In the News
Economic system should work for all
By Jim Diefenderfer for the Daily Courier, 7.27.11
The most critical need to achieve personal or business success is an economic system that works for everyone.
With this in mind, let's look at what economics will work for us. The concept of supply and demand is accepted as fact. If there is a demand for any service or commodity, someone will satisfy that demand and profit from it. The rationale is logical and demonstrably true. If the demand is there, it will be filled.
The key is demand, which means desirability and affordability. What sensible businessman would produce or increase production, unless he saw the demand for it? To do so would create surpluses, price reductions, business losses and bankruptcy.
Let's consider the supply side concept.
Textbook definition: government economic policies designed to promote economic growth by encouraging businesses to increase the supply of goods and services. These policies include lowering taxes on investments and reducing government regulations on trade, workers' safety and the environment. The demand concept is conspicuous by its absence. Again, what sane businessman wants to increase production when the market doesn't call for it?
Let's look at these ideas one at a time.
Lowering taxes (primarily on high incomes) and tax policies (15 percent capital gains taxes) have encouraged investors to take money out of business to increase their personal wealth, while the Bush tax cuts, along with corporate tax breaks, also play a large role in creating deficits. This reduced federal income, coupled with unfunded Medicare drug benefits and wars and increased defense spending, has resulted in a huge federal debt.
Reducing government regulations on business brought on repeal of the Glass-Steagall law. This removed the separation that previously existed between Wall Street investment banks and depository banks. In other words, Glass-Steagall prevented a banker from being a stockbroker/speculator. This is largely credited as the cause of the recession of 2008.
Starting with President Ronald Reagan and continuing until today, with the exception of the eight President Bill Clinton years, the supply side deficits have grown our debt dramatically. The only rational answer is a return to the supply and demand concepts with a reasonable tax structure where all individuals and companies carry on their business on a more level playing field, which is what built America into the economic power it was and still is. Supply side has one accomplishment to its credit: It has made the rich richer.
The following is an excerpt from a June 10, 2011, blog by Robert Reich, secretary of labor during the Clinton administration:
"Supply-side economics doesn't work. It's been tried for 30 years, to no avail. And now, when our continuing economic crisis is so palpably being driven by balk of demand, it's more bogus than ever. The last thing we need is for the president to go over to the supply side."
It’s Witch-Hunt Season
By PAUL KRUGMAN
Published: August 29, 2010
The last time a Democrat sat in the White House, he faced a nonstop witch hunt by his political opponents. Prominent figures on the right accused Bill and Hillary Clinton of everything from drug smuggling to murder. And once Republicans took control of Congress, they subjected the Clinton administration to unrelenting harassment — at one point taking 140 hours of sworn testimony over accusations that the White House had misused its Christmas card list.
Now it’s happening again — except that this time it’s even worse. Let’s turn the floor over to Rush Limbaugh: “Imam Hussein Obama,” he recently declared, is “probably the best anti-American president we’ve ever had.”
To get a sense of how much it matters when people like Mr. Limbaugh talk like this, bear in mind that he’s an utterly mainstream figure within the Republican Party; bear in mind, too, that unless something changes the political dynamics, Republicans will soon control at least one house of Congress. This is going to be very, very ugly.
So where is this rage coming from? Why is it flourishing? What will it do to America?(continue reading at NY Times)