Comments on: Both sides losing austerity fight http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/ Wed, 07 Oct 2015 17:23:32 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: CO2-Exhaler http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-666 Sun, 08 Jul 2012 11:19:07 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-666 What we need is less government (this doesn’t mean no regulation, incidentally). Less government means less debt, less debt means less tax, and less tax sets the real economy free. Austerity is a (negatively) loaded word that shouldn’t be used in this sort of debate.

By the way, do the people who write comments longer than the original article actually believe that anyone reads them? Some of us do still have jobs.

]]>
By: urownexperience http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-665 Sat, 07 Jul 2012 19:12:49 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-665 When Reagan and Greenspan stole the Social Security Trust Funds in the 80s and then gave the money to their wealthy friends, that began the demise of the middle class. But if you were one of the wealthy, it began an unprecedented shift of wealth from the workers to the manipulators; a period of wealthy welfare lasting to this day.

Reagan cut taxes for the rich from 70% to 28% and increased taxes on middle class, as he raised taxes 7 of 8 years hitting hardest the lower & middle class. He also tripled National Debt – his tax cuts for the wealthy left budget holes increasing then national debt from $900 Billion to $2.8 Trillion.
With all that money going to the top tiers, it was easy to want more. One had to look no further than overseas to see the profit potential of cheap labor, no taxes and no regulation. Along with that extra money came the bonus of weakening the American labor force and demoting unions until they became relatively ineffective. Reagan fired 11,345 union workers for striking and his war on unions continues to this day.

Unions were very strong when the middle class was strong in the 50s. One wage earner supported the family back then, and supported it well.
Now it takes three or four in the family working multiple low paying jobs to make ends meet with a very reduced standard of living, while all the money of the fifties have gone to the top – Wall Street and large corporations.

As workers’ wages decline, their Social Security and Medicare contributions and benefits decline as well. This means that down the road, most workers will be broke. This is the Republican dream – the end of social safety nets and the end of high wages and benefits so that 2 or 3% of the population can control 95% of the wealth.

All of these lowered wages and benefits in America for poor and middle class Americans further line the pockets of corporations whose profits increase hourly.

Long before Reagan ran for President, he railed against any kind of government backed health care. Again, in the pockets of the AMA and the insurance companies, he knew that affordable health care would help nobody but the consumer, and Ronnie was all about the wealthy (key in “Reagan, Operation Coffee Cup” – an example of the Republicans original underhanded tactics that are still used today).

When Reagan and Greenspan looted the Social Security Fund, they also used the money to pay back all the rich military industrial complex donors who helped Reagan get elected, especially the ones from California.

The military then became a part of the budget that was never questioned, with a war here or a war there promoted by Republicans in order to keep the military indispensable in the eyes of Americans. Regardless that the cost of both the active military and retired military with free health care and 20 year retirements that in real money costs us 65% of our budget, Americans are sold on their “troops.” .

Reagan and Greenspan knew what they were doing. As the budget became strained with more and more money going to the rich and to the military, social programs were cut. In other words, government, a long time protector of the working people which in the past shielded them from abusive tactics by corporations, was weakening. Their undying goal was to get rid of Medicare and Social Security completely, which is still the Republican goal.

This became the drum beat of Republicans – get rid of big government. In other words, get rid of the people’s voices. And it worked. The theory of trickledown economics or supply side economics even fooled the democrats for a while as regulations were relaxed and the money flowed like a torrent to the top. But it was a house of cards built on credit and Wall Street gambling.

Forcing the poor and middle class in America to fall behind was not enough to satisfy the insatiable appetite for wealth, so ways were thought up to make money even off of the workers’ decreased wages, and whose lifestyles were falling behind and whose incomes were becoming more and more detached from the upper class.

So, easy credit and high interest rates were made available by the bankers which gave the poor and middle classes a false sense of hope and security by artificially propping up their standard of living. Also, this ‘enjoy now and pay later’ scheme meant that the poor and middle class not only were making less and less in wages, now a large percentage of those wages were going to the banks in the form of interest payments, sometimes as high as 30% on credit cards.

And now, the coup d’état against the middle class: As the middle class took on thirty year mortgages (where all of the interest is conveniently paid up front first before principle), bankers wanted more money than that. What better way than to bundle mortgages and sell them? That’s a quick turn over and a quick buck. And what the heck, if it all backfires, the government would be forced to back up the bankers, not the public, because the banks could fail and bring down the entire financial house of cards.

Plus, the banks now get many of the houses back through foreclosure. It’s a beautiful world for the wealthy.

So the middle class, not only losing any increase in wages and benefits for thirty years, lost up to 40% of their net worth that was invested in their homes, more if they were foreclosed.

This is the way it is going and not much can stop it. Middle class Americans are not organized so will sit back in their recliners not saying a word and watch their standard of living slowly erode. They believe the Republican lies – that it is all the greedy and lazy workers fault and unions killed America.

So, what will the result be?

For middle class Americans, it means no health care, which means that saving for retirement, college expenses, or owning a home is history merely because the out of pocket expenses for the first serious illness that comes along wipes out everything. Just the cost of drugs alone will break anyone, which can easily run into the hundreds of thousands of dollars PER ILLNESS because of pharmaceutical’s influence in congress.

So where is the incentive for young people to work hard and get ahead? There will be none. Then, what will workers do? Will they sit around and bemoan their plight and blame it on themselves? Probably.

I hope so, because the alternative would be more than just a class warfare of words.

]]>
By: WorldWize http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-651 Sat, 30 Jun 2012 01:03:25 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-651 It is not Cutback Kid vs Stimulo it is Cutback Kid vs Normalcy and Stimulo vs Normalcy in separate fights over a long period of time. Unfortunately Normalcy is not a fighter that wavers or tires so the strategies Cutback Kid and Stimulo use to fight this opponent are very important.

A depression is a relative thing. It is caused by over-extended economics. Consumers borrowed beyond their means and then governments, etc.

Use the boxer analogy. Say our boxer trains for a ten round fight, his body is conditioned to last the ten rounds. But say in the second round he becomes aggressive and punches at a rate above the normal rate he trained for. He has a boost of adrenaline (debt driven spending) and punches away feeling great at the time, but the round ends and our opponent Normalcy is still there.
Our boxer tires. In boxing we do not call the third round a depression, but in economics they do. The level of activity in the second round was not sustainable and it is silly for anyone in the corner to expect it is.

What to do in the fourth round?

The Stimulo corner (think US) says you punched great in that second round you need to keep doing it, but Stimulo’s body says no. His corner sneaks in some drugs to give him an artificial boost which works. He wins the fourth round, but Normalcy is not defeated. By the fifth round Stimulo is in much more serious trouble tired from the exertion, more drugs? There is a serious risk of a knock out of Stimulo.

The Cutback Kid’s corner (think Latvia) is health conscious they know they are in for a long fight. They caution their fighter to move and adjust, but not engage until his arms have recovered. The fourth round is difficult it is a draw or a loss, but by the fifth round the fighter is back into the fray as he should be.

A “pre-bust normal” is not a normal level of economic activity, it is an over inflated level of economic activity. For people to try to maintain or regain that same level of abnormal economic activity is not sustainable. One can try and at best stimulate oneself at an unsustainable plateau while waiting for normalcy to catch up (think Japan and the lost decades). Once you are in an overextended position there is only one way out, get back to normal and normal is a level somewhere below you.

But this is not an argument against government spending, government is part of that fighters body as well playing an important part in social and defense programs that capitalistic economics cannot handle. A fighter without strong government (think anarchy) and private sector (think communism) is unbalanced and loses regardless.

]]>
By: GrahamDLovell http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-650 Fri, 29 Jun 2012 02:22:58 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-650 This is an excellent piece of analysis, putting into simple terms a very complex situation.
If both Stimulo and the Cutback Kid are not going to make much difference, I know which I would prefer, namely the one that doesn’t leave a massive debt to be repaid.
Doing the tough things usually works in the long run. The Roman Empire was rescued from disaster by Diocletian’s economic reforms, even though they were unpopular. Similarly Germany and the northern Europeans have done the hard yards to make their economies more efficient. Australia did the same thing twenty-five years ago under Hawke/Keating, and then by Howard; we need to look at this again. The Rudd/Gillard give-away mentality is the wrong approach, but at least Australian has some money in the bank (thanks Howard/Costello!).
Easy wages policies and government deficits to fill in the hole they make will not save anyone in the long term.
If anyone has money left in the kitbag they can use it to similute the economy. But if there is no money put aside, give up hope of being rescued by Simulo; in this case it is time for the Cutback Kid.

]]>
By: SamuelReich http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-649 Fri, 29 Jun 2012 00:07:00 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-649 There are obviously structural problems at work. Free trade does not work for high wage areas and has not in the past. The educational system is not world class any more. We pay more for health care than nations who get more. Not the lest we vote into office ideologs that smile nice but do not take a critical look at problems.

Building a road may put some people to work for a short time. But problem is factories shut down and moved. After a wile we will not the skills or will operate in those business any more.

Stimulus to work now must be directed to fixing particular economic problems. Like aid to business for expanding high wage exports. Notice expanding and high wage. Or free tuition for studding for degrees in short supply of inexperienced graduates (experienced skilled workers are always in short supply if business do not hire the inexperienced). We just increased the supply of paying patients without doing the same for doctors, nurses and hospitals in the short run.

]]>
By: Handbook http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-648 Thu, 28 Jun 2012 11:47:07 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-648 Neither is the “total” solution. Certaily not stimulus; as once it starts, you go back into recesssion when you shut it down. Also, it doesn’t create lasting private sector jobs. What’s needed is honest, competent politicians and government workers being made more accountable and paid far less than they presently are. No subsidies for politically connected friends, no subsidies for companies, no tax loopholes. Fair and equitable taxation. Encouraging all citizens to depend on self-reliance and hard work. Government owes its citizens a playing field that offers you opportunity to suceed, not handouts. Everyone likes a free lunch. Government attempts to please everyone will result in a continuation of the demise of the economy.

]]>
By: scythe http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-647 Thu, 28 Jun 2012 05:28:01 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-647 (quote) “post-war system evolved over the subsequent decades into one based on much debt, little regulation, free capital movements and narrowly focussed central banks. The Lesser Depression has discredited this model… ”

interesting denouement – looking forward to part two

]]>
By: boon2247 http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-646 Thu, 28 Jun 2012 05:12:41 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-646 Any government can only operate successfully if it has the support of the people. At this point so much of the world wealth has moved to so few, most nations must comply with the banking systems wishes, rather than what’s good for the people. Hence they lose public support. The USA dumps billions into the military, and what good is a huge military without a war to fight? The only solution I can see is, everything in moderation.

]]>
By: usagadfly http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-645 Thu, 28 Jun 2012 03:45:35 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-645 On politicians: no one can possibly believe they do not behave, and thing, in a theatrical rather than a perceptive manner. They do as they are told. To that extent, they most certainly debate as if they live in a black and white world. In other words, it has become black and white because the hands on the levers of power think that way, or pretend to.

It is an error to think you understand politicians or the wealthy people who have purchased their souls. Do not expect reason to lead you to some sort of “ought to” conclusion. They are humans, and deliciously selfish ones at that. Sadly they play with us as if we were flies, while claiming to have “our” interests at heart.

Most certainly, the politicians, including the ones who hold lifetime sinecure Lordships that we call “judges”, must be brought to heel, and their powers limited. One effective method seems to be voter initiatives that legally override the politicians. Certainly there must be other effective solutions.

But we also have to define precisely who “we” are and to what extent, if any, we want to continue to share a Government with the other people who now live here today. A significant part of the problem is that we must redraw lines about exactly who we are, voluntarily and not at gunpoint. That means defining who does, and does not, get a say about “our” laws and “our” national priorities. Americans need a new crack at self-determination.

]]>
By: MPLSLW http://blogs.reuters.com/edward-hadas/2012/06/27/both-sides-losing-austerity-fight/comment-page-1/#comment-644 Thu, 28 Jun 2012 03:09:46 +0000 http://blogs.reuters.com/edward-hadas/?p=265#comment-644 “Latvia, where punitive austerity is turning the suffering economy around”. This is a silly statement which few in Latvia believe. Unemployment in Latvia has dropped mainly because Latvians are moving to any country in Europe which will let them in.

]]>