

There’s a War Going On!

In his recent speech on the Senate floor, Senator Bernie Sanders passionately declared, “There is a war going on…a war being waged by some of the wealthiest and most powerful people in this country, against the working families of the United States of America, against the disappearing and shrinking middle class of our country” (see his video speech below). There are a number of data points that indicate the truth of Senator Sanders claim.

Paul Ryan’s Road Map to Disaster

Representative Ryan’s proposal, if implemented, would be a disaster for the economy, for working families, and would essentially redistribute wealth upward. Ryan is really proposing the same destructive policies that have been pushed bu Republicans for the past thirty years, usually with painful result for low-income and middle class families. In 2012, voters will have a choice about whether they want to live in a society of massive inequality and increased vulnerability for the majority of hard working Americans, or the more-centrist approach that Obama and the Democrats are pushing for.

Deficits Don’t Matter?

In a moment of honesty, Vice President Dick Cheney told a reporter, “Reagan proved deficits don’t matter” (source). Yet, more often the Republicans and their fringe backers, Fox News and the Tea Party, have made the deficit a source a public anxiety and anger. The reality is that deficit spending is required for a healthy economy, and we have been in much more debt in the past (i.e., during WWII) and we experienced the greatest boom and largest middle-class in our history (source).

Conclusion: Don’t believe Republican fear-mongering about the deficit. They don’t cut spending (unless it helps the low-income/middle-class), they increase spending when they are in power (esp. military spending and corporate handouts, incorrectly thinking it will “trickle down”). Democrats are more likely to spend on domestic priorities that drive the economy. We are doing the right thing in spending—we may even need more spending to speed up the recovery. When the private sector stops spending, the government must spend to make up the difference to up-start the economy. In the current political atmosphere, Obama could only get so much included in the stimulus. But is has been enough to avoid catastrophe. The Republicans, who blocked further stimulus, blame Democrats for failing to fix the problem their party leaders helped create under Bush. When the smaller stimulus is slow to improve the situation, they blame the ineffective nature of the public sphere, and advocate a private industry fix through their typical policy prescription: tax cuts for the rich, which would significantly increase the deficit over time—which is more evidence that they are not serious about their deficit alarmist rhetoric. To get jobs moving again, why can’t both sides quite playing fear-politics, get together, and find some things to spend money on? With John Boehner pulling the strings, I won’t hold my breath.

Do Tax Cuts Increase Revenue?

One of the fundamental differences between Republicans and Democrats is their view of taxes. Democrats believe in progressive taxation–that is, taxing the rich at a higher percentage because a flat tax would take a larger percentage of income from those with lower income. Republicans believe that reducing taxes for high-income earners is better for the economy because it will “trickle down” to the lower income workers in the form of jobs; and they believe that lowering taxes for the rich increases government tax revenues. But is this claim true?

A Case Study in Economic Policy

What economic policies lead to greater economic health? And what political policies will lead to better economic outcomes? These are complex questions, and can be difficult to test scientifically. However, it is useful to look at case studies in an effort to understand what policies work and what policies lead to disaster. Let’s take a […]