I was thinking about all the things we are doing to try to get out of this economic crisis. Do any of the following steps make sense and why aren't economists speaking out against them?
I know economists can't control everything in the world, but can't they at least speak out publicly against some of this nonsense that violates common sense? It seems to me the economics profession has been captured by corporate and banking interests and political posturing that violates all sense of reason and logic.
- To control our deficits we keep proposing plans to cut taxes and increase stimulus spending instead of raising taxes and cutting spending.
- To lower government debt we keep adding to it.
- To control too big to fail banks we are making them bigger.
- To increase confidence in our government, our Fed is counterfeiting trillions of new dollars.
- To encourage jobs here in the states, we are giving tax breaks to companies that outsource overseas.
- To strengthen wages here we are emphasizing greater trade with $1-an-hour low wage countries.
- To strengthen democracy we are encouraging more corporate involvement in politics and political advertising.
- To encourage education we are raising its price, making it more difficult to finance and allowing big subsidies for phony for-profit colleges.
- To fight against systemic risk and the fact that all correlations go to one during crises we are increasing insurance programs and allowing huge interconnectedness through CDS default insurance market where everyone guarantees everyone else against default.
- To address the debt overhang we are avoiding debt restructurings, bankruptcies and paying all creditors 100 cents on the dollar when they get in trouble.
- To address lack of regulation in banking, politicians are campaigning on removing more regulation and freeing industry to create jobs.
- To address huge inequality we are proposing additional tax breaks for wealthy and corporations and the use of a regressive VAT and suggesting that these "job creators" wealth will eventually trickle down.
- To encourage people to work we are paying unemployment benefits, some of which I would guess is going to middle-aged people who simply will retire once the benefits run out.
- To solve our funding problems in SS we keep cutting the taxes needed to fund it.
- To cure runaway healthcare costs we keep adding benefits such as paying for drug purchases and insurance coverage for poor.
- To control industry's lust for profits at all costs to society, we allow corporations and banks to write their own regulations through lobbying and campaign influence.
- To encourage aggressive arrests of financial perpetrators we allow SEC and Justice Department lawyers to move to high-paying jobs at law firms serving banks.
- In a global recession, we encourage each country on earth to increase exports even though exports is a zero sum game.
- To control corrupt managements and financial middle men we encourage greater indexing and diversification with less shareholder involvement in the oversight of individual company managements.
- Given that the banks leverage dramatically increased systemic risk and threatens the stability of the global financial system, we allow banks to pay dividends and reduce capital and increase leverage.
- In a world of too little savings and too much debt, we cut interest rates to punish savers and encourage adding more debt.
- To solve the problem of a lack of transparency at the banks, we allow them to hold non-performing assets for life and not mark them to market.
- In a housing market awash in oversupply of unsold homes, we give huge tax breaks to homebuilders to keep them in business and keep them building more unwanted new homes.
- To save countries like Greece that have too much debt, we lend them more money instead of forgiving debt.
- After the biggest economic bubble in modern times with outsized consumption financed with money borrowed against our homes, we object if prices want to deflate to more normal levels to help consumers.
John R. Talbott is a best selling author and economic consultant to families. You can read more about John at www.stopthelying.com.