Tag Archives: economics

The Mosler Proposals

August 1, 2011 – 10:58 am

Two weeks ago I introduced you to Warren Mosler’s Seven Deadly Innocent Frauds of Economic Policy, a short and insightful book you can read for free.

Review. Mosler’s main point is simple: Money doesn’t work the way you think it does. A dollar is just a data entry at the Federal Reserve, and doesn’t represent any physical substance. So if the Fed’s computer says you have a billion dollars, then you do. Those dollars didn’t have to “come from” anywhere or correspond to anything; they’re just data. (If Delta gave you a million frequent flier miles, would those miles have to come from somewhere?)

Consequently, the U.S. government’s spending is not limited by it’s ability to tax or borrow. Dollars can simply be created out of nothing by making an entry in the Fed’s database. Here’s how it works: The Treasury “borrows” by issuing a bond which the Fed “buys” by entering a credit in the Treasury’s account. Checks to Social Security recipients, defense contractors, or whoever eventually wind up at the Fed, which “cashes” them against the balance in the Treasury’s account.

According to the Fed balance sheet at Wikipedia, the Fed currently owns $1.6 trillion of the total $14.5 trillion of Treasury securities. That’s $1.6 trillion that came from nowhere.

A debt-ceiling aside. Those debt-ceiling clocks have been ticking down to the moment when the Treasury’s account at the Fed hits zero. Tuesday, CNBC’s John Carney asked the trillion-dollar question: Does that event actually mean anything? Or would a negative number in the Fed’s database work just as well?

Carney thinks it would.

Think about it. The check comes into the Federal Reserve. It looks at the U.S. government balance and discovers that we’re at zero. What does the Federal Reserve do?

I’m pretty sure the Federal Reserve would go ahead and credit the bank submitting the check with the deposit to account for the fund transfer.

What are the constraints? Then what keeps the government from giving us all a few million? Fear of inflation. Since our economy doesn’t produce enough goods to satisfy 300 million millionaires, those magically-created dollars would bid up the price of everything.

But here’s the next major point: We have unemployed workers, idle factories, empty storefronts, and so forth. The economy is just dying to produce more, if only somebody had dollars to pay for it. In this situation, there really is a free lunch: The government creates more money by spending without taxing or borrowing, and the economy creates more goods and services. No extra inflation.

Go back to the airline analogy. If Delta created and distributed massive numbers of frequent-flier miles, all the frequent-flier seats would fill up instantly, making most people’s miles more-or-less worthless. But what if most those seats had been flying empty? Then Delta could create some quantity of new miles without damaging the value of existing miles.

If you believe that, what do you do? Obviously you spend more and tax less, until the economy starts producing close to capacity.

Some of Mosler’s proposals are larger versions of things that have already been tried: suspending the collection of Social Security and Medicare taxes while continuing to pay benefits (not threatening future benefits, since the trust funds are also just data at the Fed), and giving money to the states (because it makes no sense to lay off teachers and construction workers when we still have work for them to do).

Mosler also wants to establish universal health care through a combination of a conservative idea (health savings accounts for the first $5000 each year) and a liberal idea (Medicare-for-everybody for larger expenses).

His most creative proposal is for a new category of federal job, which pays $8 per hour plus benefits. These new hires would work throughout the government rather than in a few big make-work projects. Any government office that wanted to employ them could do so without using money from its budget.

If you’ve ever worked in an office, you know that there are always useful projects that nobody can get around to doing. You may not be able to pull a shovel-ready thousand-worker project out of the air, but you could easily put two temps to work tomorrow morning, if you could just find the money.

As the economy moves closer to capacity, many of these workers will move into better jobs (aided by their continuous work history). If industry starts to have trouble finding workers, the government can ramp up the amount that the $8 workers cost project budgets.

Mosler would clean up the residue of the housing bubble in two ways: (1) Give banks freer access to loans from the Fed in exchange for tighter regulation. (2) Have the government buy foreclosed houses from the banks (making the banks eat any negative equity) and rent them back to their owners for two years. After two years, the owners have first crack at re-buying before a general auction is held.

The real economy. Probably the best thing to glean from Mosler’s book is a respect for the real economy (goods and services) as opposed to the financial economy (dollars).

This comes through clearest when you think about future generations. We have worried way too much about the numbers in future Fed databases, as if numbers make an economy robust. Instead of good numbers, we should be trying to leave future generations skills, good health, peace, a clean environment, social cohesion, and a solid physical infrastructure.

If they have those things, they will be able to produce the goods and services they need. If not, dollars won’t help them.

By weeklysift | Posted in The Sifted Bookshelf | Comments (7)

Digging into the Deficit

July 25, 2011 – 10:58 am

At the heart of the debt-ceiling debate is the question: How did the deficit get so high? It’s really pretty simple: We cut taxes, and healthcare got expensive. It all boils down to the next two charts.

The first chart refutes John Boehner’s mantra: “Washington has a spending problem, not a revenue problem.” We’ve got both.

spending and revenue

[Source: economist Jared Bernstein, who says he got it from the Office of Management and Budget. Here at the outset, I should justify the scales. I think there are only two legitimate ways to track government spending through time: as a percentage of GDP or inflation-adjusted per capita. A common conservative trick is to show raw revenues/expenditures tracking ever upward, which just proves that the country is getting bigger.]

Revenue (in blue) peaks just before the Bush tax cuts take effect, and then takes a second plunge when the Great Recession starts in 2007. Spending (red) is in a slow downward trend from the beginning of the graph until 2000. There’s a bump in 2000-2002 that could be blamed on a recession. (Recessions not only increase safety-net spending like unemployment insurance, they lower GDP. So spending-as-a-percentage-of-GDP gets a push from both sides.) But spending stays up (probably due to the Iraq War) during the tepid “Bush Boom” of 2003-2007, before jumping again when the Great Recession hits in 2007.

The second chart focuses entirely on spending.

health care spending

[Source: Christopher Conover at the conservative American Enterprise Institute, who attributes his numbers to the federal Bureau of Economic Analysis. This chart is about total government spending — state and local as well as federal — so the percentages of GDP are higher than in the first graph. It also goes back much further. The big spike is World War II.]

Conover notes:

Between 1966 and 2007, the entire increase in the size of government relative to the economy resulted from growth in tax-financed health spending.

And Matt Yglesias draws the obvious conclusion:

[G]rowth in government spending is overwhelmingly not the consequence of grasping liberals coming up with evermore things for the government to do. Instead, the government has for a long time shouldered responsibility for health care finance, and health care is very expensive.

So a more precise statement of the deficit problem is: We have a revenue problem and a healthcare spending problem.

Now let’s dig deeper into revenue. This chart shows revenue by type of tax:

taxes by type

[Source: The Department of Numbers blog. The vertical scale is percentage of GDP.]

Income tax stays within a range, with a blip up to create the Clinton surplus, and then a dive from the Bush tax cuts. (BTW: Unless you are willfully blind, it should be obvious that tax cuts do not increase revenue.) When this chart ends in 2007 we’re near the bottom of that range.  Payroll taxes (Social Security and Medicare — in yellow) go steadily upwards, while corporate taxes go steadily downwards from nearly 6% of GDP under Eisenhower to less than 2% now.

OK, so at the very least we have a corporate tax revenue problem.

Now let’s look at income tax. Conservatives make a big deal about how much tax the rich  pay — more than ever, by just about any measure.

tax burden of the rich

But that’s mostly because they are raking off a much higher percentage of the total national income. (In 50 years, when one guy is making all the income, he’ll necessarily pay all the income tax. Wouldn’t you hate to be him?)

In fact, the effective income tax rate (i.e., what they actually pay) has dropped considerably for the very rich, even as their income has shot up.

income and tax rates of the rich[Source: Ezra Klein, who attributes it to the economists listed at the bottom of the graphic.]

So: We have a problem getting revenue from corporations and the rich, and a healthcare spending problem.

Finally, let’s delve into that healthcare problem. Part of it isn’t a problem at all. As a society, we’re spending more on healthcare partly because the healthcare industry has better products than it used to.

A century ago, hospitals couldn’t do much more for you than a dedicated family member could do at home. Today, they can. People who a generation ago would have died in their 50s from heart attacks and cancer are surviving into their 80s and dying in nursing homes. It costs more, but personally, surviving into my 80s is precisely what I want to spend my money on. The option to buy a longer life is an opportunity, not a problem.

But there is a related problem: Compared to other countries, we’re not getting what we pay for.

Americans spend more, live less

[Source: University of California Atlas of Global Inequality. This data is from 2000, but things have only gotten worse since then, as the next chart will show.]

For all our healthcare spending, we live about as long as Cubans — four years less than the Japanese, and even two years less than our Canadian neighbors. (You might picture the Japanese living some spartan lifestyle we’d find unacceptable. But Canadians?)

And while all nations are spending more on healthcare — because everybody wants a longer life — the U.S. is pulling away.

rising American costs

[Source: Ezra Klein. The vertical scale is inflation-adjusted dollars per capita.]

And that’s the worrisome issue: If we’re on a higher exponential-growth path than everyone else, eventually healthcare spending will swamp the rest of our economy.

Total cost vs. government cost. Maybe you noticed I pulled a switch: The last two charts have been about total healthcare spending, not just government healthcare spending. Only about half of our healthcare spending goes through the government (Medicare, Medicaid, Veterans Administration, etc.).

If you think that government healthcare spending is the whole problem, then you do what Paul Ryan proposed: Replace Medicare and Medicaid with capped private health-insurance subsidies. The cap can be wherever the budget needs it to be, so the government-spending problem is solved.

But if total healthcare costs stay on their exponential path, they swamp the economy anyway. Eventually the government subsidies are tiny compared to the real cost of healthcare, and middle-class people start dying of curable diseases because they can’t afford treatment.

To an extent, it already happens. The U.S. performs badly in what public-health professionals call amenable mortality — i.e., preventable deaths.

preventable deaths by country

Now, I can’t see any democracy allowing middle-class people to die for lack of care, so either we’ll scrap democracy or government will end up paying for care no matter what Ryan’s projections say. And that’s why I focus on the total cost of healthcare.

Single-payer. Paul Ryan believes dialing back government funding will slow the rising costs, but his justification is a combination of wishful thinking and just-so stories about the market. The countries that get better results do the exact opposite: Virtually all their healthcare spending goes through the government.

All the evidence of actual countries tells us this: Government healthcare is more efficient than private healthcare.

In the private part of our healthcare system, the easiest way to make money is to shift costs to somebody else  — insure the people who don’t get sick — not lower the cost of care. (Ryan’s plan is similar — it shifts costs from the government to individuals.) Only single-payer systems, where there is nobody to shift costs to, deal with the real problem.

So the long-term answer to the healthcare spending problem is paradoxical: Extend Medicare to everybody.

In the short run, it will essentially double government healthcare spending. (Done right, this would be invisible to both the federal deficit and your personal budget. What you pay now in health-insurance premiums you would instead pay as taxes.) But in the long run, a single-payer system would get our costs (and outcomes) in line with countries that do healthcare much better than we do.

Summing up. So that’s my answer to the long-term deficit: End the Bush tax cuts at least for the wealthy and maybe for everybody (because the economy did fine with the Clinton tax rates). Close loopholes until corporate taxes get back to Eisenhower-era levels. And move to a single-payer system to get healthcare costs under control.

By weeklysift | Posted in Articles | Also tagged | Comments (1)

The Sifted Bookshelf: Seven Deadly Innocent Frauds

July 18, 2011 – 11:29 am

In one memorable scene from The Matrix, a boy apparently bends a spoon with his mind, and then gives Neo advice on how it’s done: by realizing that there is no spoon.

At first “there is no spoon” sounds like mystic mumbo-jumbo, but eventually you come to understand that it is literally true: The world the boy and Neo share is a computer simulation, and the apparent spoon is just a pattern of data. If you believe it is a solid object, you expect it to obey physical laws and not bend. But if it is a pattern of data, why couldn’t it be a different pattern of data — a bent spoon — instead?

As you watched that scene, you may not have realized you were learning about economics, but you were. If you need that idea spelled out more clearly (as I did) you should read a down-to-earth little book that is available for free on the internet: The Seven Deadly Innocent Frauds of Economic Policy by Warren Mosler. (Don’t let the blank first page confuse you. Keep scrolling.)

The deadly frauds, which very serious pundits and politicans tell you every day (innocently, because they don’t know any better) are:

  1. The government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow.
  2. With government deficits, we are leaving our debt burden to our children.
  3. Government budget deficits take away savings.
  4. Social Security is broken.
  5. The trade deficit is an unsustainable imbalance that takes away jobs and output.
  6. We need savings to provide the funds for investment.
  7. It’s a bad thing that higher deficits today mean higher taxes tomorrow.

Now, chances are all seven of those seem like common sense to you, just as the spoon looked very solidly spoonlike to Neo. What people have trouble grasping, Mosler explains, is what dollars are: Dollars are numbers on a spreadsheet at the Federal Reserve. Dollars are a pattern of data, and (like Neo’s spoon) could just as easily be a different pattern of data.

When, for example, the government pays my Dad’s monthly Social Security benefit, the Fed just increases the balance in the account of Dad’s bank. No object of any real-world value moves or changes.

Where else do we see this happen? Your team kicks a field goal and on the scoreboard, the score changes from, say, 7 points to 10 points. Does anyone wonder where the stadium got those three points? … Do you think all bowling alleys and football stadiums should have a “reserve of points” in a “lock box” to make sure you can get the points you have scored? …

Just keep this in mind as a starting point: The federal government doesn’t ever “have” or “not have” any dollars. It’s just like the stadium, which doesn’t “have” or “not have” a hoard of points to give out. When it comes to the dollar, our government, working through its Federal agencies, the Federal Reserve Bank and the U.S. Treasury Department, is the score keeper.

Not bankrupt. So Mosler immediately discards any notion that the U. S. government might “go broke”. Paying interest or redeeming a bond means changing the numbers in the spreadsheet, not coming up with real assets that are conserved by physical laws.

Ditto for parts of the government going bankrupt. If the Social Security Trust Fund “runs out”, that just means that the corresponding entry in the spreadsheet is zero and about to go negative, not that some real cupboard is now bare.

Taxes and inflation. The purpose of taxing is not to acquire assets that the government needs to fund its programs (because the government never has or doesn’t have any dollars). It is to take dollars out of circulation so that they don’t cause inflation.

Inflation happens when the real economy isn’t able to produce enough goods to satisfy all the people who have money to spend. So consumers bid up the price of scarce goods and businesses bid up the wages of scarce workers.

Seen any scarcities of goods or workers lately? There are occasional bottlenecks (like gasoline), but in general the economy has plenty of room to produce more goods to cover more dollars. There is no good reason not to create those dollars so that more people can work and spend.

What about saddling future generations with government debt? Again, the problem is our mis-framing of what money and debt means: Everything produced in the future will be consumed in the future, not sent back in time to pay for our spending today.

Some day it will be our children changing numbers on what will be their spreadsheet, just as seamlessly as we did, and our parents did, though hopefully with a better understanding!

There are many more quotable passages, but I’ll limit myself to this one, where Mosler answers the people who think that we need to change Social Security because the worker-to-retiree ratio is shrinking.

Let’s look at it this way: 50 years from now when there is one person left working and 300 million retired people (I exaggerate to make the point), that guy is going to be pretty busy since he’ll have to grow all the food, build and maintain all the buildings, do the laundry, take care of all medical needs, produce the TV shows, etc. etc. etc. What we need to do is make sure that those 300 million retired people have the funds to pay him??? I don’t think so! This problem obviously isn’t about money.

Mosler’s book falls into three parts: the explanation of the seven frauds (56 easy-to-read pages), the story of his career as a banker and fund manager (entertaining if you like business stories, but not necessary to get the point), and his prescription for the economy (which I’ll cover next week).

Another common-sense story that explains money-supply issues is Paul Krugman’s 1998 article about a baby-sitting co-op whose “money” consisted of coupons the participating parents traded when they baby-sat for each other.

Now what happened in the Sweeneys’ co-op was that, for complicated reasons involving the collection and use of dues (paid in scrip), the number of coupons in circulation became quite low. As a result, most couples were anxious to add to their reserves by baby-sitting, reluctant to run them down by going out. But one couple’s decision to go out was another’s chance to baby-sit; so it became difficult to earn coupons. Knowing this, couples became even more reluctant to use their reserves except on special occasions, reducing baby-sitting opportunities still further.

In short, the co-op had fallen into a recession.

They got out of the recession by printing and distributing more coupons, which worked because their “economy” was willing and able to produce more nights-out and more hours of babysitting.

A related discussion this week has concerned a novel solution to the debt-ceiling “crisis”. The Pragmatic Capitalism blog claims that the Treasury, which unlike the Fed is completely under the President’s control, has unlimited authority to produce palladium coins. Treasury could strike a small coin, stamp $1 trillion on it, and use it to redeem $1 T worth of bonds, thereby creating $1 T of space under the debt ceiling.

Independent of whether this is good economic policy, it completely avoids the current hostage situation. Even skeptics like Matt Yglesias are coming to believe that this would work.

By weeklysift | Posted in The Sifted Bookshelf | Comments (25)

Appropriation

October 25, 2010 – 3:27 pm

Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation.

— Thomas Jefferson, from a letter to James Madison (1785)

In this week’s Sift:

  • Where Jobs Come From. Conservatives would have you believe that capitalists create jobs, conjuring both workers and customers out of the aether. Right now, it looks more like customers create jobs — workers and capitalists would pop up as needed if only we had customers.
  • Short Notes. A government report has global warming leading to droughts sooner rather than later. Bush-haters and Obama-haters compared. Kansans will respond to global warming as long as they don’t have to admit it’s happening. Obama used to just be the anti-Christ; now he’s the Angel of Death. The Times takes a closer look at Chamber of Commerce donors. And more.
Where Jobs Come From

In the Pollyanna world of free-market economic theory, long-term unemployment is impossible: When people are unemployed, wages drop. That makes it possible to produce products more cheaply, which makes it possible for people to buy more stuff. At some point, then, it makes sense to produce stuff that you wouldn’t have produced at the higher wage, and so you hire people. It’s the Invisible Hand of the Market; it fixes everything.

The same thing is supposed to happen for services. At some wage, it makes sense to start hiring gas-station attendants and movie-theater ushers again. So people will, and unemployment will go away.

In theory, only a few things can keep this from happening: Union contracts or minimum-wage laws might prevent wages from falling far enough. Unemployment benefits or welfare might keep potential workers from becoming desperate enough to take the very-low-wage jobs. Or maybe the workers are just lazy, and they’re lying about the fact that they want to work.

The intoxicating thing about theory is that it saves you from needing to know anything. You don’t need to know any of the lying, lazy unemployed yourself to know that they must be out there. You don’t need to ask the unemployed whether they’re willing to take less money — they can’t be, or otherwise the theory says they’d have jobs by now. You don’t need elaborate economic models to tell you to cut the minimum wage or break the unions or cut off unemployment benefits — if there’s still unemployment, that must be the reason. The theory says so.

The problem, of course, is that as wages go down, people’s ability to buy things goes down too. So it’s easier to make things but harder to sell them. Imagine taking this as far as it can go: If you could cut everybody’s wages to zero, you could make damn near anything and sell it for pennies. But no one would have pennies, so it wouldn’t matter.

Emotions complicate the problem. You might stop buying stuff just because you’re afraid of losing your job, even though everything looks secure. They can cut prices all they want, but you’re still going to wait and see. If you’re a business, you may stop making stuff just because you’re afraid you won’t be able to sell it. Things may look fine at the moment, but who knows what the economy will be like by the time your new product hits the shelves next spring?

Debt complicates things too. Maybe my business looks fine, until my customers go bankrupt and can’t pay me. Now I can’t pay the people I owe, and they can’t pay the people they owe, and so.

In short, economies are complicated. You can’t just reduce them to one variable (wages) and assume things will work out if that variable goes low enough. If you take things a step further and use your one-variable economic model to infer things about the moral character of people you haven’t met, you’re just fantasizing. And if it makes you happy to fantasize a world full of lying, lazy people who expect you to feed them … well, maybe the wages of therapists will go down far enough that you’ll hire one.

So where do jobs come from? A bunch of factors need to come together to create a job. There has to be something worth doing, a worker willing and able to do it, a capitalist to pull together all the tools and materials of production, and a customer willing and able to pay for the product or service.

In conservative economics, though, all that really matters is the capitalist. If the capitalist has money and a good idea, the worker and the customer will appear by magic. If that were true, then a lot of conservative policies would make sense: Cut taxes on rich people, and they’ll use that money to become capitalists and create jobs. (The slogan here is “I never got a job from a poor person.” Daily Kos’ Citizen K takes that line apart — and incidentally is my source for this week’s Sift quote.)

The reason conservative economics hasn’t been working — we’ve been cutting taxes since Reagan and all it ever seems to produce is government debt — is that lack of capital and capitalists isn’t the problem. Lack of customers is. At this point, a customer with money would make workers and capitalists appear by magic. Lack of demand, not lack of capital, is the reason businesses aren’t hiring.

And now we get to the most serious problem with conservative trickle-down economics: Rich people make bad customers. There aren’t enough of them, and they don’t really need the things they buy, so they’re unreliable. Also, they use a lot of one-of-a-kind services that don’t scale up and so don’t lead to long-term growth. So an economy that depends on rich people to be its customers is not going to be as healthy as an economy that sells to the middle class.

In the same letter to Madison I quoted at the top of this post, Jefferson (who was living in pre-revolutionary France as the US ambassador) reflected on:

that unequal division of property which occasions the numberless instances of wretchedness which I had observed in this country and is to be observed all over Europe. The property of this country is absolutely concentred in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics

In Jeffersonian America, on the other hand, it was easy to find work and even to learn a trade that you could turn into a business of your own. (Visiting Frenchman Alexis De Tocqueville observed “hands are always in request” in early America.) It wasn’t because we had more rich people than France did. We had more unappropriated land and reliable middle-class customers, not richer capitalists.

Market Failures. When we talk about jobs, it’s easy to confuse the mechanisms of unemployment with the causes. In any particular industry, for example, technology is likely to be putting people out of work. That’s been happening since the invention of the plow.

But if the same stuff can be produced with less work, that’s a good thing. It only becomes a problem if we make it a problem. Two possibilities arise: Either there is still undone stuff worth doing, or there isn’t. If there isn’t — if everything everybody wants is producible without everybody working — then we have a distribution problem; either we’ll have to figure out a better way to share the work around, or we’ll have to disconnect work from consumption.

But I don’t think that’s where we are. It seems to me that there is plenty of stuff that needs doing. To give just one example, we need a new electrical grid. We need the grid to do at least two things the current one won’t: move electricity cheaply from sunny and windy places to densely populated places; and interact with smart houses to schedule non-urgent uses of electricity for times of low demand.

In the long run a smart grid would be a tremendous investment, and in the short run it would create a lot of jobs, but it’s not getting built. The only private interests in a position to build it are power companies, and their motivations run both ways. (If you already own a coal plant, you don’t want to make it easy for wind farms to compete with you.) And government can’t build it because it would cost money and government spending is evil.

The smart grid is an example of a market failure. Overall, a dollar invested in a smart grid today might net the economy two dollars or ten dollars or a hundred dollars down the road. But the market isn’t able to capture that profit in a package it can sell to an investor, so the private sector won’t build it. The same thing was true about the public infrastructure projects of the past — the canals, the highways, the airports, rural electrification, the TVA, and so on. They were great ideas, but the private sector would never have built them, because the profit from them scatters throughout the economy rather than concentrating in the hands of the investors.

The only way to build big public infrastructure is through government. We need to tax the rich and invest the money in building a healthy economy for the future — the same way America always did before conservatives took over in the 1980s.

Or we could not tax the rich and they could hire more domestics, like the pre-revolutionary French aristocrats did. That’s the alternative jobs plan.

James Kroeger’s Response to My Affluent Republican Brother is worth reading in its entirety, but it contains one argument for taxing the rich that I had never thought of before: Raising taxes on the rich actually has very little effect on their lives.

Here’s why: Poor people buy bread because they want to eat bread, not because they want to own the biggest loaf on the block. And if poor people suddenly had more money to spend on bread, it wouldn’t be that hard for the economic system to adjust and bake more of it.

But the stuff rich people buy is different. If rich people have more money to spend on beachfront property, the price of it will go up. But they won’t manage to buy any more of it, because there isn’t any more of it. The same thing is true of Renoirs or century-old bottles of wine. The whole point of buying these things is to win the competition with other rich people.

So what happens if taxes go up and rich people suddenly have less disposable income? Nothing much. As long as you maintain the same relative ranking among the other rich people, you win the same auctions for the same objects — just at a lower price.

A similar thing happens with manufactured luxury goods. The only reason to buy a 500-foot yacht is to outclass the other billionaires. If all billionaires had less money, maybe you could outclass them with a mere 400-foot yacht. The biggest would still be the biggest, and that’s all that really matters.

One result of cutting taxes is that we don’t have the money to pay teachers, so we’re laying them off. This is another example where the jobs issue has gotten disconnected from what needs doing. Have we discovered some more efficient way to educate children that makes teachers obsolete, or lets one teacher effectively handle more students? Not that I’ve noticed. Do we have a vision of the future that makes a place for large numbers of poorly educated workers? I don’t think so.

So teaching kids is still something that needs doing. We have unemployed people who are trained to do it. It’s a long-term good investment. And we are still a rich country. But we’re going to lay teachers off because rich Americans don’t want to pay taxes.

Citizen K says we should substitute “unused business opportunities” for Jefferson’s “uncultivated lands” in this week’s Sift quote. I’ve talked elsewhere about the idea that “appropriation” is about more than just land. The stock of ideas and inventions passed down from previous generations is also part of the common inheritance. If those ideas seem to belong to the corporations who own our industries, people are once again being “excluded from the appropriation”.

Short Notes

It’s about life rather than politics, but check out my article Sudden Death for UU World.

I have the feeling there’s the root of a big idea in here: A small nonprofit group is getting people in Kansas to “conserve energy and consider renewable fuels” by “focusing on thrift, patriotism, spiritual conviction and economic prosperity” rather than on scientific evidence of global warming.

Here’s what I think is going on: Conservatives have gotten very good at demonizing certain words and people. The kind of folks who watch Glenn Beck will often know nothing about an issue other than the name of a villain and a phrase that describes the conspiracy he’s supposed to be masterminding. So if you mention Al Gore or global warming, you belong to the Dark Side.

At the same time, though, conservative indoctrination hasn’t rewired people’s basic intuitions, many of which are sound. So a lot of the same people who are sure that global warming is a socialist plot also sense that burning all this fossil fuel can’t be a good idea — eventually the outdoors will smell like a big truck idling in a small garage.

That is the challenge of liberal messaging: How do we reach the basically healthy intuitions of low-information voters, even the ones who have been trained to have a Pavlovian aversion to certain words and names?

Atlantic’s Kevin Drum summarizes a new paper from the National Center for Atmospheric Research:

In other words, virtually all of the world except for China and Russia will experience increased drought by 2030 and severe drought by 2060

It’s a global-warming effect, which means Republicans will refuse to believe it and will filibuster doing to avoid it anytime soon.

Now that it doesn’t matter any more, we can get accurate coverage of the Dick Cheney hunting accident. The guy he shot in the face was not an “old friend” as the media reported at the time. His injuries were serious. It was Cheney who was violating safety protocols, not his victim. And Cheney has never apologized.

Kevin Drum again, this time comparing left-wing craziness to right-wing craziness, and in particular Bush-hatred to Obama-hatred and Clinton-hatred. He notes these differences:

(1) Conservatives go nuts faster. It took a couple of years for anti-Bush sentiment to really get up to speed. Both Clinton and Obama got the full treatment within weeks of taking office.

(2) Conservatives go nuts in greater numbers. Two-thirds of Republicans think Obama is a socialist and upwards of half aren’t sure he was born in America. Nobody ever bothered polling Democrats on whether they thought Bush was a fascist or a raging alcoholic, but I think it’s safe to say the numbers would have been way, way less than half.

(3) Conservatives go nuts at higher levels. There are lots of big-time conservatives — members of Congress, radio and TV talkers, think tankers — who are every bit as hard edged as the most hard edged tea partier. But how many big-time Democrats thought Bush had stolen Ohio? Or that banks should have been nationalized following the financial collapse?

(4) Conservatives go nuts in the media. During the Clinton era, it was talk radio and Drudge and the Wall Street Journal editorial page. These days it’s Fox News (and talk radio and Drudge and the Wall Street Journal editorial page). Liberals just don’t have anything even close. Our nutballs are mostly relegated to C-list blogs and a few low-wattage radio stations. Keith Olbermann is about as outrageous as liberals get in the big-time media, and he’s a shrinking violet compared to guys like Rush Limbaugh and Glenn Beck.

Colorado is voting on Prop 62, which will make every fertilized ovum a person under the law — including those in test tubes. I think the most convincing arguments against Prop 62 come from its supporters, so I’ll link to some: Here, Personhood Colorado explains why the facts you may be hearing against Prop 62 are “lies” and “scare tactics”. So, for example, Prop 62 won’t ban contraception — just certain kinds of contraception. It won’t ban in vitro fertilization — it will just make in vitro fertilization impractical. And so on.

And if you weren’t convinced by those arguments, maybe morphing Obama into the Angel of Death will persuade you.

Apparently it’s outrageous to accuse Sharron Angle of racism when all she’s done is connect Harry Reid to scary Latino thugs in a misleading ad. “Illegal immigration is not about race,” said an Angle spokesman. That must be why so many people are worried about illegal Canadian immigrants.

The NYT looks into the U.S. Chamber of Commerce’s political activity and the donors who support it. The Chamber’s doesn’t disclose its donors, but the Times was able to find out this much:

  • they’re spending $144 million on lobbying this year, more than any other group
  • the Chamber claims to represent small businesses, but half of its contributions in 2008 came from just 45 donors
  • big gifts from specific companies coincide with big campaigns on issues that affect those companies

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By weeklysift | Posted in Weekly summaries | Comments (4)