I’ve been a big critic of Obama’s policies on taxes, spending, regulation, and intervention, so you won’t be surprised that I argued on CNBC that his policies have made the economy worse.
Here are two graphs, which I posted earlier this month, that make my point. The red lines show the economy is finally – and slowly – moving in the right direction, but the blue lines show how the economy boomed under Reaganomics.
The gap between the two lines in the charts is a measure of how Obama’s policies have undermined the economy, as I mentioned on the program. However, I also said that this may not matter much this November if Republicans are incapable of making coherent economic arguments.
One last thing to emphasize is that Jared resorted to dishonest Washington math when discussing Obama’s make-believe budget cuts. When you use honest numbers, as i did when analyzing the President’s new budget, you find that the burden of government spending is going to climb by $2 trillion between 2012 and 2022.
Thanks for this post.
I really appreciate your work and the fact that you pointed out the “Washington math” that is used over and over again to sugarcoat policies. In addition, what we currently observe is an artificial recovery based freshly printed money.
The other day, I attended a conference in Frankfurt (Germany) where chief economist of Deutsche Bank mentioned that the attempt is made to replace debt at large scale by new fiat money. Asked what would happen if people lose trust in that kind of money as they lost trust in debt, he just replied “Oh god, you don’t wanna know.”
That is what I thought about when listening to Jared Bernstein.
It would be interesting to trend both Obama’s economic policies and Reganomics policies effectiveness during their terms against ROW economic development. This would give a true gauge of the effectiveness. To believe that Government decision have long term sustainable effects unless applied globally is a very limited view.
You won the intellectual argument on all counts, Dan. But this guy’s agenda is to get the President reelected and he did a masterful job of pushing that agenda–and looking like a reasonable, good guy doing it….and despite all of his latent arrogance, not to mention the ignorance of the huge cost Obama’s policies are going to bring down upon all of us.
I think Obama should keep his intentions like “We won’t accept lesser future” as a constant, as everyone wants that same thing. Instead he should be telling objectively HOW he would go about it.
And what Jared said about presidents being blamed when things go bad and its opposite when things go right and used it as an argument to defend questioning Obama’s policies, then he quite easily forgot that decisions have consequences and that those consequences are logically associated with the policies pursued by president. Pointing out how growth was under Obama and how it could have been is not a cliche, as Jared would have it perceived.
God bless you Dan when you have to try to discuss anything factual with the fraud economics of Bernstein! Everyone sane knows Bernstein is a tool of the left and completely off the wall.
This was a period (1981-1989) when there was a significant investment in new productive capital formation, but unfortunately the result was to further concentrate ownership of capital among the 1 percent minority.
The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate.
The Rand Corporation statistic was 98 percent, to represent the productive capital factor input to creating products and services. In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages to purchase capital. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes capital ever more productive. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real capital while distributing the earning capacity of capital workers to non-owners through jobs and welfare. Such policies do not function effectively.
In a democratic growth economy, based on binary economics, the ownership of capital would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.
We need leadership to awaken all American citizens to force the politicians to follow the people and lift all legal barriers to universal capital ownership access by every man, woman, and child as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every man, woman, and child to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.
The emphasis on the systemic injustices of monopoly capitalism can only be addressed by comprehensive reforms to the tax, monetary and inheritance policies favoring the top 1 percent at the expense of the 99 percent. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for financing advanced energy and green technologies, and outsourcing of U.S. industrial jobs to low-wage countries, trade deficits, shrinking consumption incomes among the poor and middle class, and conventional methods for financing productive growth that increase the ownership and power gaps between the top 1 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.
The unworkability of the traditional market economy is evidenced by the diverse and growing deficits––federal budget deficit, trade deficit, city, county and state budget deficits––which are making it increasingly impossible for governments at every level to function. The increasing deficit burden is the result of the growing numbers of people who cannot earn, from legitimate participation in production, enough income to support themselves and their families. Thus government is obliged to “redistribute” to starve off economic collapse. The key means of redistribution is taxation––taking from the legitimate producers and giving to the non- or under-producers––to make up the economy’s ever wider income and purchasing power shortfalls.
Please see my article on “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation And Economy” at http://www.widescreenreview.com/blog_detail.php?id=837 and http://www.foreconomicjustice.org.
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