Tuesday, May 06, 2008

an obsolete definition of insanity:

when one continues to do the same thing over and over, expecting different results.

I also love that Jon Stewart calls out Bush for (once again) being *incredibly* condescending while speaking about a problem that he clearly doesn't understand well enough to even begin to solve.


karuna said...

So actually I don't take Jon Stewart seriously at all and he's amusing. It sorta bothers me that half my generation gets its news from the Daily Show but we'll put that aside for now.

Becky, I feel like the economic reality check on your blog. It's great. I just left my economic forecasting/consulting position and now i feel like I get to do it on your blog without getting paid.

Anyway, yah so TECHNICALLY we aren't in a recession. (GASP!!) Again, a recession is defined by 2 straight quarters of negative growth. So in purely economic terms, Bush is right (GASP AGAIN!!). We are in a slow down. We are in a economic down turn. But techically not a recession. The reason for this is that we actually saw very very slight growth in the first quarter of 2008. I believe the economy grew by like 0.5%. That's not GOOD news because we need to maintain roughly 3.5% growth to not lose jobs. But it isn't a recession. It is...in it's purest form...A SLOWDOWN.

Also, yah, we can't just automatically bring down prices. I fail to see why this is funny actually (but again, I again find Jon Stewart generally stupid). Prices grow with supply and demand. That's just how it works!

Oh and finally. And I will just address this to Jon himself. No, Jon, the tax cuts DID NOT GET US INTO THE ECONOMIC DITCH WE ARE IN! The tax cuts, instituted at the end of the Clinton administration, if anything, SAVED our economy from a pretty major recession in the early years of the decade. Why? Because giving tax breaks to those BIG BAD CORPORATIONS (note that I am being completely sarcastic here) actually spurs growth. It causes companies to INVEST which is the main instigator of economic growth and yes...job creation.

And now I have said my economic piece for the day and will go back to studying the law. Please, becky, continue to post on the economy and I will continue to exercise my economics skills (I used to do this for a living...now i just do it for fun :)).

Becky said...

I don't think Jon Stewart was meaning to say that we should magically bring down prices -- he was critiquing Bush for acting/speaking as if Americans actually think the problem is that simple. The problem with Bush in those clips is that he talks as if those prices have nothing to do with the policies that he's been pushing through since he started office -- ie, ignoring our dependence on foreign oil (and making it worse with a trumped up war).

Ok, so you know I'm studying Victorian lit. and *not* economics, but I seriously don't believe that if we cut taxes for corporations, that means they necessarily invest/trickle down the money. To what extent do corporations invest in new technology/ new employees, vs. just hoarding money at the top? If big oil is seeing such huge profits right now, shouldn't they be building new refineries? I mean, I'm curious as to what you think about the increased disparity between the richest 1% of Americans and the rest of us -- because to me that seems like a sign that something about our policies are simply not helping the average American. Clearly I'm laying out my ideological stakes here, as I think the best society would be one that aimed for the common good, rather than the highest GDP.

I'm also curious to what extent attitudes toward these tax cuts for the wealthy have to do with the "American Dream" mythology... especially when I hear about surveys showing that 19% of Americans think they're in the top 1%.

I wondered what your take on Jon Stewart was -- I love him, but I always feel like it really is a show that is pitched entirely at liberals... I do think he's often as good at getting the issues out there as the traditional media, and he at least realizes how ridiculous the news stories are that get all the attention... like why are we talking about flag pins instead of how many Iraq veterans have killed themselves?

karuna said...

To your question about tax cuts, I will say this. If you were a corporate CEO, would you rather hoard your money, go buy a boat or something ridiculos like that or another house, or would you rather invest that money so that you can make MORE money and buy an even bigger boat? This goes right to the POINT of capitalism. Capitalism is not about HOARDING your money. That was the essence of what Adam Smith wrote about in Wealth of Nations. Smith observed that while rulers in Spain and Italy were hoarding the wealth at the top, the country was POOR. But the wealth, Smith found, was in the capitalists in England and Scotland who were INVESTING. These were inviduals were looking to profit. And IN PROFITTING, they were actually creating wealth throughout the country. As Milton Friedman said, greed is the essence of the human spirit but it is THROUGH this greed that you develop and allow others to also thrive.

If you own a business, and you are allowed to keep more of your money instead of funneling it to the government, you will invest that money. After all, it is in your best interest to do so. And investing that money will cause more Americans to have jobs. And this will spur economic growth (more jobs = more money in the everyday American's wallet = more money spent on consumer goods = more profit and more investment).

I will say this again. MOST OF THE ECONOMIC TREND IS NOT BASED OFF GOVERNMENT POLICIES! It's based off of the everyday decisions of normal Americans and it's based of the movements in business.

And I guess I'll add this to my little analysis here. You think "the wealthy." Well i happen to know a lot of Americans who have benefitted from Bush's taxcuts. They are very much upper middle income Americans who have children to put through college, who have debt on their houses, who have debt on their cars. These people do not need to be paying MORE to the government. They are meeting obligations to their families just like the rest of us. I know this because my parents are some of these people. They may make a fair amount of money but they have 3 kids to put through college, and tons and tons of other obligations. It again comes down to how you look at things.

I think it's telling that the people who most support "tax increases on the wealthy" are the EXTREMELY wealthy (those in hollywood and people like George Soros). I say let those people give directly to the stupid social welfare programs they so advocate for and leave the rest of us alone.

Becky said...

That kind of just made me want to read Adam Smith... I read Malthus (who was kind of responding to both Godwin's idea of a perfectible state and Smith/ political economy in general) and loved it.

I know how it's supposed to work -- my problem is that I don't really see it happening. I mean, our economic disparities right now are more extreme than anything since the Gilded Age. I find economics kind of fascinating because of this gap between the ability to explain behavior by rational models, and the tendency for human psychology to get in the way. I mean wasn't this one of the initial problems for early political economists -- how to explain the tendency for the very wealthy to desire to amass more wealth, when at that point you might say their marginal utility for more money would prevent it? Like why amass more money than you or the next five generations could ever really need? Kind of like the irrationality of the miser figure.

Anyways, besides that rambling response on my frustration that wealth is not seeming to trickle down or lift all our boats, or whatever metaphor people use these days, I was reading about how little the Bush tax cuts actually helped most Americans (I'm a new fan of Citizens for Tax Justice):

"...only 16 percent of families will have income tax cuts as large as 1800$. In other words, 84% of Americans will see a tax cut smaller than the 'average' touted by the president. For most people, the tax cut will actually be less than a third of that amount. In 2010, more than half of families will have income tax cuts totaling less than 600$."