Why do we expect stuff to be free? (part 2)

In my last post, I wrote about my frustration with so many people who seem to believe that all taxation is bad. I listed three major social benefits gained by paying taxes: economy of scale, adjusting for flaws in the economic system (without destroying the entire economy), and the ability to better achieve long range plans. Having written about economy of scale, I want to look at the latter two.

If a society is to address the flaws in its economic system, it first must admit that flaws exist. I believe in a system founded on capitalism, but even it has massive imperfections. I don’t mean the problems that result from greed and unethical people; greed and lack of ethics can derail any economic system. I’m referring to the flaws that arise in capitalism, regardless of how well-behaved its participants are; often, these flaws are byproducts of what makes capitalism function in the first place.

We all should know the fundamentals of the market system. The price paid by a consumer for a final product or service, or by a firm for the components needed to manufacture the product or service, is where demand and supply curves intersect. For instance, a farmer would love to charge $5 per pound for apples and a customer would like to pay 1¢ per pound, so the market price represents the price at which farmers are willing to sell their apples and that customers will purchase apples available for that price. The system has many advantages, but the most important for society in general is that the best people will end up supplying particular products and skills. I, for instance, am a terrible plumber, terribly inefficient, so the money I would have to charge for me to make a living would draw no customers, discouraging me from entering the profession. The system means that we obtain the best results for the money we spend and, in doing so, means that we can purchase the maximum amounts of goods and services with our available incomes.

How, then, can something go wrong? The most obvious one is that the very success of capitalism can lead to its own downfall. Remember, the system depends upon there being competition among various suppliers to keep prices at the level that is best for consumers. What happens, though, when one producer is so efficient that all of the competitors are forced out of business? Obviously, the one remaining supplier no longer has any incentive to keep prices at a level that is optimal for society in general. This may not seem like a big deal, but what if that product is something that is essential, like water or basic food? If government doesn’t intervene well….does the name “Marie Antoinette” ring a bell?

So, unless you want the system to be totally overthrown, government has to intervene in cases like this, and government intervention requires tax dollars to fund whatever programs are created, and this is what Ayn Rand disciples just don’t get. They scream for deregulation, that government destroys the incentive for people to create. An overly-oppressive government does destroy that, but they believe that any amount of regulation is overly-oppressive. Baloney.

Another example is the use of subsidies. Subsidies have gotten a bad name in recent years, deservedly so. The specific programs are flawed and there are people who receive monies who have no business getting them. However, we should never assume that a flawed program means that there should be no program at all. Subsidies are especially useful if the product is essential and there forces that are beyond human control that affect supply.

When I was in high school, my classmates and I looked on in horror at a film clip that showed dozens of milk trucks backing up into a field and dumping out hundreds of thousands of gallons of milk into a field. They were doing this because the market price of milk had plunged so low that dairy farmers couldn’t even recover their production costs, due to an oversupply of milk. Granted, part of our horror was based on what was then the universal belief that milk was almost as essential as water for children, but the basic point remains. Sometimes, suppliers of essentials, through no fault of their own, find that the market price of their products is too low for them to stay in business; if that isn’t bad enough, imagine what happens when the market recovers and there aren’t enough products to meet need.

These are just the crises that result from the success of the market system. No one is evil or conspiratorial; everyone is acting as she or he should. In these cases, a well-funded government is needed for our good, and it is further called upon for those cases where people do misbehave.

 

Why do we expect stuff to be free?

I don’t like paying taxes. I don’t know anyone who does. However, I also don’t like going to the dentist or getting a tetanus shot. If I indulge these dislikes, my teeth will be horrible and I might die. Shouldn’t we start looking more at what benefits we obtain from tax dollars?

When I taught AP Economics, I joked that Americans paid the lowest percentage of income in taxes, of any country in the industrialized world, but we complained about them more than anyone else. The first part, at least, is pretty close to the truth. There are 34 countries in the OECD (Organization for Economic Co-operation and Development), which consists of the world’s industrialized democracies. The average tax burden among these countries is 34%; the U.S. burden is 26%. Only Mexico, South Korea, Ireland, and Chile have a lower burden than the U.S. Finland, the country with the highest standard of living, has a tax burden of 44%.

I recognize that freedom of choice lies at the root of U.S. attitudes about taxation. Perhaps our greatest strength is the emphasis on this freedom. Volumes have been written, determining that our economic strength and other areas of innovation are derived from it; I’m not about to argue with them. Every dollar spent on taxes is an expenditure that was not freely chosen.

However, no quality exists in a vacuum, nor should it. To paraphrase the late Meg Greenfield, a world with total freedom is chaos, not paradise. All of us understand how that applies to criminal law and property law, but it is not always apparent how that applies to paying taxes. There are at least three major social benefits gained by paying taxes: economy of scale, adjusting for flaws in the economic system (without destroying the entire economy), and the ability to better achieve long range plans.

The first, economy of scale, refers to how all of us benefit when we pool our resources. It is the driving force behind the success of large-scale industry; its two primary determinants are the costs of the natural resources and capital needed for production and the need for a labor force highly focused on a specific task while having more than one person available to fit an individual niche.

Obviously, then, all-but-boutique automakers use economy of scale to make cars that we Americans enjoy and expect; iron and conveyer belts (capital) are very expensive, and laborers must have special skills and workers repeated execute the same series of tasks. In fact, some countries have auto and steel companies that are publicly owned (implicitly, paid for by taxes), although a market-based economy like that of the U.S. would never tolerate such companies. What are the elements, then, that make it desirable for a specific good or service to be paid for by taxes? The four primary questions are:

1. Is it needed for survival?
2. Is it something not needed on a daily basis by an individual, but constantly needed by society in general?
3. Is it something for which innovation is unnecessary, even undesirable?
4. Is it something that benefits people besides those who are using it at the time?

The more firmly the answer to these questions is “yes”, the stronger the argument that it should be provided by taxes. To clarify, here are two examples that are found at opposite ends of the spectrum: fire departments and fine dining. Fire departments obviously benefit from economy of scale. Just as obviously, they directly save lives. We would hope that no one person would need fire services on a daily basis, but these services are demanded all of the time. While there are periodic improvements in technology and techniques, firefighters are not supposed to improvise away from their routines. Finally, putting out a fire significantly reduces the chances that adjoining buildings will catch on fire. By contrast, fine dining is none of these: restaurants that emphasize economy of scale drop in quality, as luxury goods they don’t fit either #1 or #2, #3 is necessary for all but the most iconic restaurants, and it would be hard to argue that my going out to dinner would benefit you (no matter how hard I try to convince you.)

Most goods and services fall somewhere between those two extremes and, therefore, are the root of most political debates about public, tax-based ownership vs. private. Should prisons be privatized? Should we adopt universal health care? Use the criteria above and see if your answer corresponds to your gut-level response.

 

 

Some reflections upon grief

About ten days ago, my younger brother died, unexpectedly. He and my wife are my two best friends; as you can imagine, this derailed me. Fortunately, because of my past experience as a hospice volunteer, I have received training in grief counseling, and this has kept me sane and stable.

I have been more introspective than usual these past ten days and have drawn some conclusions that I would like to share. I know that most of us will go through a similar experience, and I would like to help those who face this challenge in the future.

My two major observations have to do with the grieving process itself. Many of you are familiar with Kübler-Ross’s five stages of grief: denial, anger, bargaining, depression, and acceptance. First, I learned in my training that this is not a linear process; that is, almost no one goes through these stages in a direct sequence at anything resembling a standard pace. More commonly, people will slide back and forth a bit and, even more commonly, people will tend to get stuck in one of these stages.

This brings me to the next observation. Two or more of these stages can combine into one. For me, bargaining and depression have combined to form guilt. My brother was a much-beloved icon of our community, so much so that the executive director of our largest local theater made the 750-seat facility available for his memorial service, without any request from the family. That pretty much tells you all that you need to know about him. I have been told by, literally, hundreds of people that my brother’s death is a huge loss and that he was the kindest man they had ever known. Consequently, I am dealing with a strong sense of “why him, and not me?”

Obviously, this would be a frightening and unhealthy attitude to have. Fortunately, I know that this feeling is an outgrowth of the grieving process and that the guilt is irrational, and that irrational thoughts are perfectly normal at a time like this. Certainly, the hundreds of people who love my brother are not wishing me to die.

This brings me to my concluding observation. Besides me, my brother’s widow and children have been overwhelmed by the outpouring of support. We calculated that inviting all of the people who wanted to talk or sing for my brother’s memorial would lead to a six hour-long service. Personally, I have struggled to avoid aggressively turning well-wishers away, to cite the difficulty all of the offers can pose. For me to do this, though, would be the epitome of selfishness. When loving people offer condolences, they are not only seeking to ease your pain, but are also dealing with their own grief. Regardless of my relationship to my brother, it would be extraordinarily unkind to minimize the grieving of others.

Fear is our worst enemy.

In a country where we read and hear about so much public polarization, it is time to remember that there are two things that people from all parts of the political spectrum have in common:  we want what is best for our country, and most of our political behavior is motivated by fear. The more we remember this and use it to drive our behavior, the more rapidly we will return to the civil society that most of us treasure.

A little background: I am not a straight-ticket voter, 5 of my top 8 political heroes are GOP, the men responsible for my involvement in politics were both GOP, and 3 of the last 4 campaigns I worked on were for GOP candidates.
The group first motivated by fear was that consisting of people who identify themselves as conservative, Republican, “on the right”, or some combination of the above. According to one of my favorite authors, Alvin Toffler, this group was hit by, “too much change in too short a period of time.” While I would imagine that those who self-identify as liberal, Democrat, and “on the left” look at the increases in civil rights and environmental protection as wonderful, they often forget that so much change in such a short period of time is very unsettling. The change is unsettling even for its advocates, but much more so for its opponents. Toffler argues that the first reaction to overly-rapid change is fear. No one should be surprised that Trump was much more competitive than predicted, up to and including winning the election; from a conservative’s perspective, if you see that your car is skidding on the road, your reaction is to correct that skid as fast as possible; conservatives saw that our country was skidding off the road.

It is easy to understand why people would vote for Trump. The country was skidding off the road; to continue the metaphor, though, quickly correcting a skid is horrible if it puts you into the path of an oncoming truck. I know that you who are GOP-leaning are outraged at the insults hurled your way since the election of Donald Trump. Those insults are illogical (fallacy of composition) and inexcusable; they need to be dealt with.

The point, though, is that Donald Trump is NOT a friend of the GOP or the USA. I realize that, among my friends, you voted for him because you didn’t want to see Clinton in the White House, not because of the invective hurled at you. But Trump has shown, even in a few days, that he’s antagonistic to the Constitution and to a huge list of genuine Republicans.
Please do everything in your power to block him. Ideally, Mike Pence would become POTUS. The best metaphor I can offer is that he is like a neighbor who finds out that a neighborhood house was burglarized, so he now shoots anyone on sight who he doesn’t recognize as legitimate. It solves the burglary problem, but goes against everything that we Americans stand for.
PLEASE contact your GOP senators and representatives. Our own congressman has already gone on record with his fears of what Trump is doing. It will mean more coming from you than from left-leaners, who are dismissed as being sore losers.

Now, for those who identify with the other side. The fact that Trump has acted so rapidly to reverse what you perceived as progress has caused its own kind of future shock. Just as many conservatives have acted thoughtfully in reacting to current events, many on the left have as well. Lawsuits, petitions, and demonstrations are part of our American fabric that we recognize as being legitimate means of persuasion (even if, to be honest, we tend to be more supportive of those whose views we support!)

But the left has to bear some responsibility. Publishing things such as “Bannon is a Nazi” or “Trump is a fascist” will not win people to your cause. Those are ad hominem attacks and, if I had voted for Trump, my response would be to dig in my heels even more, because these attacks make people feel that you are personally attacking their intelligence and their world views. What was the last time that you changed someone’s mind by using personal insults. (Even worse are those who tar the entire GOP or its voters with the same brush. When I read something like, “all Republicans are (fill in the blank with the insult of your choice),” I feel personally attacked.

Above, I wrote that Republicans need to approach their elected representatives, but that doesn’t let Democrats or other left-leaners off the hook. You still have to carry a lot of the load. Keep contacting all of your representatives, Democrats  and Republicans. Stick to the issues and avoid name-calling. Finally, remember that most of what impacts us in our daily lives, including government involvement, is local. My Republican best friends are all people who care about their communities and work hard to improve them. If you don’t do the same thing, it undermines your credibility when you complain about the world.

To repeat, we all have much in common, especially fear and love of our country. Please remember that, even if you disagree with someone, that person has the same ultimate goal as you; the key is to find a mutually-acceptable solution and to realize that none of us are going to get 100% of what we want. More important, though, is to remember that we are all fearful in some way. Don’t make someone with whom you disagree feel more fearful, or you will be steering your vehicle into the oncoming truck’s path.

Why the arts and humanities need MORE promotion, not less.

Cutting the National Endowment for the Arts and the National Endowment for the Humanities is aiming at low-hanging fruit. I know that a lot of people don’t appreciate what these groups do, and that a lot of Americans find that the grants they award support causes and projects with which they disagree. But, here is a brief list of why I take issue with this thinking:

1. Take a look at the budgets for these programs. Cutting them doesn’t come close to solving deficits. This is especially true when public schools aim their first cuts at these same areas at the local level. Yes, I am a teacher, but I have always taught in private schools that are unaffected by public budget cuts. I don’t want to see a two-tiered society in which young people have to attend schools like mine just to get a fully-rounded education.

2. The United States already ranks at the very bottom when it comes to per capita spending on arts and humanities among industrial nations, and the gap between the US and the second-lowest country is greater than that between the #2 country and the #40 country*. Is this really the sort of American Exceptionalism” that we want to be known for?

3. Promoting the arts and humanities advances our culture and, by supporting ideas that contradict the status quo, make us all aware that there are other possibilities in our thinking. If we are presented with only one line of thinking, how do we develop strategies to change? Given the shift in attitudes that mad the election of Donald Trump possible, I would think that these are areas that he should want to protect.

4. I know that there are a lot of people who complain that PBS is some sort of left-wing conspiracy designed to undermine the majority will of the people, and that these same people would lump in the NEH and the NEA. How many of these people have taken the time to watch the programs that are broadcast, especially the news? Do they conclude that PBS is biased simply because it doesn’t push their point of view on its viewers? I find PBS to be national treasure, in part, because its news shows present information that is ignored or covered up by both the left- and the right-wing media, and they do so with respect for all of the opinions that are raised.

Let us not forget that a major step towards either left-wing or right wing totalitarianism is to silence voices of dissent. In a world in which the oversimplified data we find on social media have become the norm, and are used by all sides to further political agendas, the NEA, NEH, and PBS are more important than ever.

*UPDATE: According to the Arts Council of England, Policy Research

and Planning Department, Research Report, the gap between the U.S. and that of the #2 country (Ireland) is no longer greater than the gap between Ireland and Germany (#40).

 Nevertheless, even with the economic crises in Ireland, far more severe than we have faced in the United States, Ireland still outspends the U.S. by over 250%. In my humble opinion, we should also keep in mind that support for the arts and humanities is considered a patriotic duty in the Republic of Ireland (the only country to feature a musical instrument on its coins) so the demand for taxpayer support is less pressing.

Some random brain droppings…

1 The topic for our Philosophy Club meeting this Friday is, “To what extent should the personal character of a person determine his or her fitness to be President of the United States?”

Now, a lot of people would react by thinking that this is a direct shot being taken at our current president-elect. Perhaps, but the topic itself is much older than that. In fact, I used it first when teaching AP Government in the 1990’s, and the target then was Bill Clinton.

Our awareness of personal character in a president has grown significantly with each passing year. Had we known about the sexual behavior and the friends of Warren Harding, would he ever have been elected, much less retained? Over the years, the vast majority of my students hold that Jimmy Carter was the finest human being to hold the top executive office; he is rarely regarded as a successful president.

The final question is this: if you believe, even before he has taken office, that president-elect Trump should not be our president, based on what you know about his moral character, did you apply the same standard to President Carter. Is it a fair comparison?

2. A few posts ago, I posed the dilemma of why a college game that seemingly should have attracted a large audience instead had only 60% of the viewership of a less-significant professional game. Since then, someone has offered another hypothesis that may have future ramifications.

The hypothesis that, regardless of how anyone felt about relative strengths and weaknesses of the professional teams. They got where they are strictly on the basis of their W-L records. On the other hand, the competitors of college’s national championship were picked by a committee. The Daily Onion parodied this when it declared that Alabama was the National Champion, because the committee decided that it had a superior group of players to Clemson!

This year, the best example happened in deciding which Big Ten team should go to the Final Four (by the way, for those of you who have forgotten, the Big Ten is that league with 14 teams in it.) Ohio State was the team selected, despite the fact that Penn State had won the conference championship. This is not to single out Ohio State for scorn (goodness knows that I have many more personal connections to Ohio State than to Penn State), but it does show what every culture I know of feels: a team earns its way to its awards based on how it plays, period. It is very likely that there is a growing sense of cynicism in the U.S. and it has trickled down to the football audience. Sports journalists love it, because it gives them a built-in lead story to write about in the part of December during which there are fewer items to attract attention. Should the desires of the media outweigh the nearly-20 million viewer gap between the interest in college and professional football?

3. Computers keep becoming more and more sophisticated motivated, in theory, by the desire to make workers more productive. That is a good goal.

Frankly, though, I think most of us would like to see more creative energy devoted to ensuring that the computers we have work. A few years ago, there was a hysterically funny satire that compared our expectations for automobiles to those we have for computers. The conclusion, of course, was that consumers would never tolerate what they have to go through with computers and their peripherals if the same failure rates applied to their cars.

I work in a place in which our IT department is unexcelled. The men who work in it pull off one miracle after another to keep our faculty and staff productive. But why should these geniuses have to visit my room just because (on average) every other week, I cannot log in or I cannot get my projector to display the images on my computer? How would you feel if, every other week, your mechanic had to visit your house to start your car?

Black, blue…ALL lives matter.

I’m getting old enough that there are fewer and fewer things that truly infuriate me. One of them, though, is the argument that supporting Black Lives Matter means that a person is anti-police, or that supporting Blue Lives Matter means that a person is racist.

This thinking is the classic example of the false dilemma fallacy. It is presenting two choices and arguing that they are the only two choices. For instance: “Either you think that Elvis Presley is the greatest musician in history or you are an idiot.” I would hope that Elvis fans know how stupid this would be to argue.

We have heard about tragedies involving the shootings or beatings of African-Americans that were umprovoked. We have also heard about tragedies of police officers being ambushed. There are both horrible. Anyone who believes that supporting one group makes a person an enemy of the other group is a fool, and anyone who suggests that there is a comparative value that makes one tragedy worse than the other is also a fool.

Shifts in American Football

Last night, ESPN radio broadcast a statistic that stunned its reporter. In comparing viewership of Monday’s National Collegiate Championship Game with that for the Wild Card playoff game between Green Bay and the New York Giants, he found that 25 million people watched the national championship game while nearly 40 million watched the NFL Wild Card game. He granted that, yes, New York is the country’s largest media market, but the Sunday game was not especially close or well-played, while the Monday game saw all of the networks showing reruns and other programming, since they suspected that most viewers would be glued to the most important college game of the year and one that turned out to be extraordinarily exciting. His question, then, was what happened?

It is a good question and one that I can’t pretend to know how to answer, but it points to a number of issues, some of them non-football related, that may be possibilities.

The College Championship game featured Alabama and Clemson. With no disrespect intended toward either university, we have to wonder whether Alabama’s sheer dominance in recent years has turned off potential viewers. We also have to wonder if, by having two schools from the same geographic area, viewers from other parts of the country simply decided they didn’t care much who won the game.

Perhaps…but the NFL had its largest market share during the years in which the Dallas Cowboys were dominant, and similar market share distributions have been the norm in other sports. Sociologists have hypothesized that having a “dynasty” team increased viewership because the public decides either to love or hate the team that wins all the time. Under that theory, viewership for Alabama versus Clemson should have reached an all-time high.

As for geographical bias, while it may be a more likely explanation, it still seems to fall short. It is difficult to determine with any certainty whether geography influences college sports viewership because the NCAA constantly changes its parameters for championship participation in its big-money sports on a regular basis. The best comparisons I can find have been when two teams from the same conference competed for the national championship in men’s basketball. In each case, there was no appreciable rise or decline in comparing those games to their counterparts in the years before and after.

One final hypothesis I have heard is that the United States has turned away from football, in general, because of drug allegations, other criminal accusations and, most critically, concerns about post-concussion syndrome. All of these issues appear in headlines far more often than in the past.

However, an examination of sports pages over the past three months shows that concerns over these issues, concerns that one might expect to drive away viewers, are  perceived as a much greater problem for professional football than for college football. If this hypothesis were true, we would expect that the college game would outdraw the NFL game by 60%, not the other way around.

So what is it? Less time to generate enthusiasm for a college team whose star players will likely leave after only three years? Too much attention paid to college coaches? I simply don’t know.

The Change in Media Effect (part one)

It is no secret that there is a lot of hostility directed at the news media. Immediately following the disclosures of Watergate in the 1970’s, there were few careers that seemed more heroic than being an investigative journalist. How times have changed…but why?

There seem to be four primary elements that have led to this shift. In chronological order, they are:

1. The elimination of the wall between news and entertainment.
2. The suspension of the Fairness Doctrine.
3. The increased concentration of media ownership among fewer and fewer people.
4. Allowing the disadvantages of high technology to prevail over the advantages.

Let’s look at the first two.

According to Harvard’s Nieman Institute, the late 1970’s saw a global shift in the expectations held for news organizations. Hardly noticed by the general public, the late 1970’s marked the first time that news organizations, usually connected to or co-owned by entertainment organizations, were expected to be profitable ventures. Prior to that time, networks saw news coverage as the responsibility of being a citizen of the community, In fact, news stations are still required to allow the public access to write commentaries about a network’s success or failure as a prerequisite to renewing a broadcast license. Unfortunately, few citizens realize that they have the opportunity to comment, opening the door for “infomercials” and other pseudo-news shows that draw high ratings.

Oh, but there are two ways to in crease profits! In addition to increasing revenues, agencies started cutting costs. Typically, a U.S.-based news agency covers the entirety of Africa, a continent with a land mass and a population nearly four times the size of the United States, with just two reporters, usually based in Egypt and South Africa. Whether one is a Republican or a Democrat, does anyone really believe that the Benghazi incident would have happened if there had been prior journalistic scrutiny? Or, going back in time, what about blood diamonds? Rwanda genocide?

When those of us old enough to remember journalism at its peak recall the stories, we remember them both for being truly newsworthy and unbiased. Unfortunately, the biggest blockade to violence has been eliminated: the Fairness Doctrine. Created in 1949 by the FCC, it was eviscerated in 1987 when Congress refused to continue to fund its enforcement.

The Fairness Doctrine required a number of criteria to be met for a radio or television source could broadcast a story. The most significant were that a story had to present all major ideological perspectives, if called for, that editorials be clearly designated as such when broadcast, and that call-in shows could not screen out callers based on their political views. While some challenged the Fairness Doctrine or any attempt to restore it as a First Amendment violation, The U.S. Supreme Court ruled that, since broadcast stations occupied a portion of the finite amount of electromagnetic bandwidth, the government was within its rights to place stipulations upon its use.

By 1987, political pressure and changes in broadcast technology gave opponents of the Fairness Doctrine the ammunition that they needed to render it useless. The proliferation of cable broadcasting, followed later by digitization, meant that there was so much bandwidth available that the argument that one station’s broadcast would keep another off the air was no longer valid. With media becoming more and more corporate, there was little incentive to enforce a policy that would allow anti-corporate interests to be represented. The emergence of commentators such as Rush Limbaugh reinforced this, since their anger and other style elements attracted new listeners, usually disaffected workers, like flies to honey. Cracks about the “mainstream liberal media,” “femiNazis,” and comparing teenager Chelsea Clinton to a dog may have been unfair and terribly shallow, but there was nothing to stand in the way of his remarks. Finally, to this day, staff members are taught routinely to block anyone who has a point of view that contradicts the star of the show.

Since 2007, there have been efforts to restore the Fairness Doctrine but, besides the fact that one side of the debate has tremendous incentive to block it, two other obstacles remain. One is that the United States has become rabidly anti-taxation in recent years,  making it hard to sell any regulatory legislation. The other is the Internet; due to its nature, all Internet news falls into a gray area that is neither broadcast nor print. Could it be regulated?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taking partisanship out of economics

Before continuing, let me say that in some ways I regret that this post is grouped in the category, “Politics and Economics,” because the central thesis is that we need to remove political labels from legitimate economic tools.

There are three major tools that the U.S. government uses to help the economy, either to stimulate it when more jobs are needed or to slow it down when inflation is too high. One of those tools, monetary policy, is a constant that is controlled by the Federal Reserve Board, which acts autonomously. While it has its critics, its autonomy places it beyond the reach of partisan politics and, therefore, is not subject to analysis in this post.

The first tool, historically, is called Fiscal Policy, first applied by Franklin D. Roosevelt during the Great Depression. In a nutshell, it means having the government create programs that directly or indirectly put people back to work by spending money. We often hear people proclaim that, “government would work better if it were run more like a business;” however, this attitude contradicts fiscal policy. In times when more jobs are needed, it is unfair to place a burden on businesses to hire more workers and, since the government is not profit-driven, it can create jobs when conditions discourage businesses.

The most recent of the tools is called Supply-Side, first applied by Ronald Reagan. It works by cutting taxes imposed on corporations and the most wealthy. We often hear people proclaim that, “it is unfair to give tax cuts to the people who are already well off;” however, this ignores the basic reality of income. When wealthier people get tax cuts, they don’t need the money to survive, so they can afford to put the money into savings. When lending institutions have more money in savings, they have more money to lend to investors who can create new jobs in the private sector.

Unfortunately, both of these tools are weakened by politics. Democrats, for the most part, are fiercely loyal to fiscal policy, remembering that it was used by the Democratic President Roosevelt to take us out of the Great Depression. But this loyalty makes the economy more and more dependent upon the government to keep it running, at the expense of private companies.

Republicans are correspondingly loyal to supply-side policy, remembering the job creation under Republican President Reagan that came without heavy government involvement. But this loyalty leads to a strong distrust of government regulation, which means that many of the jobs that are created are created outside the United States, plus there is no guarantee that the taxes saved won’t be spent on luxury goods that create few new jobs.

In summary, then, both of the major parties need to stop looking at these economic policies in partisan terms. There are politicians who argue that, if corporations are given tax cuts, they should be forced to invest the money in creating American jobs. There are also politicians who have formulated ways to gradually convert government-created jobs into private sector jobs. The time has come for all politicians to cross partisan lines, follow the aforementioned trend-setters, and do what is best for the country.