News?
I came across this piece on the Castle’s coffee table this afternoon. No clue how it got there as it’s more suited for the Castle’s public restroom. I’ll pick at a few choice portions here:
How Free Markets Sank the U.S. Economy
Ok, right from the start, this purported news article attempts to sell the reader on a premise. That the free markets (and solely the free markets) destroyed the U.S. Economy. I probably don’t need to tell you, how wrong this is…but if you don’t believe me, why don’t you keep reading and see if you don’t draw the same conclusion.
In contrast to the regulations that emerged from the Great Depression, which promoted growth and stability, the response to this crisis has led to a less-competitive financial system dominated by banks that are too big to fail, he writes.
I didn’t want to separate out the phrases here that the author is quoting part of a book from Joseph Stigliz, a Nobel-prize winning economist. First, the regulations that emerged from the Great Depression did not promote growth and stability. We’ve got the Smoot-Hawlet Tariff Act that raised prices on a consumer base that already was tapped out worsening the problem at hand. There’s the Davis-Bacon Act that required local governments to pay union wages for public projects and the Norris-LaGuardia Act that prevented the courts from issuing injunctions against union strikes. Within two years of these regulations (and others), unemployment rose to almost 25%. With fewer employees in the labor force, the government deficit grew and the immediate response was the Revenue Act of 1932 which move the top earners bracket from a recently dropped 73% to 24% back up to 63% and corporate taxes rose form 12% to 13.75% which was passed right along to the consumers (remember kids, corporates DO NOT pay taxes – people do). Finally, Hoover tried the Emergency Relief and Construction Act which attempted to do something very similar to the Recovery Act that Obama pushed through. It did little, if anything, to improve matters.
I will say that the consolidation of banks (some as a result of government pressure) does worry me. With fewer potential competitors in the marketplace, the benefits of competition will be reduced. While I’m not strongly advocating for government regulation to prevent this as natural market forces must weed out poor performers. The Reuter’s article goes on to make the following claim via Stigliz’ book:
banks’ failure to assess and manage risk, especially when risk is disguised by complex financial instruments. Such “modern alchemy” transformed risky sub-prime mortgages into A-rated products dubbed safe enough to be held by pension funds
Conveniently, the article (and maybe Mr. Stigliz, I haven’t read his book) fails to mention the 1977 Community Reinvestment Act, which was furthermore encouraged by the Clinton Administration. The CRA was designed to encourage banks to make loans to low and moderate income neighborhoods. As part of enforcing it, federal regulatory agencies would consider a bank’s compliance with the CRA when they try to open new branches and apply for mergers and acquisitions.
The solution to that problem would be to move to a single payer system that recognizes health as a social cost, not an employment cost.
This is a gross simplification presented as a complete solution. Maybe the reporter should have considered Medicare and Medicaid and see how well single insurance pool type systems are working. And while we’re at it, let’s call a spade a spade and do away with this “single payer” nomeclature and just say “wealth redistribution payment system”.
GorT is an eight-foot-tall robot from the 51ˢᵗ Century who routinely time-travels to steal expensive technology from the future and return it to the past for retroinvention. The profits from this pay all the Gormogons’ bills, including subsidizing this website. Some of the products he has introduced from the future include oven mitts, the Guinness widget, Oxy-Clean, and Dr. Pepper. Due to his immense cybernetic brain, GorT is able to produce a post in 0.023 seconds and research it in even less time. Only ’Puter spends less time on research. GorT speaks entirely in zeros and ones, but occasionally throws in a ڭ to annoy the Volgi. He is a massive proponent of science, technology, and energy development, and enjoys nothing more than taking the Czar’s more interesting scientific theories, going into the past, publishing them as his own, and then returning to take credit for them. He is the only Gormogon who is capable of doing math. Possessed of incredible strength, he understands the awesome responsibility that follows and only uses it to hurt people.