| Akvod said:
So, what do you suggest we do right now? Interest rates are near zero, yes Businesses aren't investing yet. Consumers still aren't spending as much as they used to, and we have a lot of cash just sitting in banks. We've been under the Bush tax cuts for so long, yet we're still in a period of stagnation. We're essentially becoming Japan, and like Japan, we ended up doing half assed poorly executed stimuluses that don't really translate into job creation. I mean, the fact is that we're out of options. We can keep the tax cuts for the rich, but that just simply keeps up where we are. Balancing the budget would cause more insecurity, rather than more business confidence (and we can see how the UK did after its attempt at austerity). I mean, the whole problem I have with Freshwater econ, is that it all sounds so mythical or the principles they go under are just way too unbelievable. Once government gets smaller, people will sigh and start spending again. Businesses will start investing again (even though they can borrow money cheaply) because they know government is off their backs (even though investment is based on expectation of demand). Keep taxes for the rich, since we don't want crowding out (even though savings have gone up and the treasury pumped money in). Watch out for inflation (even though we even had a moment of deflation during the recession), maybe we should go back to the gold standard (Milton Friedman would roll in his grave).
Fuck, at least Milton Friedman was skeptic, which is always good and reasonable (skeptical at how the government can execute discretionary policy properly). Now the new conservatives are religiously fixed onto taxes and the budgets (ironically they're both conflicting things). |
The answer to "What do we do know?" is both very simple and very complicated ...
The simple answer is that we should return the government to a position where they're a referee in the economy rather than an active participant, and their primary goal should be to eliminate corruption and to prevent dangerous behaviours within the economy. For far too long the government has been heavily involved in trying to "correct problems" by encouraging dangerous behaviours because they're corrupt and are trying to appease a valued lobby group, large corporation or union.
Further, they should simplify the tax code. All corporations should be taxed under the same simple rules regardless of the industry they're in and regardless of how large they are, and all individuals should face the same rules regardless of the lifestyle they lead. Subsidies should be eliminated that try to promote an industry, product or encourage a particular behaviour.
The government should phase out social programs ... Social Security should be replaced by an actual pension fund, Medicare should be replaced by an acual insurance program that is amortized over a person's career, and unemployment insurance should become actual insurance. All other federal social programs should be eliminated and/or become the responsibility of the state.
Military spending should be reduced, the emphasis should be on having the most advanced and best trained military not necessarily the largest.
I could go on and on and on but it is kind of pointless ... It would be easy to cut government spending in half, eliminate the deficit, cut taxes, and provide the same/better outcomes for all citizens over a 5 to 10 year period but it will never happen because there isn't the political will.
