Published: Tuesday, Feb. 18 2014 12:00 a.m. MST
I continue to contend that economics will remain static and ineffective until
Marxian analysis is let into contemporary economics. Marxian analysis makes
pretty quick work analyzing our current problems. First, profits come from
incomplete compensation to labor. Second, the need of capital to grow profits
without limit leads to stagnant wages and off shoring of jobs. Third, the
stagnation of wages leads to increasingly top heavy distributions of wealth and
income (this is happening, it's not just theory), and the falling from the
middle class of many families. Fourth, as capitalism matures banking capitalism
becomes more prominent (financial services have climbed to 20% of GDP) and for
that reason their recklessness lends increasing instability (Wall Street banking
created the collapse of 2007-2008). And finally fifth, government steps in to
save the system from collapse by borrowing heavily and flooding the system with
money to save the banks which in turn loan to the government to finance the
bailout of themselves. Marx predicted all of this.Isn't this
just great? We Marxists understand this stuff. Galbraith and the rest
can't because they don't have the right tools.
Economists educated using the Obama method are unable to predict anything
accurately because they use unrealistic socialist/liberal (same thing) models.
They don't live in the real world or look at real world figures. Their
accounting methods are "creative" and designed to give the illusion of
prosperity when the sky is really falling. And, even when the sky begins to
fall around them, they close their eyes and deny the truth.
Meanwhile, the accurate predictions of Austrian economists are predictably
Oh, The "economy" recovered alrighty...It's
just that it only went to the top 1%, so, the 99% of the rest of us
are left scratching our heads wondering what just happend, While the
uber-wealthy are laughing all the way to the Government bailed-out banks!
Keynes has been discredited time and again by the real world. Yet there are
still people who will tell you that a dollar spent by the government has some
kind of magical multiplying effect in the economy. They ignore this fact: before
that dollar can be spent by the government, it must first be taken out of the
economy through taxation. Surely the absence of this dollar has a ripple effect
of its own.Keynesianism attempts to make the shallow end of the pool
deeper by dipping from the deep end.
SEY:The Austrians advocate "expansionary austerity", and
they've had a very large stage to audition their ideas - Europe, and the
UK. The UK has had a double-dip recession, not exactly the robust growth
envisioned and advocated by Austrian economists and David Cameron, the Prime
Minister who decided the Austrians must be right.Keynesians like
Paul Krugman assert the only reason the recovery hasn't been bigger is
because we needed a much bigger stimulus.Monetarists like Greenspan
have found their theories and policies lacking, a sobering dose of reality as
unregulated financial markets nearly seized up.This answer may be
anathema to most, but "Marxist" comes the closest to being able to
explain what is going on. Karl Marx never prescribed specific fixes for the
problems of Capitalism, but his followers certainly had their chances, in Soviet
Russia, Cuba and earlier China.Clearly, we need a "reset" of
ideas, and the example of Teddy Roosevelt stands out as offering a good blend of
the American Dream, with regulated capitalism, with the notion of a "square
deal" paving the way for a resurgence in the optimism that has defined
America and our prosperity.
Can someone explain this.The concept of "trickle down
economics" basically says that when business and high income earners are
doing well, everyone does well.You know, the "rising tide lifts
all boats" theory.So, in the last 4+ years, Corporate America
has done pretty darn well. The richest Americans have also done quite well.Their tide is certainly rising, and quite nicely.So, why is
it that middle America and the poor and floundering, comparably?
10CC: apparently you're getting your talking points from reading Paul
Krugman who, by the way, has a knack for misreading and misinterpreting the
Austrian school. I suggest you read the real thing on the Mises website before
you engage in such wild mischaracterizations.
JoeBlow. The answer to you question is very easy. The US has THE highest
corporate taxes in the world, more government regulations on business than
nearly any other county and now Obamacare mandates! What business in their right
mind would risk their capitol to open a business in America and hire people?
Made in China sound familiar to you at all? What little is "trickling"
in the economy right now is going up to Washington DC., Jobs are very scarce but
food stamps, unemployment checks and free healthcare are not scarce. The
tricking is going the wrong way and the proof is the $17.3 trillion (didn't
congress just increase the debt ceiling?) national debt! If we could get the
government out of the way, our economy would explode!
@JoeBlow: The tide isn't rising. The "trickle down" theory that
government is using now is that the government and Fed will print money, it will
go to government programs and to bail out financial institutions and favored
industries, and from there it will trickle down to the rest of us. The result is
precious little trickling because it gets stuck on bank balance sheets and in
the hands of those closest to the source. The "rising tide" you're
looking for can't happen until animal spirits are unleashed through more
economic freedom, lower regulation and taxation.@10CC: Austerity is
not a policy, it is an unavoidable consequence of bad policy.
"The US has THE highest corporate taxes in the world,"I
assume that you know the difference between published tax rate and effective tax
rate. Corporations have paid off our politicians to give so many writeoffs that
our effective corporate tax rate is nowhere near the highest in the world.According to the GAO, in 2010, "Large, profitable U.S.
corporations paid an average effective federal tax rate of 12.6% in 2010, the
Government Accountability Office said Monday."Yes, we have lots
of "entitlement" spending. As do other developed nations.We
also spend a huge chunk in defense that those other countries dont have to pay
for with tax dollars. Did you factor that in? Wouldnt that have to add at
least a few points to the tax rate if you want to spend $700 BILLION + dollars
per year.The US DOD is the largest employer in the world. All paid
for by our tax dollars. (remember yesterday? They get FREE healthcare.
JoeBlowFar East USA, SCCan someone explain this.The
concept of "trickle down economics" basically says that when business
and high income earners are doing well, everyone does well.You know,
the "rising tide lifts all boats" theory.So, in the last 4+
years, Corporate America has done pretty darn well. The richest Americans have
also done quite well.Their tide is certainly rising, and quite
nicely.So, why is it that middle America and the poor and
floundering, comparably?8:24 a.m. Feb. 18, 2014=========
MountanmanHayden, IDInvisible HandProvo,
UTYou are both wrong.The fact of the matter is -- The
Re-distribution of Wealth doesn't happen by the goodness or compassion of
the wealthy elite, the only way it can only happen is via Unions, or the
Government.In the 1920's - American had Unions, and the USSR
had the Government.Today - Conservatives had destroyed both...leaving the Gadianton's of Corporations to "manage" the
Government and controlour Country.Imagine -- being able to finance
your own bail-outs, using "the people's" money.I'd like to see Joe the Plumber pull that one off...
@LDS Lib: Can you clarify your last post? Do you think governments and unions
should redistribute wealth? How does that work? Do you think the soviet system
of government confiscating and managing all productive assets is a good idea? I
don't think we disagree that corporations in bed with government to finance
their bailouts is bad.It appears that where we disagree is that I
think wealth should be distributed according to principles of freedom, as in
free markets, with minimal interference from central authority. You think we
should trust some central authority to do it. Is that a fair assessment?
Invisible HandProvo, UT@LDS Lib: Can you clarify your last post? Do
you think governments and unions should redistribute wealth? How does that work?
======== Unions went on strike when they saw the wealthy
getting wealthy from THEIR labor.The U.S. Goverment also taxed
Corporations when they withheld that wealth from the laborer.Conservatives
have destroyed that working model over the last 30 years. Governments [like the former USSR] simple own the Corporations and then
redistribute the wealth produced by the laborers.So -- It
really comes down to this,Either go back the strong Larbor Unions
and higher taxes on the Uber-Wealthy whcih made America the envy of the last 100
years, orlet the Government do it.I know which way I
would rather have it go, but you Conservatives seem to hate Unions and
higher taxes on the wealthy more than you do Communism....[also manifested
with the Conservative's Corpoation LOVE-feast with Communist China.]
@LDS Lib: You have set up a false dichotomy. "Either go back to strong labor
unions" (not sure how you would do this without forcing people into unions)
or "Let the government do it". There is another way that doesn't
involve coercion. Let people be free. Let them keep more of their own earnings.
You may not fix inequality (which is only a problem if you suffer from envy),
but you will get the "rising tide" that lifts everyone.
@SEY "Meanwhile, the accurate predictions of Austrian economists are
predictably ignored." What to the Austrians say about distributions of
wealth and income?
Economists are a waste of space. Obviously none of the popular doctrines work
and the world's "enlightened" spenders are all in bondage to
lenders. I learned more from a financially wise mother who spent less than she
had and paid bills on time. I learned more from an honest father whose earnings
came from his own honest toil, who didn't desire to divert percentages of
other men's incomes, whose charity began at home, and for whom additional
charity was his own decision not that of others of questionable sense or
In a rare moment of insight prominent economist Lawrence Summers had this to
say:"The current tax code is so badly designed that it is very
likely to be having the effect of reducing economic growth. It also allows the
rich to shield a far greater proportion of their income from taxation than the
poor." Summers says we are approaching a "Downton
Abbey" economy.In other words our top heavy distribution of
wealth and income is dragging the whole system down. If you want to save
American capitalism (I'm not sure I do - maybe we ought to get the whole
thing over with - but the pain of the process!), restore the progressive tax
code of the 1950's.
marxist: the Austrians have a lot to say about distribution of wealth and
income. David Stockman said a great deal about it in his monumental book The
Great Deformation. It's an impossible task to cover the subject here, but
in brief, the entire economic system has become deformed by the
"politburo" of monetary planning, aka the Federal Reserve system.
Distortions of financial markets as a result of interest rate manipulation and
massive infusions of fiat money into the system create huge pockets of
malinvestment. Cronies of the Federal Reserve and Treasury have benefited most
from these policies at the expense of the rest of us (aka the 99%). As Invisible Hand noted, austerity is not an Austrian economic policy,
it's a consequence of malinvestments as a result of inappropriate market
prices, most significantly the interest rate which impacts all other prices.
There is only one way out of this mess, and that is to allow markets to clear by
appropriate pricing set by market forces and not by the above-mentioned
politburo or by wage and price controls.
Kudos to SEY and Invisible Hand. I wish I could have said it half so well
myself. Thanks for your solid additions to this board.Now a few
words about Larry Summers. "prominent" economist Larry Summers? I'd
say rather, ignominious. Summers tops the list of those responsible for
sabotaging the world economy as one of the key players in creating the mortgage
derivative bubble that ended up costing tens of millions of Americans their
homes and life savings. As Clinton’s Treasury secretary, Summers supported
the banking lobby’s successful effort to make the sale of unregulated
bundles of mortgage securities and the phony insurance swaps that backed them
perfectly legal and totally unmonitored. Those are the toxic bundles that the
Federal Reserve is still unloading from the banks at a cost of trillions of
dollars. I don't think he's a reliable source to quote on any economic
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