Check out these two articles:
Economic Change We can Believe In
Commentary: Libertarian ideas to stimulate economy
Despite the fact that Libertarian policies are what caused this recession/depression/clusterfuck, Libertarians are hard at work marketing their brand of naive optimism for economic redemption. I’ve been planning a Johnny Article on Libertarians for a while. Let’s consider this a preview.
Our first article focuses on the corporate income tax, namely eliminating it. The corporate income tax, the article says, is up to 35% of the profits of a business. The main point of the article in our context is this:
Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers. These investments would be more productive than the ones funded by stimulus projects, since corporations respond to market forces, not to political influence. Since corporations could more easily invest out of retained earnings, repeal would also circumvent many banks’ reluctance to lend.
This is a big assumption. Let’s state it here and now, Libertairians are the Trekkies of the political sphere. They think that everything everyone does is altruistic and great for everyone. But our recent history shows us that increased profits don’t go to these things. They go to big bonuses, big offices, stock dividends, and corporate jets, the things that make companies feel like they have big penises. They also drag out the tired trickle down theory of economics saying that we’d all get a piece of this because we’d get better salaries and the money would be spent. Not true. As we saw this week, the top 1% of earners are making a larger percentage of GDP than anytime since 1928. Notice any parallels here?
The next important point they cite is this:
The budgetary impact of a corporate income tax repeal—roughly $300-350 billion per year—might seem daunting, but this amount falls well short of the Obama fiscal package. The long-run impact will be less than what is implied by current revenues, since repeal will expand economic activity and therefore increase other kinds of tax revenue.
Except that the math doesn’t hold out. The Obama fiscal package is a one-time expense that covers a couple years. It gives people jobs. If people have more money, they spend it on things, but we don’t make things anymore, and so the money goes overseas. Multiply the loss of revenue by a few years, and we’ve lost more than the Obama plan costs. We’re talking about economic multipliers here, and this doesn’t multiply out very well.
Let’s move on to our other article. It starts with the corporate income tax, then moves on. Point two is to increase the carbon tax while reducing other taxes.
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.
Well, who’s trying to win the popularity contest here? Not the Libertarians. Passing along the cost to us at the pump isn’t the most popular idea out there. It ranks right above reanimating Hitler, though I hear there’s a Republican Committee studying that idea right now. It’s funny how quickly anything green becomes pork, isn’t it? In the end, supporting green initiatives by direct spending creates more jobs faster, and creates a whole new sector of the economy that the Bush Administration left out to rot.
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.
Hmm, reducing benefits for the oldest and most vulnerable. This is why the Libertarian party doesn’t get elected. I’d support reducing benefits for the wealthy, but they’d probably chase me off their expansive manicured lawns with extreme prejudice. Social security and Medicare aren’t going anywhere. Find a better solution.
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 include 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).
Well, you’ve jumped on the say it don’t play it bandwagon. Both parties are guilty of saying “Cut wasteful spending” then funding pet projects with money that doesn’t exist. Let’s see, agricultural subsidies are necessary to keep farmers in business, but to be fair, they don’t react to market dynamics well. The Big Dig in Boston is more mismanaged (on a true big dig scale) than useless. The New Orleans Levees? You really don’t want to fund that? You never want to get elected, so you? Amtrak is more efficient, but made less so by poor rail maintenance due to underfunding and the lack of a bullet train line. Besides, have you ever been on a bus for any good distance? And Fedex is not more efficient, just more expensive to the consumer. Sometimes I don’t know what world these guys live in.
Also, earmarks make up a very small part of the budget. We’d be better off budgeting better, introducing a spending cap that once it’s gone, it’s gone, and actually showing some restraint.
Pork barrel spending. I’m so tried of this term. One man’s pork is an other’s steak, and an other’s bread and butter. Let’s put a new spin on that term: pork barrel is a label that has a point of view. We aren’t out buying pork barrels, we aren’t out just blowing money like the Monopoly guy. These projects are important to parties and recipients, and a target of jealousy for the opposition. Sure there’s some favoritism, there always is, but we can’t lose sight of the fact that pork barrel is a label made by opposition forces, and is irrelevant to the benefit of the program.
They move on to Getting out of Iraq and Afghanistan. Only people arguing about this is Republicans and defense contractors.
Limit Union powers. Hmm, Republicans, anyone? Unions are dumb. Let’s face it, they priced themselves out of the market, but without them, we’d have lower wages and few worker’s rights. Those things cost money and companies don’t hand that stuff out for free.
Renew the commitment to free trade. You mean like NAFTA? yeah, that worked out so well.
Expanding immigration on technical visas. Wow. They actually said something smart here. There are a limited number of these visas, and companies are forced to hire outside of the nation because we can’t produce enough smart people with our wonderful education system. There is a rush and a lottery every time visas open up, and the people that don’t get them wither work overseas, or find jobs with foreign companies.
And finally, stop bailing out business that, well, fucked up. This is nice but I’d hate to admit it, if we don’t save some more most of these companies, there is going to be a lot more chaos. And I know this is also too late and anti-Libertarian, but wouldn’t these companies and the rest of us have benefited by more oversight and regulations?
In short, Libertarians want to do all of the things that got us into this mess. Maybe they just want to finish the job.
