Those who are flirting with the Tea Party need to be aware of just what the Party is all about…because these are the folks that are complaining about government interference. The Tea Party’s candidate “de jour” is Dr. Rand Paul, the son of Congressman (and doctor) Ron Paul. The Paul’s both have developed a reputation, as Bill Maher describes it, of “speaking NON-SENSE to power.” Congressman Ron Paul I have personally heard say that the Civil War needn’t be fought because slavery would have eventually ended anyway. Yeah, in another three or four thousand years! The Paul’s argue a pure laissez-faire policy. The basis of the libertarian “movement” is laissez-faire, in philosophy. They do not want government to interfere in any way.
Those who want to embrace this policy need to understand just what no government interference means. I have always held to the principle that most people are conservative when if refers to others but, very liberal when it comes to themselves. They are against the government interfering when it comes to their business, however, if their neighbor starts dumping contaminants in their backyard they’re complaining because the EPA isn’t out there to protect them. People are against the federal government getting involved in healthcare until they can’t get insurance because of a pre-existing condition or their insurance company drops them when they get sick, then they expect the government to be all over the insurance companies. So, here is a little background on what Laissez-faire means in practice.
In economics, laissez-faire means allowing industry to be free from government intervention, especially restrictions in the form of tariffs and government monopolies, and more specifically today in terms of regulation. The phrase is French and literally means "let do", but it broadly implies "let it be", or "leave it alone."
According to historical myths, the phrase stems from a meeting in about 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, Le Gendre replied simply "Laissez-nous faire" ("Leave us be", literally "let us do"). This is sort of interesting to me because modern day conservative Americans (Tea Baggers) are quick to belittle European governments and ideas, and like to criticize the French in particular, yet France is where all this comes from.
The laissez faire slogan was popularized by Vincent de Gournay, a French intendant of commerce in the 1750s. Gournay was an ardent proponent of the removal of restrictions on trade and the deregulation of industry and economic prosperity in France. Gournay was delighted by the LeGendre anecdote, and forged it into a larger maxim all his own: "Let do and let pass.” His motto has also been identified as the longer "Let do and let pass, the world goes on by itself!" Although Gournay left no written tracts on his economic policy ideas, he had immense personal influence on the thinking of his contemporaries, notably the physiocrats, who credit both the laissez-faire slogan and doctrine to Gournay.
Before Gournay, P.S. de Boisguilbert had enunciated the phrase "let nature run its course.’ Laissez-faire was one of a number of French "free trade" and "non-interference" slogans coined in the 17th century. D'Argenson, during this time, was better known for the similar but less-celebrated motto "Govern not too much.”
The Doctor Paul’s are on record criticizing the section of the Civil Right Act of 1964 when it comes to interference with private business. Meaning: They think service or goods should be able to be denied to individuals for any reason, including race, by businesses, on the basis that they are private. The Paul’s believe private business owes nothing to the public. Doesn’t this seem idiotic to you? The Paul’s apparently think that government has no business making rules for businesses. So what if they sell poison to children?
Private businesses whether they like it, or not, depend on our government. They use our streets, utilities, police protection, fire protection, and they use our currency. In my opinion, this should rightfully give us as a society adequate reason to impose restrictions on how they go about their business. If they want to sell their goods and services to our citizens they should have no objection to playing by our rules. Believe me, there are plenty of third world countries that will not restrict their business practices, and of course, this is why they are third world countries.
The misguided notion that everyone will do what is right if left to their own devices should have been resolved by the time each of us reaches kindergarten. As the new Kentucky Senate Candidate, Dr. Paul, has now gone further. He has stated that its “un-American” for the president to criticize British Petroleum for the oil spill in the Gulf of Mexico. Specifically, Dr. Paul said; “I think it's part of this sort of blame game society in the sense that it's always got to be someone's fault instead of the fact that sometimes accidents happen,” and then went on to say it was “un-American” for the president to be using language like placing the governments boot on the throat of BP to insure they paid for the damage. Forget that we have an ample supply of evidence to conclude that the accident was the direct cause of BP’s actions. I guess that Dr. Paul’s position is that since BP is a private business we should just let it go, trust them to correct the error they committed, and clean up the mess they created; believing that they will reimburse all the effected lives and businesses without any prodding from our government. They will make everyone whole for their mistake. That is what we’re supposed to believe!
Laissez-faire, stretched to its intended purpose, means “we the people” (remember that is who the government really is, us!) do not have the right to say that discrimination is wrong and we will not tolerate it if you want to participate and be a part of our society. Or, that “we the people” do not have the right to inspect the food we eat or deny businesses the right to sell tobacco and alcohol to minors. I guess we should abolish traffic rules. Just let us drive the way we want. The whole notion of “leave it alone” is not conducive to an organized society. Rather than measure government by a laissez-faire standard we should measure the government by efficiency standards. We should not care how big or small a government is. We should care about how efficient the government is. That would be a fair argument to have.
We will, and should, forever protect everyone’s right to speak out in support of any lunatic idea they choose, but it does not mean that free speech implies that we will let anybody do whatever they want. Organized societies have rules, and rules are the difference between order and chaos.
I cannot believe there is anyone, other than a greedy banker, who thinks “we the people” should not govern the banks in a much stricter sense in light of the financial crisis of 2007 and 2008. I have mentioned before in this blog that we as a country and culture have been sold a bill of goods based on capitalism as all good and socialism as all bad. There are good and bad points to each system and we are foolish not to take advantage of the best of both systems. The religious right, who seems to be behind much of the Tea Bag movement, needs to wake up and realize they could be worshiping the God of capitalism just as much as any other false god.
An editorial in the May 22, 2010 edition of the New York Times summed it up pretty well.
“It is a theory of liberty with roots in America’s creation, but the succeeding centuries have shown how ineffective it was in promoting a civil society. The freedom of a few people to discriminate meant generations of less freedom for large groups of others.
It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market. It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.”
AAAAAAAmen, brotha!
Sunday, May 23, 2010
Friday, May 21, 2010
THE INSINCERITY OF DEFICITS HAWKS
As all progressives must restate to begin with…I am in FAVOR of living within my means, both on a personal and public basis. However, today’s versions of “deficit hawks” are insincere to say the least. Hopefully their insincerity can provide a lesson for the future.
The lesson is really pretty simple. First, we took our foot off the gas as far as deficit reduction during the George W. Bush Administration in 2001. As Dubya took office we were running a $300 billion surplus. We were taking in $300 billion more dollars than we were spending. We were running a national debt ( we owed borrowed money from years past) even as we started accruing this annual surplus allowing us to pay down the national debt. But, the Bush Administration preferred to enact a tax cut policy for the wealthiest individuals in our country. This policy on its very own squandered the annual surplus. To be fair Dubya is not the only one to blame. He was encouraged to pursue this policy by Alan Greenspan, who has probably been the most overrated Fed Chairman in history. Alan Greenspan was good at one thing…giving bad advice, and that record becomes more clear every day.
Second, we engaged in two major wars without paying for them. This is completely counter to our record for other wars in our national history. We always understood there would be sacrifice when we engaged in war. We understood the sacrifice in lives lost, and we understood the cost in the treasury lost. War is expensive and we borrowed to pay for the wars in Iraq and Afghanistan.
These mistakes in tax policy and wars were made in fiscal terms. The mistakes are NOT being made now that we find ourselves in a fragile condition. The dollars are not being squandered today on stimulus and spending that we are pursuing domestically. Not to stimulate our economy as we did in 2009 would have meant a longer more protracted recovery period that would render us in peril of failure everyday it lasted. We are fortunate to have the size and economic system that allows us to use our government to stimulate and restore our economic well being.
The recovery will eventually bring us back to where we were…growing and strong. Hopefully will have learned our lesson and use budget surpluses properly in the future to control our overall national debt and prudently choose the expenses we pursue.
The lesson is really pretty simple. First, we took our foot off the gas as far as deficit reduction during the George W. Bush Administration in 2001. As Dubya took office we were running a $300 billion surplus. We were taking in $300 billion more dollars than we were spending. We were running a national debt ( we owed borrowed money from years past) even as we started accruing this annual surplus allowing us to pay down the national debt. But, the Bush Administration preferred to enact a tax cut policy for the wealthiest individuals in our country. This policy on its very own squandered the annual surplus. To be fair Dubya is not the only one to blame. He was encouraged to pursue this policy by Alan Greenspan, who has probably been the most overrated Fed Chairman in history. Alan Greenspan was good at one thing…giving bad advice, and that record becomes more clear every day.
Second, we engaged in two major wars without paying for them. This is completely counter to our record for other wars in our national history. We always understood there would be sacrifice when we engaged in war. We understood the sacrifice in lives lost, and we understood the cost in the treasury lost. War is expensive and we borrowed to pay for the wars in Iraq and Afghanistan.
These mistakes in tax policy and wars were made in fiscal terms. The mistakes are NOT being made now that we find ourselves in a fragile condition. The dollars are not being squandered today on stimulus and spending that we are pursuing domestically. Not to stimulate our economy as we did in 2009 would have meant a longer more protracted recovery period that would render us in peril of failure everyday it lasted. We are fortunate to have the size and economic system that allows us to use our government to stimulate and restore our economic well being.
The recovery will eventually bring us back to where we were…growing and strong. Hopefully will have learned our lesson and use budget surpluses properly in the future to control our overall national debt and prudently choose the expenses we pursue.
Sunday, April 25, 2010
SO YOU WANT TO BE KNOWN AS A CHRISTIAN NATION
The religious, evangelical right insists that the United States is a Christian nation. Well, if that’s what they want to be it looks like the Christian Right better get away from conservative ideology because, they’ve got to reconcile this from the New Testament in the book of Matthew (verses 35 trough 40).
35”For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, 36I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.'
37"Then the righteous will answer him, 'Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? 38When did we see you a stranger and invite you in, or needing clothes and clothe you? 39When did we see you sick or in prison and go to visit you?'
40"The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'”
The Tea Party is one of the foremost voices for the Christian Nation concept. Keep in mind…there is no (really no) historical evidence that the founding fathers ever intended to create a government of any religion. Quite to the contrary, they wanted to have religious freedom. That would be a country beholden to no religion. But, these right wing extremist don’t like the responsibility for anyone other than themselves.
I was recently having dinner with my aunt to prides herself on her devout commitment to Christianity. However, she explained to the rest of the family how she didn’t like paying taxes that ended up paying other peoples debts (which by the way you don’t pay any tax money to pay anyone else’s debts, but, that’s another story). Well…if you’re a Christian nation you shouldn’t have any problem with that at all. You also shouldn’t have any objection to welfare for the poor, for children, for the unemployed, or for foreign nations who are drowning in poverty. And, I don’t know how they can be against health care for everyone. Not if you believe in the portion of Matthew I’ve referred to above.
“Whatever you did for the LEAST of these brothers of mine, you did for me!”
The Christian right needs to learn something before they decide they want to claim the United States as a Christian nation…they need to learn what actually is the RIGHT thing to do! (We’re talking to you Sarah Pallin).
35”For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, 36I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.'
37"Then the righteous will answer him, 'Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? 38When did we see you a stranger and invite you in, or needing clothes and clothe you? 39When did we see you sick or in prison and go to visit you?'
40"The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'”
The Tea Party is one of the foremost voices for the Christian Nation concept. Keep in mind…there is no (really no) historical evidence that the founding fathers ever intended to create a government of any religion. Quite to the contrary, they wanted to have religious freedom. That would be a country beholden to no religion. But, these right wing extremist don’t like the responsibility for anyone other than themselves.
I was recently having dinner with my aunt to prides herself on her devout commitment to Christianity. However, she explained to the rest of the family how she didn’t like paying taxes that ended up paying other peoples debts (which by the way you don’t pay any tax money to pay anyone else’s debts, but, that’s another story). Well…if you’re a Christian nation you shouldn’t have any problem with that at all. You also shouldn’t have any objection to welfare for the poor, for children, for the unemployed, or for foreign nations who are drowning in poverty. And, I don’t know how they can be against health care for everyone. Not if you believe in the portion of Matthew I’ve referred to above.
“Whatever you did for the LEAST of these brothers of mine, you did for me!”
The Christian right needs to learn something before they decide they want to claim the United States as a Christian nation…they need to learn what actually is the RIGHT thing to do! (We’re talking to you Sarah Pallin).
Saturday, April 17, 2010
THE FIRE DEPARTMENT
Paul Krugman in his April 16, New York Times column wrote “On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments.
Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform. In particular, he was objecting not to the existence of fire departments, but to legislation that would give the government the power to seize and restructure failing financial institutions. But it amounts to the same thing.
Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.
In his speech, Mr. McConnell seemed to be saying that in the future, the U.S. government should just let banks fail. We “must put an end to taxpayer funded bailouts for Wall Street banks.” What’s wrong with that?
The answer is that letting banks fail — as opposed to seizing and restructuring them — is a bad idea for the same reason that it’s a bad idea to stand aside while an urban office building burns. In both cases, the damage has a tendency to spread. In 1930, U.S. officials stood aside as banks failed; the result was the Great Depression. In 2008, they stood aside as Lehman Brothers imploded; within days, credit markets had frozen and we were staring into the economic abyss. So it’s crucial to avoid disorderly bank collapses, just as it’s crucial to avoid out-of-control urban fires.
Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.
So proposed reform legislation gives regulators “resolution authority,” which basically means giving them the ability to deal with the likes of Lehman in much the same way that the F.D.I.C. deals with conventional banks.”
In 1993 William Seidman (former Chairman of the FDIC) in his book “Full Faith and Credit” discussed his FDIC experience and the condition he found the FDIC in when he was appointed to the position as Chairman. He noticed that the division devoted to closing banks was woefully understaffed with permanent employees. As a result he determined that the FDIC needed a thousand employees, permanent staff, devoted to being ready to address bank failures in tough economic times. What Mr. Seidman said in his book was that he thought the FDIC needed these employees, even if they didn’t have anything to do, because as Mr. Seidman put it; “you don’t disband the fire department just because the town arsonist is in jail.”
Unfortunately, the incoming appointees by the George W. Bush Administration to the financial regulatory agencies came to office with an agenda. The agenda was a dismantling of the regulatory agencies. The agencies were downsized and the bank examiners were instructed to cut back on their examination time. The division at the FDIC devoted to closing banks was reduced to the size Mr. Seidman had sought to rectify and which he wrote about in his book. The purpose was simply to get the cat out of the house so the mice…or more aptly described “rats:…could have unfettered reign within the financial world. And…the result was the catastrophe we experienced in 2007 and 2008.
These examples by Paul Krugman and Bill Seidman are interesting metaphoric examples of the work of banking regulators. THE FIRE DEPARTMENT. These are good illustrations of the need for financial regulatory reform, why there needs to be regulators of financial institutions and, in my opinion, why there needs to be a Consumer Protection Agency. These rules, these employees, and these agencies are needed for times of economic turmoil. Bankers left to their own devices will NOT act in the best interest of you or the economy as a whole. They will be driven by greed, and have no recollection of the last financial debacle. They will go for the easy profit, the big salary, and have no compunction to bending the rules to meet their own greedy desires.
The bankers at the top of the major institutions are not willing to do the hard work of the finance business. That business is making one small loan at a time. They are after the big kill. Their attitude is why make a lot of small loans when we can make one big one…the easy route.
They do not understand that long term economic expansion is built on loaning lots of people small amounts of money. They do not understand economic expansion is loaning small amounts of money to purchase washing machines, televisions, computers, cars and houses. It takes underwriting the loans to insure that the borrower is not overextending themselves.
So…we need a good, well equipped, well trained fire department. This department will be structured around a focused Federal Reserve, competent auditors at the Office of the Comptroller of the Currency, State Banking Commissions, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration. Finally, we’ll need a capable staff at the FDIC and a newly created Consumer Protection Agency to shut down banks or other large companies who comprise systemic risk to the country.
The FIRE DEPARTMENT is the perfect metaphor for our predicament.
Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform. In particular, he was objecting not to the existence of fire departments, but to legislation that would give the government the power to seize and restructure failing financial institutions. But it amounts to the same thing.
Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.
In his speech, Mr. McConnell seemed to be saying that in the future, the U.S. government should just let banks fail. We “must put an end to taxpayer funded bailouts for Wall Street banks.” What’s wrong with that?
The answer is that letting banks fail — as opposed to seizing and restructuring them — is a bad idea for the same reason that it’s a bad idea to stand aside while an urban office building burns. In both cases, the damage has a tendency to spread. In 1930, U.S. officials stood aside as banks failed; the result was the Great Depression. In 2008, they stood aside as Lehman Brothers imploded; within days, credit markets had frozen and we were staring into the economic abyss. So it’s crucial to avoid disorderly bank collapses, just as it’s crucial to avoid out-of-control urban fires.
Since the 1930s, we’ve had a standard procedure for dealing with failing banks: the Federal Deposit Insurance Corporation has the right to seize a bank that’s on the brink, protecting its depositors while cleaning out the stockholders. In the crisis of 2008, however, it became clear that this procedure wasn’t up to dealing with complex modern financial institutions like Lehman or Citigroup.
So proposed reform legislation gives regulators “resolution authority,” which basically means giving them the ability to deal with the likes of Lehman in much the same way that the F.D.I.C. deals with conventional banks.”
In 1993 William Seidman (former Chairman of the FDIC) in his book “Full Faith and Credit” discussed his FDIC experience and the condition he found the FDIC in when he was appointed to the position as Chairman. He noticed that the division devoted to closing banks was woefully understaffed with permanent employees. As a result he determined that the FDIC needed a thousand employees, permanent staff, devoted to being ready to address bank failures in tough economic times. What Mr. Seidman said in his book was that he thought the FDIC needed these employees, even if they didn’t have anything to do, because as Mr. Seidman put it; “you don’t disband the fire department just because the town arsonist is in jail.”
Unfortunately, the incoming appointees by the George W. Bush Administration to the financial regulatory agencies came to office with an agenda. The agenda was a dismantling of the regulatory agencies. The agencies were downsized and the bank examiners were instructed to cut back on their examination time. The division at the FDIC devoted to closing banks was reduced to the size Mr. Seidman had sought to rectify and which he wrote about in his book. The purpose was simply to get the cat out of the house so the mice…or more aptly described “rats:…could have unfettered reign within the financial world. And…the result was the catastrophe we experienced in 2007 and 2008.
These examples by Paul Krugman and Bill Seidman are interesting metaphoric examples of the work of banking regulators. THE FIRE DEPARTMENT. These are good illustrations of the need for financial regulatory reform, why there needs to be regulators of financial institutions and, in my opinion, why there needs to be a Consumer Protection Agency. These rules, these employees, and these agencies are needed for times of economic turmoil. Bankers left to their own devices will NOT act in the best interest of you or the economy as a whole. They will be driven by greed, and have no recollection of the last financial debacle. They will go for the easy profit, the big salary, and have no compunction to bending the rules to meet their own greedy desires.
The bankers at the top of the major institutions are not willing to do the hard work of the finance business. That business is making one small loan at a time. They are after the big kill. Their attitude is why make a lot of small loans when we can make one big one…the easy route.
They do not understand that long term economic expansion is built on loaning lots of people small amounts of money. They do not understand economic expansion is loaning small amounts of money to purchase washing machines, televisions, computers, cars and houses. It takes underwriting the loans to insure that the borrower is not overextending themselves.
So…we need a good, well equipped, well trained fire department. This department will be structured around a focused Federal Reserve, competent auditors at the Office of the Comptroller of the Currency, State Banking Commissions, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration. Finally, we’ll need a capable staff at the FDIC and a newly created Consumer Protection Agency to shut down banks or other large companies who comprise systemic risk to the country.
The FIRE DEPARTMENT is the perfect metaphor for our predicament.
Sunday, April 11, 2010
WHICH IS IT, FAITH OR INDISPUTABLE EVIDENCE?
I just got back from church. One of the junior ministers at my Methodist Church was filling in for the senior pastor. The junior minister places great importance, apparently, on the need to KNOW the existence of God and Jesus. I find it interesting that many, if not most; Christians give so little necessity to FAITH, and so much to indisputable evidence. Modern day evangelical Christians insist that you must “know” God exists and Jesus defeated death and rose from his tomb, and you’re just dumb if you don’t profess this with absolute certainty. It is compelling to me that the foundation of Christianity is based on faith…and, really many modern day Christians place very little importance on it. What is faith if it’s indisputable evidence? It’s really not faith at all is it?
Many evangelical Christians do not have a clue that those outside our belief look at us as arrogant. Why? Because we go around insisting we KNOW this and that. The fact of the matter is we don’t know this or that. We BELIEVE this and that. “Believing” is what Christianity is all about. You have to take Christianity on faith. We want to treat those unbelievers as stupid, but they’re not stupid at all. In fact, they’re the ones taking the logical argument. As much as my Christian friends and family may demean this argument…it really isn’t logical that someone can come back to life after being dead three days and continue to live two thousand years later. It’s not illogical of those who say this can’t happen to come to that conclusion…they just don’t believe. Non-belief on its own is not stupid at all…it’s completely logical. That’s the way Christianity is supposed to work. You have to believe it without the facts to assure you.
We need to stop treating anyone who doesn’t believe like we do as though they were ignorant animals. From my perspective belief in God is a bit richer if I believe without proof as opposed to knowing as indisputable God’s existence. It’s the difference in doing “good” for goods sake rather than doing good because you’ll get a reward for doing good. I’ve often said I wouldn’t even go into work if they didn’t pay me…but, I’ll go play golf or play with my grandchildren even when I know I won’t get paid. Why…because I love my grandkids, and in a lesser sort of way love to play golf, or tennis or any of the things I like to do even though there’s nothing in it for me. My guess is a lot of Christians might not be interested in the faith at all if they didn’t think there was a reward at the end of their lives…heaven.
This junior minister noted that even the “demons” know. Probably true! That’s the difference, we mortals don’t know…we just have to believe. That’s exactly the way it’s supposed to be. If we had indisputable evidence it wouldn’t be faith…it would be empirical evidence. No faith is required for indisputable facts. You don’t need to believe in gravity…you only need to throw a rock up into the air.
All religions need to recognize that generally speaking they all serve the same God. So, why is it that they use their particular organized sect as a “team” that is supposed to defeat, even unto death, the other teams who…as I said before, worship the same God. Jews, Christians, and Muslims all worship the same God if you take the history of the Torah, Bible and Koran as historically accurate. The only difference in the organized religions is those who serve the monotheistic God, and those who are Polytheistic. So those who profess that there is only one God are basically on the same team…they just follow different prophets and place greater importance on the prophet they follow.
Unfortunately for reasons well beyond the tenets of their respective religions many of those followers think they have been instructed to destroy the followers of the competing prophets. However, isn’t it interesting that of each prophet’s teachings compassion for all God’s creation is at the core. Whether we’re Jew, Christian, or Muslim, we’re told to treat others like we want them to treat us. Every religions scripture has a similar instruction somewhere in its text. So, why do they choose to pursue destruction of the other’s religion…I’m going to go out on a limb with my thinking here and suggest “GREED.” It has nothing to do with the pursuit of their faith and everything to do with the pursuit of POWER.
Atrocious things have been done in the name of serving God. Every religion whether it be Judaism, Islam, and yes, Christianity (those crosses the KKK were burning didn’t connect them with the Hindus). Criminals on this earth have used God to excuse murder, prejudice, slavery and many other abuses of humanity. The perpetrators always want us to believe they are doing God’s will…that God told them to do whatever. Well…they aren’t doing God’s will…they’re serving their own purpose. Harboring child molesters in the name of saving a denominations perceived (or what’s left of it) good name is neither Christian or virtuous. And, how can a Christian with any conscience at all scoff at the idea of reducing nuclear weapons by 33%, and pledging not to attack a non-nuclear state with our nuclear weapons (the way Sarah Palin, the darling of the evangelical Christian right, did). Does she realize that a nuclear weapon will kill and maim children as well as any misfit government? Here again…it’s not about what God might be saying to anyone…it’s about the lust for power. God didn’t talk to George Bush anymore than he talks to me…and, God never lead me to believe that invading Iraq was his will. It was clearly George and Dick Cheney’s will.
There is not an explainable reason other than the lust for greed and ultimate power that prevents the world’s religions from getting along, and even working together. What religion wants to see a child suffer…whether it is by molestation of the clergy or nuclear holocaust?
We, in the Christian faith, have seen our religion hijacked by the commercialization of Christianity, mostly by conservative politics. It’s become the standard answer for why we go to war, why we shouldn’t pay taxes, why we shouldn’t provide healthcare to everyone, why we shouldn’t be good environmentalist, and why we need to believe totally in capitalism and nothing else. Modern evangelical Christianity and Roman Catholic churches are making plenty of money off commercial conservative Christianity. Why else would the Roman Catholic Church excuse child molestation in an effort to save face of the Roman Catholic Church…it’s about power, it’s about greed, and in Sarah Palin’s case of criticizing the reduction in nuclear weapons it’s about scoring what she thinks might be a political point. But it has nothing to do with anything God has or will say about anything to any particular person, religion, or denomination.
I am a believer! I’m a believer because I choose to be a believer. Those who choose not to believe are no worse or better than I am. I have no right to treat them indignantly. I may be wrong. They may be wrong. It’s to all of us who are Christians to give up our arrogance and realize that faith is absent fact. Because it’s absent fact we need to be at least willing to hear another point of view…in all humility. Who knows…God maybe talking to us!
Many evangelical Christians do not have a clue that those outside our belief look at us as arrogant. Why? Because we go around insisting we KNOW this and that. The fact of the matter is we don’t know this or that. We BELIEVE this and that. “Believing” is what Christianity is all about. You have to take Christianity on faith. We want to treat those unbelievers as stupid, but they’re not stupid at all. In fact, they’re the ones taking the logical argument. As much as my Christian friends and family may demean this argument…it really isn’t logical that someone can come back to life after being dead three days and continue to live two thousand years later. It’s not illogical of those who say this can’t happen to come to that conclusion…they just don’t believe. Non-belief on its own is not stupid at all…it’s completely logical. That’s the way Christianity is supposed to work. You have to believe it without the facts to assure you.
We need to stop treating anyone who doesn’t believe like we do as though they were ignorant animals. From my perspective belief in God is a bit richer if I believe without proof as opposed to knowing as indisputable God’s existence. It’s the difference in doing “good” for goods sake rather than doing good because you’ll get a reward for doing good. I’ve often said I wouldn’t even go into work if they didn’t pay me…but, I’ll go play golf or play with my grandchildren even when I know I won’t get paid. Why…because I love my grandkids, and in a lesser sort of way love to play golf, or tennis or any of the things I like to do even though there’s nothing in it for me. My guess is a lot of Christians might not be interested in the faith at all if they didn’t think there was a reward at the end of their lives…heaven.
This junior minister noted that even the “demons” know. Probably true! That’s the difference, we mortals don’t know…we just have to believe. That’s exactly the way it’s supposed to be. If we had indisputable evidence it wouldn’t be faith…it would be empirical evidence. No faith is required for indisputable facts. You don’t need to believe in gravity…you only need to throw a rock up into the air.
All religions need to recognize that generally speaking they all serve the same God. So, why is it that they use their particular organized sect as a “team” that is supposed to defeat, even unto death, the other teams who…as I said before, worship the same God. Jews, Christians, and Muslims all worship the same God if you take the history of the Torah, Bible and Koran as historically accurate. The only difference in the organized religions is those who serve the monotheistic God, and those who are Polytheistic. So those who profess that there is only one God are basically on the same team…they just follow different prophets and place greater importance on the prophet they follow.
Unfortunately for reasons well beyond the tenets of their respective religions many of those followers think they have been instructed to destroy the followers of the competing prophets. However, isn’t it interesting that of each prophet’s teachings compassion for all God’s creation is at the core. Whether we’re Jew, Christian, or Muslim, we’re told to treat others like we want them to treat us. Every religions scripture has a similar instruction somewhere in its text. So, why do they choose to pursue destruction of the other’s religion…I’m going to go out on a limb with my thinking here and suggest “GREED.” It has nothing to do with the pursuit of their faith and everything to do with the pursuit of POWER.
Atrocious things have been done in the name of serving God. Every religion whether it be Judaism, Islam, and yes, Christianity (those crosses the KKK were burning didn’t connect them with the Hindus). Criminals on this earth have used God to excuse murder, prejudice, slavery and many other abuses of humanity. The perpetrators always want us to believe they are doing God’s will…that God told them to do whatever. Well…they aren’t doing God’s will…they’re serving their own purpose. Harboring child molesters in the name of saving a denominations perceived (or what’s left of it) good name is neither Christian or virtuous. And, how can a Christian with any conscience at all scoff at the idea of reducing nuclear weapons by 33%, and pledging not to attack a non-nuclear state with our nuclear weapons (the way Sarah Palin, the darling of the evangelical Christian right, did). Does she realize that a nuclear weapon will kill and maim children as well as any misfit government? Here again…it’s not about what God might be saying to anyone…it’s about the lust for power. God didn’t talk to George Bush anymore than he talks to me…and, God never lead me to believe that invading Iraq was his will. It was clearly George and Dick Cheney’s will.
There is not an explainable reason other than the lust for greed and ultimate power that prevents the world’s religions from getting along, and even working together. What religion wants to see a child suffer…whether it is by molestation of the clergy or nuclear holocaust?
We, in the Christian faith, have seen our religion hijacked by the commercialization of Christianity, mostly by conservative politics. It’s become the standard answer for why we go to war, why we shouldn’t pay taxes, why we shouldn’t provide healthcare to everyone, why we shouldn’t be good environmentalist, and why we need to believe totally in capitalism and nothing else. Modern evangelical Christianity and Roman Catholic churches are making plenty of money off commercial conservative Christianity. Why else would the Roman Catholic Church excuse child molestation in an effort to save face of the Roman Catholic Church…it’s about power, it’s about greed, and in Sarah Palin’s case of criticizing the reduction in nuclear weapons it’s about scoring what she thinks might be a political point. But it has nothing to do with anything God has or will say about anything to any particular person, religion, or denomination.
I am a believer! I’m a believer because I choose to be a believer. Those who choose not to believe are no worse or better than I am. I have no right to treat them indignantly. I may be wrong. They may be wrong. It’s to all of us who are Christians to give up our arrogance and realize that faith is absent fact. Because it’s absent fact we need to be at least willing to hear another point of view…in all humility. Who knows…God maybe talking to us!
Friday, April 9, 2010
THE PARTY OF “HELL NO” AND WE DON’T APOLOGIZE!
Sarah Palin’s latest attempt to resurrect the Republican Party was sprinkled with the most unpatriotic advice one could find from someone who drapes themselves in the United States uniform and the flag.
First, the Party of “HELL, NO!” I’m assuming besides saying “hell no” to health care reform, which thank goodness is now law, that they will say “hell no” to financial regulatory reform, and “hell no” to attempting to stimulate the economy with more job creation legislation like tax cuts to same businesses for hiring out of work workers, and additional investments in our infrastructure ripe with withering roads, bridges, schools, libraries, state and local buildings. I’m assuming they will be saying “hell no” to retrofitting all government owned buildings with energy efficient devices that might lower our need for Middle East oil and create hundreds of thousands of new jobs. They will surely be saying “hell no” to tax incentives to develop solar, wind and new battery technology for additional sources of energy. They weren’t satisfied with being just the party of NO…Bobby Jindal, Sarah Palin, and John McCain (most surprising of all) want to be the party of “Hell No!” Their words…not mine!
Then the next little gem out of, the “half term” governor of Alaska, Sarah Pallin’s mouth was we’re American’s…we don’t apologize. All of you and any of your friends who happen to read this blog need to ask yourselves…is that what your families taught you…never apologize? Did your mother, father, grandmother, grandfather, aunts and uncles really tell you never to apologize? Probably not! Most of use grew up in families that when we misbehaved our mother’s marched us over to the offended party with our ear lobes in her hand while she waited and we told the person we wronged that we “APOLOGIZED” for what we’ve done. It’s an act of humility. And Sarah, the mental midget that she is, needs to explain to us why this is not an American value. It certainly makes me wonder exactly what kind of a “Christian” household Sarah grew up in and now lauds…refuses to apologize. Since when did arrogance become a virtue?
The Party of “Hell No” is not the country of “old fashioned” values they purport to be. When I was young my parents taught me that apologizing was the “right” thing to do. But, apparently today…it’s just the “left” thing to do!
A final dig at the Alaskan Governor who’s most well known characteristic is that she is a quitter…being a half term Governor as her crowning moment. She has described her most fond motto as “don’t retreat…RELOAD!” But, what really qualifies her as dumb is that she insists even as she expels this motto that it’s not a call to violence. YES IT IS! Words matter Sarah! You are certainly dumb enough to believe that “reload” is just innocuous…but, it’s not Sarah. There are people dumb enough to hang on your every word who believe it is just a demonstration of their second amendment rights to bring a loaded weapon to a political event attended by the President of the United States looking for a chance to fire that weapon. You’ve instructed them to reload. And, to think these people are the bastions of Christianity (at least as they see it). If you really want a biblical example you might try “turn the other cheek” rather that “reload.”
If you really want to see a totalitarian government, just elect the Tea Party to power. These people don’t believe in liberty or democracy…they want to tell you what you can and can’t do. And, speaking of death panels…if you can’t afford to pay for health benefits you will die under their heavy hand.
First, the Party of “HELL, NO!” I’m assuming besides saying “hell no” to health care reform, which thank goodness is now law, that they will say “hell no” to financial regulatory reform, and “hell no” to attempting to stimulate the economy with more job creation legislation like tax cuts to same businesses for hiring out of work workers, and additional investments in our infrastructure ripe with withering roads, bridges, schools, libraries, state and local buildings. I’m assuming they will be saying “hell no” to retrofitting all government owned buildings with energy efficient devices that might lower our need for Middle East oil and create hundreds of thousands of new jobs. They will surely be saying “hell no” to tax incentives to develop solar, wind and new battery technology for additional sources of energy. They weren’t satisfied with being just the party of NO…Bobby Jindal, Sarah Palin, and John McCain (most surprising of all) want to be the party of “Hell No!” Their words…not mine!
Then the next little gem out of, the “half term” governor of Alaska, Sarah Pallin’s mouth was we’re American’s…we don’t apologize. All of you and any of your friends who happen to read this blog need to ask yourselves…is that what your families taught you…never apologize? Did your mother, father, grandmother, grandfather, aunts and uncles really tell you never to apologize? Probably not! Most of use grew up in families that when we misbehaved our mother’s marched us over to the offended party with our ear lobes in her hand while she waited and we told the person we wronged that we “APOLOGIZED” for what we’ve done. It’s an act of humility. And Sarah, the mental midget that she is, needs to explain to us why this is not an American value. It certainly makes me wonder exactly what kind of a “Christian” household Sarah grew up in and now lauds…refuses to apologize. Since when did arrogance become a virtue?
The Party of “Hell No” is not the country of “old fashioned” values they purport to be. When I was young my parents taught me that apologizing was the “right” thing to do. But, apparently today…it’s just the “left” thing to do!
A final dig at the Alaskan Governor who’s most well known characteristic is that she is a quitter…being a half term Governor as her crowning moment. She has described her most fond motto as “don’t retreat…RELOAD!” But, what really qualifies her as dumb is that she insists even as she expels this motto that it’s not a call to violence. YES IT IS! Words matter Sarah! You are certainly dumb enough to believe that “reload” is just innocuous…but, it’s not Sarah. There are people dumb enough to hang on your every word who believe it is just a demonstration of their second amendment rights to bring a loaded weapon to a political event attended by the President of the United States looking for a chance to fire that weapon. You’ve instructed them to reload. And, to think these people are the bastions of Christianity (at least as they see it). If you really want a biblical example you might try “turn the other cheek” rather that “reload.”
If you really want to see a totalitarian government, just elect the Tea Party to power. These people don’t believe in liberty or democracy…they want to tell you what you can and can’t do. And, speaking of death panels…if you can’t afford to pay for health benefits you will die under their heavy hand.
Wednesday, March 24, 2010
EVERYTHING YOU NEVER WANTED TO KNOW ABOUT DEBTS AND DEFICITS
I’m not accustomed to promoting spending beyond your means. Like most Americans, I borrowed when I needed to and always considered my ability to repay my obligations. So, it’s naturally compelling when I hear the patriotic calls from conservatives for the United States Government to conduct their financial affairs similar to the way our citizens conduct their personal financial affairs. It all seems reasonable…right? Not really.
Make no mistake…there are times when the government should seek to go heavier on borrowing and other times when the government should go stronger on savings. One such opportunity was missed in the first decade of the 21st century. When the year two thousand rolled around the United States government was spending about $300 billion less than they were taking in. Republicans gained control of the White House, Senate, and House of Representatives. They promptly cut taxes to the richest two percent of the country reversing what could have been a $3 trillion dollar surplus over the next ten years reducing what was a $5 trillion debt, and turned it into an additional $1.2 trillion of debt. Then, they lurched into an unnecessary war against the weakest of adversaries creating an additional $1 trillion of debt and the loss of 4000 additional precious souls of our military and hundreds of thousands of Iraqi’s. Those are the years we should have been saving…but, we were spending frivolously.
Now…things are different. Twentieth-century British economist, John Maynard Keynes argued in 1930 that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocated active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The theories forming the basis of Keynesian economics were presented in The General Theory of Employment, Interest and Money, published in 1936. He advocated interventionist economic policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics. Simply put, Keynes believed, and was proven right by means of the recovery from the Great Depression, when he advocated the government should spend money to stimulate the economy when the private sector doesn’t, or can’t.
Recently the New York Times in their editorial of February 7, 2010, the Nation magazine in their March 22, 2010 issue, and Time magazine in its March 15, 2010 edition has expounded on the debt and deficit. The Nation and Time articles were particularly interesting in that they were composed by James K Galbraith, economist and professor at the University of Texas, and Zachary Karabell, president of River Twice Research. Mr. Galbraith is the son of John Kenneth "Ken" Galbraith, who was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. Yeah…and his son teaches at the University of Texas…fact is stranger than fiction.
The aggregation of these writings advocates the following conclusions. Mr Karabell writes that “the numbers are undoubtedly daunting, with projections of total gross debt reaching 100% of U.S. gross domestic product (GDP) this year or next and surging every year thereafter. But, the debt is probably not as much of a problem as the anxiety we have worked up about the debt.” The amount the country pays to service the national debt isn’t particularly onerous. Interest payments in 2010, (expected to be $500 billion), are not much different in inflation-adjusted terms from what servicing cost 20 years ago, especially to GDP. The same is true for household debt, which has shot up astronomically in dollars but consumes about the same percentage of household income to service as it did in the 1990’s. Said differently, we’re paying about the same percentage of our income to service debt as we did 20 years ago.
The reason we can afford such large debts is that interest rates are so low. At the beginning of 2000, it cost the U.S. government more than 6.5% to borrow money. It now cost less the 2.5%. Relative to the size of the economy, the debt isn’t particularly high by global standards. Of course, we have to be concerned that one day those rates could go up.
Many are concerned with the amount of borrowing from China. I, personally, think there is another argument to this worry. As, I’ve written before in this blog…when you owe the bank $100,000 they own you…when you owe the bank $100 million you own them. The same thing can be said for China. They are in the same boat with us, like it or not. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a long time, which in turn means that our debts, however big, can be managed. And, for those of you who have heard the recent threats that the rating agencies might down-grade U.S. Treasuries from their current rate of Aaa…well, China can’t exactly stand for that either. Though eliminating deficits might seem wise, it could actually be fatal to future prosperity. We have to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end, provided the Administration and Congress shows it can effectively channel that money.
Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public…a bit of a surprising fact. As incredible as this is…the debt the government owes itself can simply be rolled over endlessly. As long as the dollar remains central to the global system, and there is little chance of that changing in the next decade, the government will have the latitude to borrow more than most other countries.
America’s indebtedness would be sustainable and even healthy if the underlying economy were vibrant, innovative and strong and if federal and state governments could channel those moneys productively and quickly. The problem isn’t how much debt we’re carrying today; it’s whether the economy of tomorrow will be able to justify it. And, as I have previously written, it’s widely recognized that if we could reduce the unemployment rate to 4% the deficit would completely disappear. America isn’t investing enough in its future. We are failing to mobilize resources to improve our health care and infrastructure and stay competitive in global economy that is more clamorous than ever. Hopefully, with the signing of health care legislation on March 23, 2010 (now a very famous day in history and one we should all mark down) perhaps we’ve begun to address the healthcare solution.
James Galbraith goes further…he is concerned with what might happen if a deficit reduction attitude infects the recession’s recovery position we now find ourselves in. He believes a big deficit-reduction program would destroy the economy that remains after the Great Recession. To cut current deficits without rebuilding the private credit system is a sure path to stagnation and probably a second recession. This, Galbriath is surely correct about. Until financial regulatory reform takes place all the same factors remain in place for another crushing financial meltdown…the next one being worst than the last. As sure as the sun will come up tomorrow the financial titans who bought us down in 2007 and 2008 will bring us down again. I work with these people every day. They are as clueless today as they were in 2006. They do not get it!!!
We need to re-establish strong growth and high employment. There are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. That’s basically all there is. Governments and banks are the two entities with the ability to create something from nothing. If total spending power is to grow, one or the other of these two great financial institutions has to be involved.
Here are the undisputable facts of Galbraith’s argument. DEFICITS PUT MONEY IN PRIVATE POCKETS. They own that cash free and clear and they can spend it however they see fit. But, bankers don’t like budget deficits because they compete with bank loans as a source of growth. When banks loan you money it’s not free and clear because you have an obligation to pay THEM first…principal and INTEREST. Wall Street labors hard to confuse the issues. They never thought to warn you about the financial crisis they were creating. These same financial geniuses are warning of the impending bankruptcy of Social Security, Medicare, even the United States itself. Remember, the rating agencies who were publically anointing sub-prime mortgage securities as Aaa securities are now warning that the United States might lose the same rating.
This is where Galbraith takes on a notion that is in contradiction to how we manage our personal debt. The notion that the burdens of public debts will impose burdens on our grandchildren. All of this forms part of one of the great misinformation campaigns of all time. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But, Galbraith insists, “it’s not.” In these matters the public and private sector differ on a very basic point. Your family needs income in order to pay its debts. Your government does not. With government, the risk of nonpayment does not exist. Government does not need to have cash on hand. It is possible that government may spend imprudently. Too much spending may lead to inflation, usually by depreciation of currency…but, with the world in recession there is not an immediate risk. No government can be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts.
Galbraith insists public debt is not a burden on future generations. Public debt does not ever have to be repaid. Governments do not die…except in war or revolution, and when that happens, their debts are moot. In the entire history of the United States public debt has increased on all but about six short occasions, with each surplus followed by a recession. These debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts which merely transfer income from one part of the private sector to another. Social Security and Medicare are government programs that cannot go bankrupt and cannot fail to meet their obligations unless Congress decides.
Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits, which is what happened in the 1990’s. A credit collapse kills the tax base and generates more spending, which is what’s happening now, and big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. If we could revive lending we should do it up to a point. Decentralized and competitive banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients is good for the economy. However, right now we don’t have functioning big banks. We have “too big to fail,” incompetently run banks. Galbraith believes that all the deficit hysteria is intended to divert attention from dysfunctions of private banking, and is helpful in distracting us from doing meaningful financial reform.
Finally, The New York Times brings a meaningful conclusion. The Times states, “the cold hard economic truth is this; at a time of high unemployment and fragile growth, the last thing which government should do is to slash spending. That will only drive the economy into deeper trouble.” “Spending without taxing is a recipe for huge deficits and running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts.” And, “once a deep recession takes hold, slashing government spending is not going to solve the problem. It only makes is worse.”
The Times offers the following as evidence of stimulus spending by the government having a position effect on a contracting economy. “The stimulus package slowed job losses and helped spur activity – in the third quarter of 2009, the economy grew at an annual rate of 2.2%, and the initial fourth-quarter reading was 5.7%, a rebound few thought possible.”
I’ve said this before but it is worth repeating. Being a deficit hawk in a time of severe economic contraction is like be a water conservationist while your house is on fire. There are times to manage your debt as an individual, and as a country. But, the characteristics are different for us as individuals as opposed to us as a government.
These collective writings from the editors of the New York Times, Zackary Karabell, and James Galbraith are a compelling argument against those conservatives who have seen the light since Barrack Obama was elected. The conservatives might have a point…but, they have it all backwards.
Make no mistake…there are times when the government should seek to go heavier on borrowing and other times when the government should go stronger on savings. One such opportunity was missed in the first decade of the 21st century. When the year two thousand rolled around the United States government was spending about $300 billion less than they were taking in. Republicans gained control of the White House, Senate, and House of Representatives. They promptly cut taxes to the richest two percent of the country reversing what could have been a $3 trillion dollar surplus over the next ten years reducing what was a $5 trillion debt, and turned it into an additional $1.2 trillion of debt. Then, they lurched into an unnecessary war against the weakest of adversaries creating an additional $1 trillion of debt and the loss of 4000 additional precious souls of our military and hundreds of thousands of Iraqi’s. Those are the years we should have been saving…but, we were spending frivolously.
Now…things are different. Twentieth-century British economist, John Maynard Keynes argued in 1930 that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocated active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The theories forming the basis of Keynesian economics were presented in The General Theory of Employment, Interest and Money, published in 1936. He advocated interventionist economic policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics. Simply put, Keynes believed, and was proven right by means of the recovery from the Great Depression, when he advocated the government should spend money to stimulate the economy when the private sector doesn’t, or can’t.
Recently the New York Times in their editorial of February 7, 2010, the Nation magazine in their March 22, 2010 issue, and Time magazine in its March 15, 2010 edition has expounded on the debt and deficit. The Nation and Time articles were particularly interesting in that they were composed by James K Galbraith, economist and professor at the University of Texas, and Zachary Karabell, president of River Twice Research. Mr. Galbraith is the son of John Kenneth "Ken" Galbraith, who was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. Yeah…and his son teaches at the University of Texas…fact is stranger than fiction.
The aggregation of these writings advocates the following conclusions. Mr Karabell writes that “the numbers are undoubtedly daunting, with projections of total gross debt reaching 100% of U.S. gross domestic product (GDP) this year or next and surging every year thereafter. But, the debt is probably not as much of a problem as the anxiety we have worked up about the debt.” The amount the country pays to service the national debt isn’t particularly onerous. Interest payments in 2010, (expected to be $500 billion), are not much different in inflation-adjusted terms from what servicing cost 20 years ago, especially to GDP. The same is true for household debt, which has shot up astronomically in dollars but consumes about the same percentage of household income to service as it did in the 1990’s. Said differently, we’re paying about the same percentage of our income to service debt as we did 20 years ago.
The reason we can afford such large debts is that interest rates are so low. At the beginning of 2000, it cost the U.S. government more than 6.5% to borrow money. It now cost less the 2.5%. Relative to the size of the economy, the debt isn’t particularly high by global standards. Of course, we have to be concerned that one day those rates could go up.
Many are concerned with the amount of borrowing from China. I, personally, think there is another argument to this worry. As, I’ve written before in this blog…when you owe the bank $100,000 they own you…when you owe the bank $100 million you own them. The same thing can be said for China. They are in the same boat with us, like it or not. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a long time, which in turn means that our debts, however big, can be managed. And, for those of you who have heard the recent threats that the rating agencies might down-grade U.S. Treasuries from their current rate of Aaa…well, China can’t exactly stand for that either. Though eliminating deficits might seem wise, it could actually be fatal to future prosperity. We have to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end, provided the Administration and Congress shows it can effectively channel that money.
Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public…a bit of a surprising fact. As incredible as this is…the debt the government owes itself can simply be rolled over endlessly. As long as the dollar remains central to the global system, and there is little chance of that changing in the next decade, the government will have the latitude to borrow more than most other countries.
America’s indebtedness would be sustainable and even healthy if the underlying economy were vibrant, innovative and strong and if federal and state governments could channel those moneys productively and quickly. The problem isn’t how much debt we’re carrying today; it’s whether the economy of tomorrow will be able to justify it. And, as I have previously written, it’s widely recognized that if we could reduce the unemployment rate to 4% the deficit would completely disappear. America isn’t investing enough in its future. We are failing to mobilize resources to improve our health care and infrastructure and stay competitive in global economy that is more clamorous than ever. Hopefully, with the signing of health care legislation on March 23, 2010 (now a very famous day in history and one we should all mark down) perhaps we’ve begun to address the healthcare solution.
James Galbraith goes further…he is concerned with what might happen if a deficit reduction attitude infects the recession’s recovery position we now find ourselves in. He believes a big deficit-reduction program would destroy the economy that remains after the Great Recession. To cut current deficits without rebuilding the private credit system is a sure path to stagnation and probably a second recession. This, Galbriath is surely correct about. Until financial regulatory reform takes place all the same factors remain in place for another crushing financial meltdown…the next one being worst than the last. As sure as the sun will come up tomorrow the financial titans who bought us down in 2007 and 2008 will bring us down again. I work with these people every day. They are as clueless today as they were in 2006. They do not get it!!!
We need to re-establish strong growth and high employment. There are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. That’s basically all there is. Governments and banks are the two entities with the ability to create something from nothing. If total spending power is to grow, one or the other of these two great financial institutions has to be involved.
Here are the undisputable facts of Galbraith’s argument. DEFICITS PUT MONEY IN PRIVATE POCKETS. They own that cash free and clear and they can spend it however they see fit. But, bankers don’t like budget deficits because they compete with bank loans as a source of growth. When banks loan you money it’s not free and clear because you have an obligation to pay THEM first…principal and INTEREST. Wall Street labors hard to confuse the issues. They never thought to warn you about the financial crisis they were creating. These same financial geniuses are warning of the impending bankruptcy of Social Security, Medicare, even the United States itself. Remember, the rating agencies who were publically anointing sub-prime mortgage securities as Aaa securities are now warning that the United States might lose the same rating.
This is where Galbraith takes on a notion that is in contradiction to how we manage our personal debt. The notion that the burdens of public debts will impose burdens on our grandchildren. All of this forms part of one of the great misinformation campaigns of all time. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But, Galbraith insists, “it’s not.” In these matters the public and private sector differ on a very basic point. Your family needs income in order to pay its debts. Your government does not. With government, the risk of nonpayment does not exist. Government does not need to have cash on hand. It is possible that government may spend imprudently. Too much spending may lead to inflation, usually by depreciation of currency…but, with the world in recession there is not an immediate risk. No government can be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts.
Galbraith insists public debt is not a burden on future generations. Public debt does not ever have to be repaid. Governments do not die…except in war or revolution, and when that happens, their debts are moot. In the entire history of the United States public debt has increased on all but about six short occasions, with each surplus followed by a recession. These debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts which merely transfer income from one part of the private sector to another. Social Security and Medicare are government programs that cannot go bankrupt and cannot fail to meet their obligations unless Congress decides.
Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits, which is what happened in the 1990’s. A credit collapse kills the tax base and generates more spending, which is what’s happening now, and big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. If we could revive lending we should do it up to a point. Decentralized and competitive banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients is good for the economy. However, right now we don’t have functioning big banks. We have “too big to fail,” incompetently run banks. Galbraith believes that all the deficit hysteria is intended to divert attention from dysfunctions of private banking, and is helpful in distracting us from doing meaningful financial reform.
Finally, The New York Times brings a meaningful conclusion. The Times states, “the cold hard economic truth is this; at a time of high unemployment and fragile growth, the last thing which government should do is to slash spending. That will only drive the economy into deeper trouble.” “Spending without taxing is a recipe for huge deficits and running big deficits when the economy is expanding only sets the country up for bigger deficits when the economy contracts.” And, “once a deep recession takes hold, slashing government spending is not going to solve the problem. It only makes is worse.”
The Times offers the following as evidence of stimulus spending by the government having a position effect on a contracting economy. “The stimulus package slowed job losses and helped spur activity – in the third quarter of 2009, the economy grew at an annual rate of 2.2%, and the initial fourth-quarter reading was 5.7%, a rebound few thought possible.”
I’ve said this before but it is worth repeating. Being a deficit hawk in a time of severe economic contraction is like be a water conservationist while your house is on fire. There are times to manage your debt as an individual, and as a country. But, the characteristics are different for us as individuals as opposed to us as a government.
These collective writings from the editors of the New York Times, Zackary Karabell, and James Galbraith are a compelling argument against those conservatives who have seen the light since Barrack Obama was elected. The conservatives might have a point…but, they have it all backwards.
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