The next new normal

When Grover Norquist, the crazy uncle of all tea partiers, promised to shrink government and drown it in a bathtub, his accessories were limited. He couldn't even count on Ronald Reagan and George Bush to deliver. But fast forward 25 years and the Norquist vision is becoming reality. From those early sparks of deregulation in the financial sector, a wildfire has spread, separating rich from poor at alarming rates, while tanking the economy at the same time. Tax receipts drop. The deficit grows. Services get cut. Poverty worsens. Schools fail. The downward swirl continues. Instead of a bathtub, it's more like a toilet.

All this is mostly a Republican affair, though Democrats are complicit due to their own corporate interests. Democrats should be more careful though. If achieving their drown-the-government agenda requires a second great depression, Republican leaders are just fine with that. But Democrats will get the blame, as they often do.

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Comments

It's always the economy, stupid

Which makes (1) triggering a second great depression and (2) flushing North Carolina down the commode both vast benefits to Republicans over the next 30 months. Ezra sez so.

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

Total State Budget?

I know that $1.7 billion worth of stimulus money isn't counted in that budget total.

If you look at Appendix Table 5, Page 95 ( http://www.osbm.state.nc.us/files/pdf_files/bgt0911summary.pdf ) you can clearly see that our state budget is continuing to increase, but much of the funding is coming from federal sources. It seems as though we are replacing state tax dollars with federal debt dollars.

There are lies and then there are statistics.

Wrong

The $1.5 billion in federal spending that will supplement state spending doesn't even come close to making this a net gain in state spending.

Welcome to the next great depression.

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

No you are wrong

Page 95
http://www.osbm.state.nc.us/files/pdf_files/bgt0911summary.pdf

I did edit my post. Basically folks love to talk about the General Fund portion of the state budget, which now accounts for well under half of the total state budget.

Total State budget in millions
1990: $12,939.6
2000: $24,501.7
2010: $47,545.3

While it's easy to talk about the general fund budget, it appears that more and more things are being removed from the general fund. The state's budget is growing significantly faster than population growth/inflation...just not the general fund.

Even Paul Krugman agrees

In the New York Times

It has been astonishing and infuriating, as the economic crisis has unfolded, to watch America’s political class defining normalcy down. As recently as two years ago, anyone predicting the current state of affairs (not only is unemployment disastrously high, but most forecasts say that it will stay very high for years) would have been dismissed as a crazy alarmist. Now that the nightmare has become reality, however — and yes, it is a nightmare for millions of Americans — Washington seems to feel absolutely no sense of urgency. Are hopes being destroyed, small businesses being driven into bankruptcy, lives being blighted? Never mind, let’s talk about the evils of budget deficits.

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

Two Questions

I have two questions.

First, James, can you provide any documentation regarding the link between deregulation and the increasing income gap? I'm honestly interested in this, but have zero information, and I wouldn't even know where to start.

Second, why aren't budget deficits a significant part of the problem? If a public agency is spending more money than it has, then one or both of two things must happen: services have to be cut, taxes have to raised, or both. Both result in political problems because politicians voting for either of these options end up dickering about and trying to shift the blame. Depending on the services cut, some individuals lose benefits that they were counting on to maintain their quality of life, which negatively effects the economy (say, if they lose their house). And, if taxes are raised, the economy takes a hit since that's less money individuals have to spend in the economy, and more money lost to the government middle man (a certain amount of any tax dollars going to pay for some service must be cut out to fund the bureaucracy supporting that program).

Cheers,

The Black Sheep

Cheers,

The Black Sheep

Brandeis University

has done some of the best work in this area. They have an extensive series of reports about the growing income gap, with a specific emphasis on deregulation of the lending market that unleashed high-cost credit, including predatory loans, payday lending and check-cashing stores. These disproportionately damage those already at risk, while feeding the topline growth of the lenders. As the bottom has fallen out, the suffering isn't spread evenly.

You can read more here.

Regarding deficits, of course they are part of the problem, but they're also part of the solution. It's a delicate balance. For example, most economists agree today that the stimulus spending (deficit spending) was critical in staving off catastrophic depression. As near as I can tell, in fact, deficit spending is the only lever available in terms of public policy that can pull us out of the downward spiral we're in. Deficit hawks say the thread of higher deficits is more damaging in the long run than, say, another great depression with unemployment spiking up to 20-plus percent for the next decade. I guess it all depends on what you think is more important: balance sheets or people.

If you really want to understand the logic behind deficit spending, you'd do well to read Deficit Hysteria, a short, easily digestible book by UNC economist, Art Benavie.

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

The difference in macro and micro

The state of NC can't print money.

The federal government can. And the federal government has...to bail out the wildly wealthy.

Is this another instance of willful ignorance or do we really need another lesson in micro/macro here? If the latter, someone else please take it up.

Be sure to remind folks that the Fed has already taken interest rates to the zero bound, so that changes how policies impact the economy.

 

Great point

I don't know about the micro/macro distinction, but you make a great point about the so-called "trickle down" stimulus. That theory didn't hold up with Reagan and it's not holding up now. The rich are getting relatively richer as a matter of public policy.

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

Economic terrorism

From one of my favorite writers.

Foes of extending unemployment benefits keep spouting two excuses. First, benefits create hobos, layabouts who enjoy spending every day watching cable, drinking six-packs of brew and luxuriating on an average $315 a week instead of looking for a job. For a three-person family, that comes in at $16,380 a year, a couple of grand below the poverty line. Cushy, eh? The second excuse, which we've been barraged with for weeks, is that America cannot afford another extension because of the federal deficit. Between now and November, the extension would cost $33 billion.

These excuses are mere cover for what Republicans who have blocked the extension really want – to make life hard as possible until November. This, they believe, despite their disgraceful record at holding out-of-work Americans hostage to their ideology, will somehow give them cachet to trash the Democrats. And for what? For failing to achieve economically what Republicans have done everything in their power to keep them from achieving. They take their leader Rush Limbaugh seriously.

Paul Krugman describes them as the coalition of the heartless, the clueless and the confused. Right on the first count. But unconvincing on the second two. The heartless are neither clueless nor confused. They have a clear-headed agenda: economic terrorism. They're the real-life version of Saw. And their shameless goal is straightforward: worsen the economic situation for millions of Americans' in hopes of scoring more seats in Congress so they can cause even more damage to people's lives (emphasis added).

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“Don't tell me what you value, show me your budget, and I'll tell you what you value.”
― Joe Biden

Conspiracy Theories and Trash Talk

You know, it's funny, but the Republicans are saying pretty much the same thing about the Democrats. I can't give you a cite, but just go listen to Rush or Hannity or some such for a few hours; they'll get around to it.

I am neither Republican nor Democrat, and I take in commentary from both sides. It's sad how easily both sides resort to grand conspiracy theories, demonizing characterizations, and dismissive comments. If both Rush Limbaugh and the author cited above (is his only moniker really Meteor Blades, or did I miss his real name somewhere?) are saying the same thing, what's going on? Are both telling the truth? Is one telling the truth and the other just committing slander and libel? Or are they both just inflammatory?

"And their shameless goal is straightforward: worsen the economic situation for millions of Americans' in hopes of scoring more seats in Congress so they can cause even more damage to people's lives."

Can anyone give me a reasonable argument for why a bunch of elected officials would intend to gain seats in Congress just to cause damage to people? And if you're answer is that they're corrupt or self-serving, then that is most certainly something that can be found among politicians on both sides of the aisle.

And thanks for the links above, James. I'll check those out when I get the chance.

Cheers,

The Black Sheep

Cheers,

The Black Sheep

Warped perspective

Can anyone give me a reasonable argument for why a bunch of elected officials would intend to gain seats in Congress just to cause damage to people?

Because the vast majority of Conservatives believe the government's main function is the redistribution of wealth, and its tools are entitlement programs such as Welfare, Unemployment Compensation, Medicaid, etc. They also believe that most of the people who receive such assistance are neither needy nor worthy, and they would cut off their aid in a heartbeat.

And then they would tell you they're not really causing "damage", they're just rectifying a mistake.

Exactly right...

EOM.

Syd

Not quite what I asked . . .

. . . though I can see the misunderstanding, due to my wording. I'm asking for a motivation. I'm trying to understand why all these Republican politicians, and I guess the vast majority of conservatives, would intentionally want to hurt people. I understand that they think the government has become a tool for the redistribution of wealth. I understand that they think government aid should be reduced. But why? Why would they say that they're rectifying a mistake? I have a hard time believing that every one of them just hates poor people.

Cheers,

The Black Sheep

Cheers,

The Black Sheep

More fear than hate,

but unfortunately, hate often dogs fear's footsteps.

And it's not fear in the classic sense, where they're worried that poverty will bring about more crime and danger. It's much deeper than that. It's the fear of loss of control.

Okay, here's the deal: as a society refines its structure, it trends toward collectivist thought and action. We see it every day, right? From the halls of Congress down to garden clubs and condo associations, we govern by committee. In order for that system to function properly, individuals have to surrender just a little bit of their free will and desire.

And that takes trust. Not just trust in someone you might know personally, but trust that the group itself will naturally arrive at good judgment. That the "finer traits" of each member will eventually emerge, making the group wiser than the sum total of its individuals. That's a little fancier than what usually happens, but there it is.

For some people though, this approach is anathema. They believe the worst traits in each will emerge from such a gathering, and this forms the roots of anti-government sentiment. It's a fundamental distrust of people in general, and groups of people in specific. And when society reaches out to the poor, the group gets really big.

Individualists don't want to be a part of this group, but the bigger it gets, the more it feels like they're losing freedoms and losing control. They don't want to be on the inside and they don't want to be on the outside, and that makes them afraid. And quite often, angry.

I think that's exactly right

...and I'll just add that 30 years (since Reagan) of rhetoric to the effect that "government is the problem" has contributed to an irrational fear of government in some people. Their starting point is that fundamental mistrust of government, and everything government does. This allows them to see unemployment benefits, for example, as a misallocation of tax dollars from them to someone else, as opposed to a distribution within the community that helps the worst off in that community.

What I think they don't see is that libertarianism, taken to its logical end, results in the few exploiting the many. And that an important function of government is to provide rules to prevent that exploitation from being the rule. So, for example, FDR imposed rules on banks to prevent them from taking risks with ordinary people's money; Congress lifted most of those rules in the last 10-15 years, and we are now reaping the results.

Misplaced trust

What I think they don't see is that libertarianism, taken to its logical end, results in the few exploiting the many.

This, I believe, is one of the core fallacies associated with the movement. They have very little trust in government (made up of people), but they claim that all the good things that government does will be replaced by charitable acts from individuals, once they no longer have to pay taxes.

I find it hard to believe someone who mistrusts so heavily can turn around and trust these (yet to emerge) other people. Frankly, I think Libertarians know this second set of people won't become the caring neighbors the formula predicts, at least not in great numbers. It's just a fake sunset painted into the picture.

Redistribution of Wealth

Because the vast majority of Conservatives believe the government's main function is the redistribution of wealth

The vast majority of Republicans in Congress KNOW that the government's main function is the redistribution of wealth. As others have pointed out, they have used the tax code and regulatory policies to great effect over the last three decades to make the redistribution of wealth successful beyond their wildest dreams.

While "tax cuts for the rich" is the headline, their assault on those who earn their income from wages, salaries and tips (so-called "earned income") has included things like eliminating the tax deduction for interest on automobile loans and consumer debt and drastically scaling back the tax deductions for medical expenses. Those were both part of the mid-1980's "revenue enhancements" in the wake of the tsunami of deficit spending resulting from the Reagan tax cuts.

While "conservatives" rail about "high taxes," federal revenues have fluctuated within a narrow range between 15% and 20% of GDP since the end of WWII according to Project America. The graph shows spending within that same range. Stimulus spending might bring the deficit to 12-15% of GDP, compared to a "normal" deficit of 3% of GDP, but much less than the 30% of GDP deficits during WWII.

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The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR

Fear, Hate, and Trust

And that takes trust. Not just trust in someone you might know personally, but trust that the group itself will naturally arrive at good judgment. That the "finer traits" of each member will eventually emerge, making the group wiser than the sum total of its individuals. That's a little fancier than what usually happens, but there it is.

...and I'll just add that 30 years (since Reagan) of rhetoric to the effect that "government is the problem" has contributed to an irrational fear of government in some people. Their starting point is that fundamental mistrust of government, and everything government does.

It is my understanding that a distrust of government was one of, if not the, core concepts behind the founding of America. Our federal government was designed to be limited in power and scope, though it has grown steadily more centralized and powerful since then. Can anyone provide me an example of when a big group of people got together and their better traits spontaneously emerged, making the group more benevolent and just than any individual within the group? I'd like to know of any evidence of this occurring, since that would certainly be convincing evidence in favor of a socialist theory.

This allows them to see unemployment benefits, for example, as a misallocation of tax dollars from them to someone else, as opposed to a distribution within the community that helps the worst off in that community.

I am certainly no economist, so I may be missing a nuance, but this confuses me. Isn't it both? Aren't the unemloyment benefits being taken from one person, usually against their will I imagine, and given to another person? It is certainly a redistribution of money from one part of the community to another. But, if the source of that money doesn't want to part with it, or doesn't want to part with it under the terms mandated by tax law, doesn't it make sense that they'd view it as a misallocation?

What I think they don't see is that libertarianism, taken to its logical end, results in the few exploiting the many. And that an important function of government is to provide rules to prevent that exploitation from being the rule.

This is certainly one possible outcome of free-market capitalism taken to its logical end. Nevertheless, I myself can't think of a non-libertarian style of government that has resulted in anything different. For (cliched) example, in Soviet Russia, the few (i.e., the Party) exploited the many (i.e., the People).

So what happened? Why didn't their better traits emerge and coalesce into a superhuman government, greater than the sum of its parts, more benevolent and just than any individual member? I remain confused.

Was Soviet Russia a failure because a new few rose up to exploit the many, instead of everyone living in total equality and justice? Or was it a failure because the many failed to create a society in which they were able to exploit the few?

Cheers,

The Black Sheep

Cheers,

The Black Sheep

You're misreading

making the group more benevolent and just than any individual within the group?

I said the group would surpass the sum total of the individuals within the group, not the "best" individual of the group. Rarely will the more benevolent have the wherewithal to grab the reins of power on his own; it's usually the other way around. And it was this mistaken cult of personality that led to:

Was Soviet Russia a failure because a new few rose up to exploit the many

It was individualism, not collectivism, that pitted Stalin against Trotsky. And it was brutality and propaganda, not collective judgment, that allowed the former to seize control and betray the workers. Stalin wasn't a Marxist, he was a despot. And to hold up Soviet Russia as the prime example of Socialism is akin to holding up your pet cat and calling it a bird.

Our nation has succeeded so well because we recognize both the rights of individuals and the value of collective thought and action. As it was from the beginning, and as it is today.

"I told you, we're an anarcho-syndicist commune."

I said the group would surpass the sum total of the individuals within the group, not the "best" individual of the group. Rarely will the more benevolent have the wherewithal to grab the reins of power on his own; it's usually the other way around.

I did misread your statement, and this makes much more sense, in theory. But as you say, it seems very rare for the benevolent individual to find himself in charge. How does the group get the most benevolent or wisest member to be the leader? I include wisdom here and intend it to mean something like farsightedness, since all the benevolence in the world won't help you if you're terminally short-sighted.

And, if the goal is the maximization of benevolence and wisdom in the group, or at least the part of the group that calls the shots, then won't the logical end be a single benevolent and wise ruler? Because, if the benevolent and wise leader had to bend to the will of all the others, wouldn't that dilute or lessen the benevolence and wisdom of the ruling body?

And this is all very theoretical. How does amassing larger and larger numbers of people together automatically result in an overall increase in benevolence and wisdom anyway? Are there more benevolent and wise people than not?

And to hold up Soviet Russia as the prime example of Socialism is akin to holding up your pet cat and calling it a bird.

Okay, okay, so Stalin was a bad socialist. What about China? North Korea? Nazi Germany? Certainly, all of these examples fell prey to a personality cult. But that begs the question: why did all of these socialist countries fall prey to the exact same problem?

And simply to my own defense, it was a socialist revolutionary mindset that set Stalin (or Mao, or whoever) up to take control, and he maintained that control by manipulating and exploiting that revolutionary mindset. So in all fairness, I don't think I'm holding up my pet cat and calling it a bird. I think I'm holding up a very sick cat and calling it an example of a cat. It might not be a healthy cat, but I haven't seen an awful lot of healthy cats around. Am I missing a good example of a healthy cat? Or, to drop this silly metaphor, is there a way to avoid the pitfall of the personality cult?

Our nation has succeeded so well because we recognize both the rights of individuals and the value of collective thought and action. As it was from the beginning, and as it is today.

And I think this is quite true. Or at least I thought so. But if we've struck this balance, why is there so much conflict between the left and the right in our country today?

I really do appreciate you entertaining all these questions. Especially scharrison. I've found this exchange to be very helpful, thus far.

Cheers,

The Black Sheep

Cheers,

The Black Sheep

Striking the balance

But if we've struck this balance, why is there so much conflict between the left and the right in our country today?

Perhaps it is more accurate to say that we recognize there is a balance to be struck, and the battle line is drawn somewhere between these competing interests.

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The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR

It's about keeping each other honest

How does amassing larger and larger numbers of people together automatically result in an overall increase in benevolence and wisdom anyway?

Forgetting the "good vs evil" people for a moment, consider this: a single person acting alone is likely to pursue selfish ends. It's just human nature. Two people acting together might be tempted to (conspire to) better themselves at the cost of many others. You add a third person, and this conspiracy becomes less likely. As you add a fourth, fifth, sixth, etc., conspiracy moves toward a near-impossibility.

This doesn't mean that selfishness won't be a factor, it just makes it less likely and less damaging when it does happen.

"The truth shall set you free."

So, if I'm understanding what you're saying, socialism's proper goal is not so much an overall increase in compassion or benevolence, but an overall increase in honesty (or at least transparency)? Is that right? That does make a bit more sense to me.

Still though, this only really seems to work if everyone has the same agenda, shares the same mission, is on the same team, or however you want to express the idea. America is certainly more transparent than many other countries, but there are still a great number of "backroom" political dealings. Everyone in a corporation may share the same goal, but that goal will conflict with a great number of other people (if no other reason than because they work for competing companies). So, as long as society has a diverse number of groups with diverse and often competing interests, how are we minimizing self-interestedness and transparency?

And that still doesn't answer another question of mine. A total lack of transparency was another problem across states built upon a socialist ideology. Like the personality cult, why has a lack of honesty or transparency plagued socialist countries in the past?

Cheers,

The Black Sheep

Cheers,

The Black Sheep

Socialist theory vs corporatist theory

Can anyone provide me an example of when a big group of people got together and their better traits spontaneously emerged, making the group more benevolent and just than any individual within the group? I'd like to know of any evidence of this occurring, since that would certainly be convincing evidence in favor of a socialist theory.

That is supposedly the theory behind the corporation, a big group of people who get together to make their "better traits" emerge. Of course, the goal is not to become "more benevolent," but to become more "profitable" than any individual within the group.

The common thread is in the threat the "big group of people," whether government or corporation, poses to the individual.

And the scary thing is that government (one big group of people) more and more teams up with the corporation (another big group of people) against the interests of the individual.

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The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR