Well, all this is interesting to me, anyway, and that's what matters here. The Internet is a terrible thing for someone like me, who finds almost everything interesting.
Wednesday, May 23, 2012
Cutting government jobs
Why does this matter? Because slashing government jobs does the same thing as slashing private jobs in a recession - it makes the recession worse by lowering demand.
It's the exact opposite of what we should be doing, since we need that demand in order to get private businesses hiring again.
Heck, we've known all this since the Great Depression of the 1930s. That's why government hiring has gone up during recessions under Republican presidents, even when they had Democratic Congresses to contend with.
Today's Republicans know it, too, but they don't want the economy to get better as long as there's a Democrat in the White House. They're willing to damage America and to harm American families in order to help their own political ambitions.
And they're faith-based, too, so they find it easy to believe whatever they want to believe (in this case, that the end justifies the means).
As a result of the economic crash, a lot of governments have found themselves with a huge national debt, and (worse) running a massive deficit (i.e. annual expenditure way over income), which means that the debt is getting larger all the time. What this means is that an ever-larger proportion of government income is used up simply in paying the interest on the debt.
To make matters worse, if the financial markets believe that a government is not doing enough to tackle the problem, they'll push up the cost of borrowing which means that the interest payments on the debt go ever higher.
This is an ever-steepening downward spiral which has resulted in some EU countries paying around 7% annual interest on their debt. However, the UK is paying less than 2% - not because our economy is in any better shape (it isn't) but because the government is trying to cut back on the size of the debt, so the financial markets have some confidence in what they're doing.
In an ideal world, governments would balance their books and store up large financial reserves in the good times, which they could then spend in the bad times to maintain employment in the way that you suggest. Unfortunately, very few governments are that sensible - most politicians can't resist "buying" the electorate by spending everything they can, and then borrowing even more to spend as well, even in the good times. Which means economic disaster when the bad times arrive.
I can't speak for Europe, Tony, especially since the currency situation (with the Euro) makes the issue very complicated. But it's a different matter here - to some extent, at least.
The problem here was that the right-wing gave us record-breaking deficits even before the collapse. Due to tax cuts for the rich and two unfunded wars (for the first time in our history, we waged war without raising taxes to actually pay for it), we started in a deep, deep hole, even before the worst economic collapse since the Great Depression.
And yes, that limited what we could do. Nevertheless, America is having no trouble selling government bonds at very low interest rates. The dollar has even been strong. Eventually, the cost of borrowing would go up, but we're not at that point yet.
Furthermore, the best thing we could do to bring down the deficit would be to get people working again and get the economy moving again. Spending now to increase demand would prime the pump for that. Cutting spending in a recession is counter-productive, because it just keeps the economy in the toilet.
(Again, I can't speak for Europe, but austerity seems to be killing them. Certainly, Europe is holding back our own recovery. Of course, we gave them the collapse in the first place, so America can't really complain, huh? But European countries - like Greece - also made their own mistakes which have little to do with us.)
Being counter-productive is deliberate here, because Republicans know that an improving economy would help the Democrats. As Barack Obama noted, they've acted just the reverse when Republicans had the presidency. (But they wanted the economy to improve, then.)
I understand your point, Tony, but I think you're wrong, at least when it comes to America. It's not a matter of governments not being sensible. Democrats during the Clinton administration worked to keep the debt down, even starting to pay off the debt from previous Republican administrations. Not all governments are the same.
No, this has been a relatively-recent thing in America, partly the result of 'suppy-side' or 'trickle-down' economics - which has proven to be a complete failure - and partly from a deliberate attempt to bankrupt America, thus forcing a smaller government (the 'starve the beast' strategy of people like Grover Norquist).
Record-breaking deficits were the whole point for those people. That was their way of shrinking America's government until it was small enough to 'drown in a bathtub.' They wanted these deficits, and now they're using that excuse to slash spending on social programs (never on the military).
Before then, deficits increased, but not out of line with the growth in GDP. So I don't think we can look at the trends since the supply-siders got started (in the Reagan years) and call this inevitable. No, this was the result of a whole political party - a whole political ideology - being wrong.
We've had 30 years of this, and as it's failed, the faithful have just become more and more extreme. Well, they're faith-based, not evidence-based. But none of it is inevitable. Eventually, this will join other failed ideologies in the dustbin of history. Or so I hope.
I'm a skeptic. I think it makes sense to have reasons for what I believe, so I apportion my belief to the evidence. You're welcome to disagree. Please, tell me I'm wrong. I probably don't agree with anyone about everything. Why should disagreement be a problem? Check the Pages section below for series posts and links to book reviews and game posts, as well as contact info. Unfortunately, I rarely blog at all, anymore. So don't expect new posts. - Bill
We've all heard that a million monkeys banging on a million typewriters will eventually reproduce the entire works of Shakespeare. Now, thanks to the Internet, we know this is not true. - Robert Wilensky
It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong - Richard Feynman
The general root of superstition is that men observe when things hit, and not when they miss, and commit to memory the one, and pass over the other. - Sir Francis Bacon
When a whole nation is roaring Patriotism at the top of its voice, I am fain to explore the cleanness of its hands and purity of its heart. - Ralph Waldo Emerson
Speculation is perfectly all right, but if you stay there you've only founded a superstition. If you test it, you've started a science. - Hal Clement
No matter how many times a theory meets its tests successfully, there can be no certainty that it will not be overthrown by the next observation. This, then, is a cornerstone of modern natural philosophy. It makes no claim of attaining ultimate truth. In fact, the phrase "ultimate truth" becomes meaningless, because there is no way in which enough observations can be made to make truth certain and, therefore, "ultimate". - Isaac Asimov
The government of the United States of America is not in any sense founded on the Christian Religion. - Treaty of Tripoli, passed unanimously by the U.S. Senate and signed by President John Adams (1797)
I don't doubt the sincerity of dowsers, but even after we've demonstrated that they can't produce results that are any better than chance they'll still go away believing in their abilities... It is like the mother whose son is caught shoplifting on tape. She wonders why someone would want to frame her child by producing a fake video. - James Randi
During many ages there were witches. The Bible said so. The Bible commanded that they should not be allowed to live. Therefore the Church ... imprisoned, tortured, hanged, and burned whole hordes and armies of witches, and washed the Christian world clean with their foul blood. Then it was discovered that there was no such thing as witches, and never had been. One does not know whether to laugh or to cry. - Mark Twain
Aristotle maintained that women have fewer teeth than men; although he was twice married, it never occurred to him to verify this statement by examining his wives' mouths. - Bertrand Russell
A casual stroll through the lunatic asylum shows that faith does not prove anything. - Friedrich Nietzsche
I have been thinking that I would make a proposition to my Republican friends... that if they will stop telling lies about the Democrats, we will stop telling the truth about them. - Adlai E. Stevenson, Jr.
This is not about proof. Science does not use proof. We favor evidence, and the work consists largely of the slow accumulation of evidence in support of ideas, not magically potent proofs that establish an idea as unassailable. - PZ Myers
No, people don't expect government to solve all their problems. But they sense, deep in their bones, that with just a slight change in priorities, we can make sure that every child in America has a decent shot at life, and that the doors of opportunity remain open to all. - President Barack Obama
The formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat. - Shekhar Gupta
We are prodding, challenging, seeking contradictions or small, persistent residual errors, proposing alternative explanations, encouraging heresy. We give our highest rewards to those who convincingly disprove established beliefs. - Carl Sagan
We are all atheists about most of the gods that societies have ever believed in. Some of us just go one god further. - Richard Dawkins
120 million of us place the big bang 2,500 years after the Babylonians and Sumerians learned to brew beer. - Sam Harris
To kill a man is not to defend a doctrine, but to kill a man. - Michael Servetus, burned at the stake in 1553
Democracy is not about majority rule; it is about minority rights. If there is no culture of not simply tolerating minorities, but actually treating them with equal rights, real democracy can't take root. - Thomas L. Friedman
We cannot absolutely prove that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us and with just as much apparent reason. - Thomas Macauley, 1830
It may be true that the law cannot make a man love me, but it can stop him from lynching me, and I think that's pretty important. - Martin Luther King, Jr.
We will not walk in fear, one of another. We will not be driven into an age of unreason if we dig deep into our history and remember we are not descended from fearful men. - Edward R. Murrow
The deepest sin against the human mind is to believe things without evidence. Science is simply common sense at its best - that is, rigidly accurate in observation, and merciless to fallacy in logic. - Thomas Huxley
There is no absurdity so obvious that it cannot be firmly planted in the human head if you only begin to impose it before the age of five, by constantly repeating it with an air of great solemnity. - Arthur Schopenhauer
Because religious belief, or non-belief, is such an important part of every person's life, freedom of religion affects every individual. ... Erecting the "wall of separation between church and state," therefore, is absolutely essential in a free society. - President Thomas Jefferson
To be elected in America, no matter from what party, the candidates have no choice but to year after year pledge to lower taxes further and further. We have become the nation of Ken and Barbie, looking good but very poor at the math. - Rack Jite
Invisible Pink Unicorns are beings of great spiritual power. We know this because they are capable of being invisible and pink at the same time. Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them. - Steve Eley
We have always known that heedless self-interest was bad morals; we know now that it is bad economics. - President Franklin D. Roosevelt
I have been attacked by Rush Limbaugh on the air, an experience somewhat akin to being gummed by a newt. It doesn't actually hurt, but it leaves you with slimy stuff on your ankle. - Molly Ivins
In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican. - H. L. Mencken
Success is not final, failure is not fatal: it is the courage to continue that counts. - Winston Churchill
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3 comments:
I'm not sure that it's quite that simple, Bill.
As a result of the economic crash, a lot of governments have found themselves with a huge national debt, and (worse) running a massive deficit (i.e. annual expenditure way over income), which means that the debt is getting larger all the time. What this means is that an ever-larger proportion of government income is used up simply in paying the interest on the debt.
To make matters worse, if the financial markets believe that a government is not doing enough to tackle the problem, they'll push up the cost of borrowing which means that the interest payments on the debt go ever higher.
This is an ever-steepening downward spiral which has resulted in some EU countries paying around 7% annual interest on their debt. However, the UK is paying less than 2% - not because our economy is in any better shape (it isn't) but because the government is trying to cut back on the size of the debt, so the financial markets have some confidence in what they're doing.
In an ideal world, governments would balance their books and store up large financial reserves in the good times, which they could then spend in the bad times to maintain employment in the way that you suggest. Unfortunately, very few governments are that sensible - most politicians can't resist "buying" the electorate by spending everything they can, and then borrowing even more to spend as well, even in the good times. Which means economic disaster when the bad times arrive.
I can't speak for Europe, Tony, especially since the currency situation (with the Euro) makes the issue very complicated. But it's a different matter here - to some extent, at least.
The problem here was that the right-wing gave us record-breaking deficits even before the collapse. Due to tax cuts for the rich and two unfunded wars (for the first time in our history, we waged war without raising taxes to actually pay for it), we started in a deep, deep hole, even before the worst economic collapse since the Great Depression.
And yes, that limited what we could do. Nevertheless, America is having no trouble selling government bonds at very low interest rates. The dollar has even been strong. Eventually, the cost of borrowing would go up, but we're not at that point yet.
Furthermore, the best thing we could do to bring down the deficit would be to get people working again and get the economy moving again. Spending now to increase demand would prime the pump for that. Cutting spending in a recession is counter-productive, because it just keeps the economy in the toilet.
(Again, I can't speak for Europe, but austerity seems to be killing them. Certainly, Europe is holding back our own recovery. Of course, we gave them the collapse in the first place, so America can't really complain, huh? But European countries - like Greece - also made their own mistakes which have little to do with us.)
Being counter-productive is deliberate here, because Republicans know that an improving economy would help the Democrats. As Barack Obama noted, they've acted just the reverse when Republicans had the presidency. (But they wanted the economy to improve, then.)
I understand your point, Tony, but I think you're wrong, at least when it comes to America. It's not a matter of governments not being sensible. Democrats during the Clinton administration worked to keep the debt down, even starting to pay off the debt from previous Republican administrations. Not all governments are the same.
No, this has been a relatively-recent thing in America, partly the result of 'suppy-side' or 'trickle-down' economics - which has proven to be a complete failure - and partly from a deliberate attempt to bankrupt America, thus forcing a smaller government (the 'starve the beast' strategy of people like Grover Norquist).
Record-breaking deficits were the whole point for those people. That was their way of shrinking America's government until it was small enough to 'drown in a bathtub.' They wanted these deficits, and now they're using that excuse to slash spending on social programs (never on the military).
Before then, deficits increased, but not out of line with the growth in GDP. So I don't think we can look at the trends since the supply-siders got started (in the Reagan years) and call this inevitable. No, this was the result of a whole political party - a whole political ideology - being wrong.
We've had 30 years of this, and as it's failed, the faithful have just become more and more extreme. Well, they're faith-based, not evidence-based. But none of it is inevitable. Eventually, this will join other failed ideologies in the dustbin of history. Or so I hope.
Very interesting info!Perfect just what I was looking for!
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