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02-05-2009, 04:24 PM | #1 |
Master of Karate and Friendship
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The "Stimuluses"
CNN || Commentary: Libertarian ideas to stimulate economy
Commentary: Libertarian ideas to stimulate economy By Jeffrey A. Miron Special to CNN img UPDATED: 10:12 AM EST 02.05.09 CAMBRIDGE, Massachusetts (CNN) When libertarians question the merit of President Obama's stimulus package, a frequent rejoinder is, "Well, we have to do something." This is hardly a persuasive response. If the cure is worse than the disease, it is better to live with the disease. In any case, libertarians do not argue for doing nothing; rather, they advocate eliminating or adjusting policies that are bad for the economy independent of the recession. Here is a stimulus package that libertarians can endorse: Repeal the Corporate Income Tax: Repeal would spur investment, improve the transparency of corporate accounting, slash compliance costs, and avoid the distortions caused by the special-interest provisions in the tax code. Repeal can work fast, by raising companies' share prices, increasing cash flow, and allowing corporations to lessen their need for bank lending. Thus repeal provides short-run stimulus and enhances long-run efficiency. Recent estimates suggest that tax cuts are at least as effective as spending increases in raising GDP. The adverse impact on the deficit is likely to be less than the $300-$350 billion in revenue the corporate tax takes in per year, since repeal spurs growth and therefore the revenue from other taxes. Increase Carbon Taxes While Lowering Marginal Tax Rates: Reasonable people disagree about how much the U.S. should reduce its use of fossil fuels, but crowded highways, air pollution, and global warming all suggest that some reduction is desirable. The effective way to accomplish this is higher gasoline or other carbon taxes, not the messy, complicated green spending in the Obama plan that will morph into pork in many cases. If higher carbon taxes are combined with lower marginal tax rates, the private sector faces better incentives on both counts. This approach avoids the higher deficits implied by Obama's green initiatives. Moderate the Growth of Entitlements: The elephant in the room amidst the stimulus debate is the impending imbalance in Social Security and Medicare as the baby boom generation moves into retirement. Without reductions in benefits, taxes will have to increase substantially, generating a major drag on the U.S. economy. A reasonable response is to raise the age of eligibility for Social Security and Medicare, consistent with the increases in life expectancy and health that have occurred in past decades. This restructuring would reassure markets about the U.S.'s long-run fiscal balance. This means foreigners will continue to be willing to hold U.S. debt, so U.S. borrowing costs will remain moderate. Eliminate Wasteful Spending: Most discussion of the stimulus focuses on areas where, according to proponents, government spending should be higher. Much current expenditure, however, is wasteful. Examples ******* agricultural subsidies, bloated transportation projects like the Big Dig in Boston, misguided infrastructure projects like the New Orleans levees (why encourage people to live below sea level?), ineffective weapons systems, pork barrel spending, and subsidies for Amtrak and the Post Office (buses are more efficient than railways, and Fedex is more efficient than the Post Office). Everyone knows the U.S.'s long-run deficit picture is dismal. We should address this by cutting inefficient spending now. Withdraw from Iraq and Afghanistan: President Obama plans to withdraw U.S. forces from Iraq over the next eighteen months, while expanding U.S. involvement in Afghanistan. It is hard to see, however, that any good arises from dragging out our Iraq exit or from staying in Afghanistan. The government should move toward faster withdrawal, and from both countries. The U.S. can redeploy these troops where useful, or release the resources to civilian uses. Limit Union Power: Later this year, Congress is likely to vote on the card check bill, a new law that facilitates unionization. The law eliminates the presumption of a secret ballot, which means union organizers can pressure employees into accepting representation. Laws that protect unions are problematic. Unions raise wages above market levels, increasing unemployment. Thus the Obama administration can signal American business that it cares about efficiency, not just redistribution of wealth, by opposing the card check bill. Better yet, it can repeal the Davis-Bacon Act, which inflates labor costs in federal contracts. Renew the U.S. Commitment to Free Trade: One crucial danger in the current environment is that the U.S. and other countries will embrace protectionist policies. The U.S. enacted prohibitive tariffs during the Great Depression, and many trading partners retaliated. World trade plummeted, contributing to the economic misery. The Obama fiscal stimulus risks reviving this insanity, since both the House and Senate bills require that certain stimulus-funded projects use U.S. equipment and goods. The administration should oppose these provisions. More generally, President Obama and his economic advisors should state -- no, scream -- that America is unambiguously committed to free trade. Expand Legal Immigration: Radical changes in immigration policy seem unlikely in the near future, but one specific change is compelling: an increased quota for H-1B visas, which go to workers with technical skills seeking employment in U.S. industry. The annual quota for such visas was 195,000 as recently as 2000, but it now stands at only 65,000. A major increase in this quota would be a boon to American scientific and engineering productivity. More broadly, expanding immigration is the most effective method the U.S. has for aiding poor citizens of foreign countries and for influencing repressive governments. Stop Bailing out Businesses that Took on Too Much Risk: Popular opinion blames deregulation and private sector greed for the financial meltdown, but the reality is more subtle. Existing regulation was ineffective at preventing excessive risk-taking, and the private sector did its best to profit from the incentives that were in place. The extreme increase in risk-taking, however, would not have occurred absent policies that encouraged such risk (e.g., Fannie Mae or the Fed's reassurances about housing bubbles) or past bailouts that cushioned the losses from private risk-taking. One crucial response to any crisis is learning to avoid the next one. The lesson this time is that rewarding risk generates more risk. The U.S. should therefore stop bailing out banks, automakers, homeowners, or anyone else. The libertarian view, then, is that many desirable policy changes involve less government, not more. Even changes that are inconsistent with the Keynesian stimulus framework, such as reductions in military spending, make sense when the spending is wasteful. It is tempting to believe that every problem has a solution, but the reality is not so nice. It is possible, even likely, that the best we can do is fix things we know how to fix, and then get out of the way. This may not ameliorate the current situation, but it avoids making things worse. In economics as in medicine -- first, do no harm. The opinions expressed in this commentary are solely those of Jeffrey Miron. |
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02-05-2009, 06:03 PM | #2 |
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did you read that at all because i'm going to bet you just saw the headline and cut and pasted it.
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02-05-2009, 07:26 PM | #3 |
Master of Karate and Friendship
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Of course I did. I disagree with a couple of points but overall it's a hell of a lot better than what's currently proposed.
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02-06-2009, 11:12 AM | #4 |
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I believe the part about getting rid of the "buy American" clause. That alone would really improve the quality and lower the cost of what is being purchased in this bill. The south Koreans are capable of making some things that are vastly superior to the comparable US product, and they should not be kept out of this process. Same is true with Japan and Germany.
This guy is on the right track but is still wrong. The only way to truly stimulate the economy would be to bring all federal taxes down to 0% for 2 years, including corporate, income, and capital gains taxes. No income tax at all, not even on rich people. Then you have a small 3% national sales tax on all items, and use that money to service the debt for the next to years. All other government spending is financed for 2 years. This would spark the greatest rebound since mankind existed. |
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02-06-2009, 12:32 PM | #5 |
ghost
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amazing why didn't anyone think of this before
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02-06-2009, 02:23 PM | #6 |
Master of Karate and Friendship
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02-07-2009, 04:23 AM | #7 |
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that and the fact that nobody wants to know what happens when a country goes bankrupt.
i mean someone has to pay for the federal budget and if we suspend federal income taxes we're still taking out a trillion dollar loan so fuck are you really this dumb |
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02-07-2009, 06:50 AM | #8 |
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02-07-2009, 12:28 PM | #9 |
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Only positive of this bill is the housing stimulus we were able to get pushed through.
That'll be more beneficial than anything else in this heaping pile of shit. |
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02-07-2009, 12:48 PM | #10 |
ghost
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the $15,000 housing credit is just screaming for abuse by house flippers.
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02-07-2009, 01:00 PM | #11 |
Netphoria's George Will
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It must be repaid (with interest, in some cases) if the house is sold/transferred within two years.
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02-07-2009, 01:13 PM | #12 |
ghost
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how many people are going to game this by selling their home to a relative or friend just to get that 15k?
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02-07-2009, 01:42 PM | #13 |
Netphoria's George Will
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Maybe 1 or 2 percent? Even by doing so, it's creating income for a huge sector (arguably the most important in the country) that is in desperate need of a lift.
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02-07-2009, 02:55 PM | #14 |
ghost
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i hope your right. It will at least push anybody that is sitting on the fence to buy a home, but its not like there's a housing shortage. I don't imagine that this will actually spur more houses to be built since the supply is elastic.
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02-07-2009, 08:29 PM | #15 |
Netphoria's George Will
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It'll help the massive unsold inventory, which will down the road lead to new home construction. In order to get there, though, the unsold inventory has to go.
This will greatly enhance that key opportunity. |
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02-07-2009, 09:01 PM | #16 |
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is there any other economy in the world that depends so much on new houses?
this is ridiculous. |
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02-07-2009, 09:54 PM | #17 |
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The scary thing about this stimulus is that we are basically letting other countries (i.e. China) own an even bigger chunk of the US, because we sure as hell don't have the money.
But if we do NOTHING, the consequences are even worse. It's a damned if you do, fucked if you don't kind of situation. And it scares the shit out of me. Economically speaking, America is going down the spiral fast... What is this country going to look like in ten years? |
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02-08-2009, 04:26 AM | #18 |
The Man of Tomorrow
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I wont pretend to know economic theory to the level of some of you. Its clear there are the two camps on this, I lean on the krugman/keynesian side. Either way, a bill that tries to do some of each strikes me as fairly stupid. It's doing something half-assed, half of which wont really work to begin with (regardless of which side is right). That seems to be what this bill is. I mean that was some great sounding rhetoric Obama gave before the dems the other day, and yet we end with this muddled garbage (surprising..). Rightly criticizes the past 8 yrs, but starts out compromising before they even attack the bill. I hope the Krugman side is wrong, then maybe things aren't so fucked.
What the centrists have wrought - Paul Krugman Blog - NYTimes.com What the centrists have wrought I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus. The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts. According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger. Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out. My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years. The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad. |
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02-08-2009, 09:28 AM | #19 |
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It shocks me that the reasons for the collapse are so obvious, and the proposed solutions have failed numerous times in both our recent history and the recent history of other countries, and yet still this is the course we are pursuing. The ignorance of the general public and the stubbornness and arrogance of those in power is incredible.
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02-08-2009, 11:06 AM | #20 |
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maybe we could make better decisions if economy wasn't so damn boring and complicated
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02-08-2009, 05:04 PM | #21 | |
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Quote:
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02-08-2009, 07:03 PM | #22 | |
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So yes, you can say - "but they didn't nationalise the banks" or some other "more socialist" measure - but nationalising the banks (or whatever measure) is in principle the same philosophically as, say, creating Fannie and Freddie and giving them supra-market power. The deduction here is that "taking the socialist ideal farther" would have made things worse. |
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02-08-2009, 08:16 PM | #23 |
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02-09-2009, 12:25 AM | #24 | |
ghost
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Anybody who tries to pin the housing crisis on Fannie Mae and Freddie Mac don't know what they are talking about.
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02-09-2009, 01:33 AM | #25 |
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Paul Krugman says the package is too small, and Republicans say it's too big.
Stimulus will lead to 'disaster,' Republican warns - CNN.com WASHINGTON (CNN) -- Leading Republicans warned Sunday that the Obama administration's $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster." The country will "pay dearly" if it executes the president's stimulus plans, Sen. Richard Shelby says. "Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We'll pay dearly." Shelby, of Alabama, told CNN's "State of the Union" that the package and efforts to shore up the struggling banking system will put the United States on "a road to financial disaster." But Lawrence Summers, the head of the administration's National Economic Council, said Republicans have lost their credibility on the issue. "Those who presided over the last eight years -- the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that's collapsing more rapidly than at any time in the last 50 years -- don't seem to me in a strong position to lecture about the lessons of history," Summers told ABC's "This Week." President Barack Obama, his advisers and the Democratic leaders of Congress argue the roughly $830 billion measure will help pull the U.S. economy out of its current skid. Much of the package involves infrastructure spending, long-term energy projects and aid to cash-strapped state and local governments. The nonpartisan Congressional Budget Office reported last week that the measure is likely to create between 1.3 million and 3.9 million jobs by the end of 2010, lowering a projected unemployment rate of 8.7 percent by up to 2.1 percentage points. But the CBO warned the long-term effect of that much government spending over the next decade could "crowd out" private investment, lowering long-term economic growth forecasts by 0.1 percent to 0.3 percent by 2019. In a concession to Republicans, about a third of the bill involves tax cuts. But the measure is expected to have only minimal GOP support when it goes to a scheduled vote early this week. Video Watch South Carolina Gov. Mark Sanford warn of "disastrous consequences » The version of the bill that passed the House of Representatives had no Republican votes. "We need to spend money on infrastructure and on other programs that will immediately put people to work. But this is not it," said Sen. John McCain, R-Arizona, last year's GOP presidential nominee. Senators reached a tentative agreement Friday on a compromise bill largely negotiated by a handful of moderate Republicans whose votes are needed to prevent a filibuster. But McCain told CBS' "Face the Nation" that the package should have been about half the size of the one now before senators, and should be balanced between tax cuts and spending. "We're going to amass the largest debt in the history of this country, by any measurement, and we're going to ask our kids and grandkids to pay for it," he said. The stimulus bill includes about $45 billion in transportation spending, much of which can be spent on projects "that can be implemented immediately," Transportation Secretary Ray LaHood told CNN. LaHood, a former Republican congressman from Illinois, said he would talk to his former colleagues on Capitol Hill "and do all that I can to persuade them that this bill really will put people to work." He said he invited state transportation chiefs to Washington for a Wednesday meeting on how to create jobs using funding from the stimulus bill. "There aren't going to be any boondoggles. This money will be spent correctly, by the book, with no shortcuts," LaHood said. The administration is also readying a second phase of the financial bailout program launched by the Bush administration last fall. Shelby said Obama and his advisers need to address the staggering problems in the U.S. banking system first. "Until we straighten out our banking system, until there is trust in our banking system, until there's investment there, this economy is going to continue to tank," he said. Shelby also has been critical of other efforts by the federal government to help the struggling economy, including legislation that would have provided a bailout to the auto industry. advertisement But Sen. Kent Conrad, the chairman of the Senate Budget Committee, told CBS the current recession -- which has already produced an unemployment rate of 7.6 percent -- is in danger of a deep downturn "like we saw in the Great Depression." "If there is a failure to give a significant boost to this economy, this crisis will only deepen and become far more serious," said Conrad, D-North Dakota. |
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02-09-2009, 01:46 AM | #26 | |
Minion of Satan
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Look at this union contract! Benefits...perks...a green cookie on St. Patrick's Day...Oh, it wasn't always like this, Smithers...it wasn't like this at ALL! |
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02-09-2009, 04:37 AM | #27 | ||
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And that article is crap debaser. I would have hoped that you were past this reactionary phase were whenever you perceive someone is attacking whatever it is the Democrats are currently supporting (which, by virtue of your apparent lack of independent thinking you rush to support before even asking basic questions), you pull some completely irrational article out of a union journal or something. I mean, crikey, you think that these points: Quote:
Does he think that interventions don't have any unintended consequences and only do exactly what they intend to do? Of course! This is why there is no gang crime surround drug prohibition, or why terrorists just hate our freedom for some unknown reason. It has nothing to do with the effects of our policies rippling outwards! We can intervene in the housing market and financial sector for almost a century, obliterate reliable price data, obliterate reliable credit prices and there will be no crash from the bubble that this creates! If a law was made that said, either sell kids doughnuts or go to jail, this guy would say - "It's not the law that's at fault here - it's the fact that evil people sold kids doughnuts!" |
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02-09-2009, 07:04 AM | #28 |
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02-09-2009, 09:08 AM | #29 |
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No, there is no "to you" or "personal preferences" here. Please show me where I am using "personal preferences" - I am making a reasonable and logical case. If it were "personal preferences," my post would have merely constituted the sentence you quoted. However, I wrote two paragraphs - and yet you deal with none of it and just throw out an accusation. And you are going to imply that I am being unreasonable here?
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02-09-2009, 12:22 PM | #30 | |
ghost
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Furthermore, the most damage to this economy came from the completely unregulated parts of the financial industry -- credit derivatives and mortgage backed securities. |
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