I really wanted to talk about music instead...


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Posted by Ammianus Marcellinus on 03/29/02 - 09:31:11
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The whole chronological statement in #10340 is a matter of selective credit.  JFK is praised for lower taxes and credited with Johnson's boom economy, yet all eight years of Clinton's "boom" economy are credited to Congress, regardless of Clinton's "highest taxes in history".  Especially egregious is the matter of crediting the overspending in Reagan's two terms, the biggest in history, to Reagan's Congress, rather than to budgets proposed by Reagan's Executive Department itself.  There's no real order to it (not to mention no cited sources backing up its argument): basically "good times" are credited to the ideologically most convenient "hero," whereas "bad times" are credited to the ideologically most convenient "villain."  At any rate, the portrayal of economic heroes and villains is more important to such a story than any discussion of economic facts per se.

And then there's its dubious "lesson":

"Lesson: when the "rich" quit spending in order to pay higher taxes, the poor lose their jobs."

Here, of course, we have an assumption of plutocracy in order to justify plutocracy.  We need to coddle the rich, the arguer asserts, in order to have a healthy economy, which by its own definition is an economy where we coddle the rich in order to grant mere "jobs" to the poor.  So why not institute an economy like they have in Mexico, where with a small bribe to an official one can avoid taxes altogether, if one is sufficiently rich.  What are we afraid of?  "Prosperity" like Mexico's?  I would hope so.

 And then there's this argument's diversion from reality.  The rich do not quit spending in order to pay higher taxes -- if this were so, the economies of western Europe, with much higher taxes than in the US, would have given up the ghost long ago.  But since economics is highly biased to begin with, it’s hardly to be expected that a counter-explanation would be any better.  But here goes.  

Investors, in a capitalist economy, spend because they have surplus money to invest.  There's been tons of this money floating about the global economy since OPEC called off the embargo, and even more with the Reagan spending boom.  In an economy based upon casino capitalism, like what we have now, investors gamble that an investment is going to have a much higher return than the slow aggregate growth rate that has characterized the American economy since 1980.  Otherwise the investment return gets sucked up by middlemen.  Investors hope, in short, to beat the field, much as one seees with bettors at a horse race.  The operation of this logic in the larger economy is explained in tedious detail in Harry Shutt’s _The Trouble With Capitalism_: investors expect a 20% yearly return, whereas the growth rate slogs along at 5-7% maximum.  This portrayal is supported by data in the much-better-documented "The Turbulence of Global Economics," Robert Brenner's article filling issue #229 of the _New Left Review_.  

So what we get is an economy where investors and their corporations seek to maximize their share of the economic surplus by minimizing that share that has previously gone to labor.  They do this by encouraging consumer overbuying on credit, by downsizing, by sending jobs to low-wage countries.  And, lacking this, they go bankrupt.  And these strategies have gone on through the ‘80s and ‘90s regardless of the tax rates.

The result of it all is an economy where investors, i.e. the rich, more specificially America’s richest 10%, prosper at a rate of 57% on average, where the rest of us slog along at maybe 7% growth, tops.  What you have, therefore, is an economy which benefits the rich.  And the government statistics bear this out.  See hard evidence at:

http://www.panix.com/~dhenwood/Wealth_distrib.html

http://www.panix.com/~dhenwood/IncPov98.html

http://www.prospect.org/print/V6/22/wolff-e.html

Now what were you saying about Hendrix?


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