bbearren.com

I got a reply, of sorts, to my last post, which is a bit humorous.  It’s the second blurb down, beginning with “My correspondent quotes me and then comments”.  The humorous part is in what follows in that sentence; “I dislike that form of dialogue, in part because it doesn’t require that the critic demonstrate he has understood what I said”, which makes the title of my post, “Response to an insular, unassailable pontificant” seem all the more fitting.

Well, I do understand what he said.  He is, after all, a conservative, and conservatives are not all that difficult to understand.  However, the fact remains that several million jobs have simply disappeared, and there is a very reasonable and largely consensus explanation for why they disappeared.

I do not believe for one moment that unemployment can be made comfortable enough for all of the folks who lost all those jobs to be satisfied with being unemployed.  I firmly believe that the vast majority of those people would much prefer to be gainfully employed.  No doubt there are a number who are old enough for retirement, but that doesn’t necessarily mean that they prefer retirement, or considered themselves ready for retirement.

The bane here is not in that unemployment has been made more pleasant and appealing, and that is why there are so many unemployed, but that economic policies were put in place a number of years ago that led to the disappearance of several million jobs in a few short months, the majority of which, I believe, as do others, will not be coming back.  Deregulation in the financial sector and unsound loans being bundled into derivatives (some of which were shorted by the very companies issuing them, betting that they would fail) “disappeared” those jobs, and it will take a number of years for those millions of jobs to be replaced in the best of economic circumstances.

We don’t need to read the history of past decades or centuries in order to know what has happened and what needs to be done.  We mainly need to read the history of this past decade and try to fully understand what has transpired.  Greed will out, and deregulation will speed that process considerably – we have proof.

We don’t by any means need a command economy; but we certainly don’t need widespread deregulation, either.  That’s what got us here, and whistling past the graveyard won’t change that one whit.

Government “getting out of the way” will not repair our infrastructure that is literally falling apart in many places across the country; government owns the infrastructure that is falling apart.  I worked in maintenance for a number of years.  My motto then was, “let’s fix it now while it’s still relatively cheap, because the costs go up as time goes by.”  A systematic and comprehensive repair of our infrastructure nationwide would be quite a kick-start for the economy.

I recently emailed the following to Jerry Pournelle, but I don’t expect to see it on his blog: 

I keep hearing that dual mantra of “Job-Killing Regulations” and “Tax Breaks to Stimulate the Economy”, and both are, quite frankly, BS.  More and more independent studies are pointing out the ignorance of those and similar statements. 

http://www.centurylink.net/news/read.php?id=18692574&ps=1014&cat=&cps=0&lang=en 

“Consider proposed cuts in taxes and regulation, which nearly every GOP candidate is pushing in the name of creating jobs. The initiatives seem to ignore surveys in which employers cite far bigger impediments to increased hiring, chiefly slack consumer demand. 

“Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration, and there is no reason to believe that more of them will have any today,” writes Bruce Bartlett. He’s an economist who worked for Republican congressmen and in the administrations of Presidents Ronald Reagan and George H.W. Bush. 

As for the idea that cutting regulations will lead to significant job growth, Bartlett said in an interview, “It’s just nonsense. It’s just made up.” 

Government and industry studies support his view.” 

And: 

“”I don’t care about that,” Texas Gov. Rick Perry told The New York Times and CNBC, referring to tax breaks for the rich. “What I care about is them having the dollars to invest in their companies.” 

“Many existing businesses, however, have plenty of unspent cash. The 500 companies that comprise the S&P index have about $800 billion in cash and cash equivalents, the most ever, according to the research firm Birinyi Associates.” 

They need more cash to sit on?  That will stimulate the economy?  Sounds like BS, doesn’t it? 

“The rating firm Moody’s says the roughly 1,600 companies it monitors had $1.2 trillion in cash at the end of 2010. That’s 11 percent more than a year earlier. 

Small businesses rate “poor sales” as their biggest problem, with government regulations ranking second, according to a survey by the National Federation of Independent Businesses. Of the small businesses saying this is not a good time to expand, half cited the poor economy as the chief reason. Thirteen percent named the “political climate.” 

I’ve said it before, and I’ll say it again: Consumers create jobs.  We need more consumers.  That’s what most of the businesses and companies that actually do the hiring are saying.  But you can ignore them, can’t you, ‘cause you have a PhD in politics; the business community doesn’t understand what they’re talking about.  All they understand is dollars and cents.

but I think he missed.  I sent him a couple of links to the Warren Buffett Op Ed piece, the original and an edited version, but from his response, I don’t think he read it.

I sent him another email asking about “Job-Killing Regulations”.  Usually he just ignores me; on occaision I’ll get a reply email.  But then on rare occaisions, he’ll actually use my letter, and this time he used three!

Here’s what he had to say.

He’s all for it…

I’ve been paying income taxes all my working life, ever since I started making enough money to reach the filing minimum.  (I’ve been paying sales taxes ever since I was big enough to push a nickel onto the counter to buy candy at one of the local Mom and Pop stores.)  I’ve never complained about the requirement to pay federal income taxes; I’ve always known that government isn’t free, and I’ve always accepted that I had a responsibility to pay my fair share, and believe that everyone else should also pay their fair share.  I live in a state that doesn’t have a state income tax, but they make up the revenue in other taxes that most everyone pays.

But my federal income tax strategy has always been quite simple; have enough payroll tax withheld that I would get at least a small refund every year, rather than having to pay in extra.  And for the last several years I’ve used my tax refund for some significant purchase or deposited it into my savings account, rather than depositing it into my checking account.

That describes basic consumerism; I have some disposable income, I have a particular purchase in mind, I shop for that item and buy it, or choose to put that money in savings.  Without disposable income, the only things I’m likely to consume are the groceries that have been prepared and put on the table.  I refer to that financial situation as 21^st century subsistence living; paycheck to paycheck.  The vast majority of subsistence living income is used for food, shelter, utilities, and replacement clothing.

Our economy in a nutshell is that consumers buy things.  As things move off the store shelves into the shopping baskets of consumers, the retailer orders more things from the wholesaler.  As things move out of the warehouse of the wholesaler, the wholesaler orders more things from the manufacturer.  If the manufacturer can’t make enough things with his workforce to keep all the wholesalers supplied, then more workers need to be hired to start operating a second shift to keep up with the demand for things.

That second shift soon becomes another group of consumers, and the cycle grows.  It is fueled by disposable (or discretionary) income in the wallets and purses of consumers.  The state of the economy these days is primarily a lack of consumer demand.  The high unemployment rate is a large part of that decline in consumer demand.

Factory jobs cannot be “created” without a ready supply of consumers to purchase the products that the factory produces.  Consumers cannot be easily created without jobs.  Unemployment compensation only contributes to subsistence living; it doesn’t provide disposable income.

The only realistic way that the federal and state governments can create jobs is through repairing and rebuilding our infrastructure; roads and bridges, locks and seawalls, highway expansion, parks and the like.  Jobs such as these are incubators for other jobs; materials and parts suppliers, equipment rentals, sales and repairs.  Service sector jobs to accommodate the needs of these new workers.  People with jobs soon rise above the subsistence living level and become consumers.  And from day one, many begin to earn enough to become taxpayers, revenue for the government.

And for even more revenue we need to cut back severely on entitlements.  No, I’m not talking about Social Security and Medicare, I’m talking about the entitlements for the rich, super-rich, and major corporations; tax cuts and tax loopholes.  The gridlock in Washington seems to have led the rich and super-rich to believe that they are entitled to their tax cuts and loopholes; millions are contributed to election campaigns to maintain that gridlock so that the rich and super-rich can keep their “entitlements”.

The “Bush Tax Cuts” are not new taxes; they’ve been on the books for years.  It’s time for the IRS to resume collecting those taxes, and for the loopholes in the tax code to be closed.

I received the following recently from a high school classmate and longtime friend.  The information and stats were compiled by Stephen Bloch.

U_S_ Federal Deficits, Presidents, and Congress

It has been said that no matter who is President, the House and Senate are the real decision makers.  Let’s not forget, though, it is the President who says, “Put something on my desk that I can sign.”  Only the President holds the power of the veto, and it takes a 2/3 majority of both houses of congress to override a presidential veto.

And why are the “temporary” tax cuts for corporations and the rich, that the Republican Party steadfastly refuses to even consider letting expire, called “The Bush Tax Cuts”?