(No, I'm not an economist. But I figure I can't really do much worse than they've done)
So let me get this right. There used to be a savings crisis. Americans didn't save enough --unlike those industrious Chinese. In fact, the Chinese were so thrifty compared to us that we ended up in hock to them up to our keesters.
But wait a second, where did all the money the Chinese saved come from? It turns out, from us, from our inexhaustible purchases of their exports. Much of that was paid for with illusory housing bubble wealth -- but that didn't stop the Visa from going through at the Best Buy for that flat screen TV. Money that didn't just go to the Chinese. The TV had to be unloaded in port, and trucked to the store. Then there were the salaries of the store clerk, the manager, and the company execs, not to mention the fees of the advertising agencies who came up with the commercials to sell the TV on the TV, and so on.
Now, we're told, saving is part of the problem. When we save too much, we don't spend enough. And everybody knows, consumer spending is the engine to full employment. Not that this means we should incur more consumer debt. Debt bad. Spending good. No spending, no jobs. No jobs, no recovery.
That leaves the government to do the spending, and by extension, to incur the debt. But since debt is so "bad," Obama could barely get a wholly inadequate stimulus package through Congress. It was just enough to produce an anemic recovery, while plenty enough to add a lot to the deficit. The big evil deficit.
So we're spending a trillion plus more a year than we're collecting in taxes, borrowing prodigious amounts to do so. Where is all that borrowed money coming from? Banks. In other words, us. Our deposits. Our tax-funded bailouts. (It also comes from the Chinese, but that's money we give them too.)
So to whom, finally, do we really owe all that money?
Ourselves.
Banks, incidentally, love the national debt. They never want the principal repaid, because they can live on just the interest forever. And live very well, thank you very much.
So what would happen if all the interest that has been paid on the national debt was declared applied to the principal? (I can't find that calculation anywhere, but I'm pretty damn sure the national debt would no longer be the subject of giant digital clocks in the trillions.) It seems hard to believe I'm the first person to think of this, but I don't know why it can't get some serious discussion even if I am. As far as I can tell, the only people who'd lose out are the bankers.
Don't be intimidated by the economists and the deficits hawks. The problem is not debt -- not when you owe it to yourself, as depositor and taxpayer and employer of Chinese workers. The problem is distribution. Google "income inequality," and read for a while. Not one article -- even from the right -- claims that there hasn't been a huge increase in the wealth of the top quintile over the past decade, concentrated in the richest one percent. According to Professor Emanuel Saenz at Berkeley, (cited by Professor Richard Wolff in this graph) our income inequality is exactly where it was in 1932.
The problem is not that Grandma gets her medical care for free. The problem is not the lack of consumer spending, or even the deficit. The problem is that a few people have a lot more than they need, so a lot of people (including the government, i.e. all of us) have a lot less than they need. It's not rocket science, it's simple math.
At the very least, we should return to the level of taxation under Clinton--a level that produced surpluses. If Clinton is too liberal for the Republicans, we might propose going back to the way things were under Eisenhower. I was born in 1958, and my Dad not only supported 4 kids and a wife selling encyclopedias, but bought the house I was born in on that salary.
There were plenty of rich people in 1958 too -- they just had a proportionate sense of wealth. Three houses--not thirteen. First class travel -- not private jets. An understanding that a 91% maximum tax bracket was God's way of saying you had too much money, and that paying it was indeed, one of the most patriotic things an American could do.
Follow Mark Olmsted on Twitter: www.twitter.com/MarquisMarq
I think your arguments make sense, Mark, but I have to admit that my head is a-swim on the economy. I've read so much and heard so much, I can't think straight; I was hoping that Clinton could. I miss the guy!
Which would partially explain why so many lower and middle income Americans are constantly convinced to vote against their own interests. They seem to believe if they vote as if they were already rich, they will somehow hasten then day. It makes about as much sense as buying more lottery tickets as a retirement plan.
Two percent of the world's humanity have 85% of the weatlh
So to whom, finally, do we really owe all that money?
Ourselves."
FALSE, false, FALSE premise - making the rest of this "idea" rather naive, at best.
As of April 2010, FOREIGN COUNTRIES were the proud holders of 3.9 TRILLION of U.S. debt:
http://www.ustreas.gov/tic/mfh.txt
http://www.cnbc.com/id/29880401/The_Biggest_Holders_of_US_Government_Debt?slide=1
China knows if it doesn't keep lending us money we can't buy their goods--potential disastrous. Do you realize what a 10 % unemployment rate would mean in China? Each increase of 1% represents 10s of millions--huge potential social unrest. We have plenty of leverage with which to negotiate.
And the assets belonging to Americans, in American banks, is still gargantuan. We are still a wealthy country. It's just been taken from the middle and lower classes and given to the upper classes. The issue of debt is not insurmountable if the superrich pay the same rate they paid under Clinton, and we stop bleeding billions in insane defense spending and employ people putting solar roofs on houses and building high-speed trains instead of occupying third world countries..
I encourage you to look to the ideas associated with 19th century American economist and social philosopher Henry George, who wrote about political economy (PE is the science which deals with the natural laws governing the production and distribution of wealth and services).
He was one of the classical economists (see also Adam Smith, David Ricardo, John Stuart Mill) whose ideas are mentioned ever-so-briefly in today's college economics courses, but which have the potential for making economics something other than a dismal science.
George's landmark book was "Progress and Poverty," which considered, in a rigorous analysis, why it is that in a world and a society with advancing technology, rising population and huge wealth, we still had poverty. He looked at the then-current explanations and resulting approaches to reducing poverty, and found them wanting. P&P provides a far more plausible model for understanding income concentration and wealth concentration, and then shows a simple, logical and just remedy.
And that, of course, is why most people haven't learned much about his ideas in college economics courses. They weren't the kind of ideas that the funders of such institutions wanted widely understood. And what instructor today teaches what his own professors omitted?
Read P&P online.
Those of us who consider it morally wrong for a few to have immense wealth in the face of immense poverty need to be willing to confront the impulse of greed, to say no, it is not okay for you to have more than you could possibly need when, for example, the waitress at the diner your limo drives by can't even afford asthma medication for her son, asthma he has because of the toxic factory that you makes your millions off of. http://www.huffingtonpost.com/mark-olmsted/is-there-morality-in-prof_b_620216.html
I would prefer a system in which no one could accumulate so much in the first place, but that ain't gonna happen, so in its stead, progressive taxation seems like the next best thing.
none of this will ever change until the tax code is no longer volumes upon volumes of pages
Instead, the geniuses in Congress, and probably the author of the article, will simply demand more pages and volumes of tax code regs be added, further exacerbating the problem.
NO ONE is going to advocate a more complex tax code; making things simpler is about as controversial a position as condeming child molesters.
I think rich people and corporations should pay more than they do. When they have in the past, we've had a much fairer country and a much larger middle class, as recently as the 90s. If the tax code can be made simpler, I'm all for it. But this knee jerk demonization of regulations is exactly what caused both the crash and the oil spill. Government is not the problem, lack of good government is. If it keeps being viewed as some sort of foreign entitiy instead of a manifestion of our collective will, like voting, than it will never be what it can be.
That said, there has been significant social change for the better in the past two centuries in spite of the huge role of money in our political system. The tide of history is stronger than any of the riptides that swirl around it.
http://www.youtube.com/watch?v=xphiYdfd-Tg
There a scene in "All About Eve" - which takes place soon after the war- when Bill Sampson shrugs at the Hollywood paycheck he'll be getting to direct a movie. "It all goes to Uncle Sam anyway." No bitterness whatsoever--a recognition, however, that in living well and doing what he loves he has all he needs from the world.
Appropriating Jesus to justify having far more than your neighbor would be the height of blasphemy--if I believed in such a thing. But he left us with words on how to deal with these people: "Forgive them father, for they know not what they do." (Even if they seem to have heard: "Buy low, sell high")
It's certainly a pet peeve of mine. I see all these meglo-churches - with their own auditoriums and taking up more room than a small college campus - and think about how Jesus would just sit and stare, most likely, adding up in his mind the cost of all that labor, material, and daily maintenance and realizing how many hungry people those dollars could have fed the world-over, or right in the church's backyard for that matter.
The tel evangelicals are the absolute worse and they don't even pretend to hide it anymore. Many of them now preach, simply, Jesus wants you to be rich (like me) because God loves you and wants the best for you (just look what he's given me for "giving my life over to his ministry!"). And people swallow that bilge; how I cannot imagine, yet millions do.
Jesus - at least by the teachings we have that are said to be his - taught to keep nothing for yourself and to give of yourself freely in every way possible for the benefit of all sentient beings (that's a little Eastern twist on it, but the Buddha's message is not so dissimilar). He did not believe in hoarding wealth or even accumulating it, for that matter!
Doing for and helping others is one of the few lasting things we can do on this Earth, and it means more than having 13 homes while alive!
Loved this graf. Fanned!
I wish my remote control or dog could bring me a beer from the fridge. It would be nice, but defies logic. You can make up any rule that sounds good? But did you make that rule because it sounded good or was realistic.
After cancelling the debt, I would have no issue with a balanced budget amendment that required us to live within our means.
When Republicans start questioning a defense budget that is more than all the defense spending of all the other countries of the world combined; when they don't vote for war appropriation sthat are not included in the budget, when they support pay as you go instead of voting against it, and when they stop this endless tax-cutting for the richest sliver of the population, then they can lecture me about fiscal responsibility or wishful thinking. Low taxes AND low deficits--the Republican "solutions" aren't even reality-based.
I realize that is a very simplistic way of looking at it (it could also be 20% of the loan amount...I can't remember which, it doesn't really matter), but it's not very far off. So that house that the bank paid $10-20K out of their "own" pocket, they make approximately $80K over a 20 year period. Now multiply that by the size of your bank's home loan department.
What we need to convince them of is that it’s extra super-duper patriotic to contribute more to society than the other rich guys.
Sadly, I don’t think I’m going to see that in my life time.
If there's a silver lining to the BP disaster, I think there's a new awareness of the extraordinary wealth concentrated in the hands of the multinationals and the men who run them. I'm glad they forked up the $20 billion, but in a rational economy, they would never have had that much to put aside in the first place. $63 billion in PROFIT last year, when it would take $30 billion to provide the world's poor with clean drinking water. .