Flowing Up Economics Saturday Political Soap Box 37

Ah, elections!  The time when we should be discussing issues but instead focus on birth certificates and dogs on roofs of cars.  When the latest inadvertent misstatement is more important than the direction they'll take the country.  When the election of the other guy will lead to a thousand years of darkness.  In the face of that, I will continue to try to focus on some basic issues and what I believe is the direction we should take. And yes, I am taking a sacrifice in number of page views by going this route instead of the Mittbot Thurston Howell route or that darn Kenyan Socialist route.

I believe in Keynesian economics, or at least some modified version.  You only get out of recessions/depressions by accelerating demand.  This means government action and projects.  This means getting money into the hands of people that will spend it.  I prefer government works projects, research and development, infrastructure improvements, shoring up states and increased support off education.  But the cold hard facts are that the most effective stimulus is unemployment insurance and food stamps, at least for the immediate bang for the buck.  Austerity programs in the face of recession do nothing but fuel the recession.

The dominant Republican theory since the early eighties has been in something called trickle down economics.  This represents the belief that if you allow those at the top to have a very low tax rate and few regulations, the effects of this will trickle down and benefit the rest of us, in more jobs and opportunities, because those at the top have more money to invest in enterprises that will trickle down to support the rest of us.  In actuality, all this theory has down has allowed the continued acceleration and concentration of money at the top.  The rich save and become richer.  Their priority is often to save money and pass it on to their family.  Ergo, the vicious hatred of the estate tax.  They are as likely to invest overseas as they are domestically.  With some philanthropical exceptions, their major goal is to accumulate more wealth, not to benefit society as a whole.

Real economic growth comes from the bottom, not the top.  It is relatively full employment at good wages that contributes to a healthy society and a growing, vibrant middle class.  Businesses are fueled not by investment, but by demand.  If there is no demand for a product or service, why the hell would you invest in it?  The businessman Henry ford understood this.  He wanted to pay his workers enough so they could afford to buy the cars they built.  somehow, this fundamental principle has been completely and utterly lost.

When the engine of demand loses steam, that is when recession and depression hits.  And the only way to bring to back is to rev up demand.  You can give money to the wealthy all day long and it's not going to help much.  You can cut regulations, but why make even unregulated, unsafe things if there is no demand for them?  You can eliminate public sector jobs, and cut services to the poor and middle class, and all your austerity will do is further reduce demand, which further fuels the economic downturn, which cuts government revenues even further thereby increasing the deficit everyone was worried about.

I would love to see us in this country refocus on grand projects and dreams, and they can be public/private partnerships.  I would love to see a revived space program taking us to Mars and beyond.  It is fundamentally vital to the leadership of the United States and the preservation of our planet that we focus on green energy solutions.  And we will not lead the planet if we don't invest more practical dollars in PUBLIC education, and make higher education more accessible and affordable.

Austerity, anger against the poor, jealousy of public sector workers, giving more and more tax cuts to the wealthy and fewer and fewer services to those in need, is only going to result in a continuing  spiral downward  Whether they tell you they will or not, whoever is President will have to bend to Keynesian economic reality.  Bet your bottom dollar on that.