The first social democratic president since Carter?

Denerick

Obama's budget proposal calls for a new stimulus package that will boost overall demand in the economy whilst simultaneously reducing unemployment and poverty. He is going to fund this by raising taxes on the wealthiest Americans who enjoy criminally low tax rates. This class fought and won a class war in the 80s. That assault on the American middle class is finally at an end. Obama's proposals will be very popular with the electorate once the sound and fury of the tea party radicals dies down.

He is not being controversial. He is asking extremely wealthy Americans to pay a top income rate that is equivalent to economically liberal Britain. This is not a Nordic budget. It is extraordinarily tame given the economic and fiscal constraints at present (America should be raising all sorts of taxes over the next decade, such as VAT, motor tax etc. if it plausibly wishes to remain a great power) but it is a sign of progress.

When the American electorate is faced a choice between an unprincipled plutocrat and a visionary social democrat in 2012 its fairly obvious where their vote will go.

Permabear

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Denerick

Permabear wrote: »

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It boosted overall demand in the economy at a time of massive private sector deleveraging. While its impossible to say how many jobs were created as a result, the basic arithmetic stacks. A job is a job - bury boxes of money under the ground and then hire people to dig it up again. A job is a job.

No, they really didn't. Those who believe that Thatcher and Reagan came to power in the 1980s because the wealthy won a "class war" tend to forget the many dismal failures of government in the high-tax 1960s and 70s. Ultimately, people came to conclude (correctly) that wealth was better off in private hands than in government hands.

Bit of a generalization, but I'll bite. The 'many dismal failures of government in the 60s and 70s' - such as achieving the highest standard of living ever attained by any generation of human beings hithertoo* (Another generalization, but we all seem to be at it tonight) - People came to conclude that the stagflation of that era could only be solved by economic liberalization. There may well have been a point to that, and I'm not calling for a return to 70s economics. But you (As in, the collective 'you') have lost all sense of proportion. Life is hard enough, I've never understood the libertarian desire to make it harder by punishing the poor for being poor and rewarding the rich for being rich. We possess a mechanism that can make life easier and more relaxing in the welfare state, an institution that has done more than any other in history to vastly reduce human misery and poverty.

Is it? If you imposed a 100 percent income tax on everyone with more than $1 million in income, it would raise enough to fund the federal government for two and a half months.

I'm thinking of people earning more than 70k per year. The mass affluent, not the super rich.

The United States did not become a world power by taxing people.

It became a superpower following the second world war; a time of unprecedented rates of taxation, and the dawn of the greatest military industrial complex yet known to mankind. If that isn't a major testament to the power of state manipulation in the economy then I don't know what is.

Permabear

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Memnoch

Permabear wrote: »

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If you believe that the welfare state creates more crime and poverty then why is it that states with robust social systems have lower rates of crime than their more free-market counterparts? I'm talking about the Scandinavian countries, for example, and other European countries like Britain and Ireland.

What after all is the difference between the West, i.e. developed nations and developing and Third World countries? Greater prosperity, yes but also strong democracy, and protection for the less fortunate among us. It is certainly a complex issue, far too complex that I feel to see the causality you are implying exists between the welfare state and the problems outlined above.

If you're talking about the growth of the military-industrial complex, then certainly, I'll grant you that that's testament to the state's power to confiscate private wealth through taxation and spend it on armies and weapons of mass destruction so that the state can flex its muscles by slaughtering people in other nations. However, I don't personally applaud the growth of what Murray Rothbard called the welfare-warfare state.

I wonder when it will be that I will cease to be amazed at the ability of libertarians can distort basic reality. There is a reason that the word industrial is at the heart of the military-industrial complex. While the state does confiscate private wealth of the masses it does so at the behest of and the benefit for the wealthy elite. It does so because it becomes corrupted by these same elite. Finding the truth is simple, just follow the money. The Iraq war is a great example. The Iraqi people paid and the American taxpayer certainly paid, but reconstruction companies, oil companies and weapons manufacturing companies as well as mercenary management companies made absolute killing. Quite literally. Companies which contributed to the campaigns of the people then waged towards and who then hired the same people to sit on their boards.

The libertarians prefer to blame the government for this. But in order to do so they repeatedly make the same flawed assumption. That without the power of the state to collude with the ultra-wealthy and powerful would not be willing or able to continue to exploit the ordinary person in the same way. It is an utter failure of logic when all available evidence points to the contrary. That's the foundation on which modern libertarianism seems to be constructive is utterly porous.

ed2hands

Memnoch wrote: »

... the Scandinavian countries...

There you go Memnoch. You've just proved Hayeks' "Road to Serfdom" is completely wrong with just three words.

irishh_bob

Denerick wrote: »

Obama's budget proposal calls for a new stimulus package that will boost overall demand in the economy whilst simultaneously reducing unemployment and poverty. He is going to fund this by raising taxes on the wealthiest Americans who enjoy criminally low tax rates. This class fought and won a class war in the 80s. That assault on the American middle class is finally at an end. Obama's proposals will be very popular with the electorate once the sound and fury of the tea party radicals dies down.

He is not being controversial. He is asking extremely wealthy Americans to pay a top income rate that is equivalent to economically liberal Britain. This is not a Nordic budget. It is extraordinarily tame given the economic and fiscal constraints at present (America should be raising all sorts of taxes over the next decade, such as VAT, motor tax etc. if it plausibly wishes to remain a great power) but it is a sign of progress.

When the American electorate is faced a choice between an unprincipled plutocrat and a visionary social democrat in 2012 its fairly obvious where their vote will go.

watched a docu on bbc 1 last night called POOR AMERICA , it featured several different familys who have been hit by the rescession , showed how the working poor with no health insurance often travel long distances to touring medical clinics , one man who earns a small wage in construction was in danger of getting gangerine in one of his legs but he cant afford to have the problem treated but the most shocking segment of all featured a young girl who made the astonishing declaration that her family once had to eat a rat for dinner

obama is no more a socilist than david cameron is , he has been as big of a friend to wall st as bush ever was , its a testament to the way the american news media have brainwashed the people of the usa that the word soclist could be used in the same sentance as obama

btw , i say all this as someone who is not a socilist but who believes a man who works should be entitled to keep his infected leg , thats all

Valmont

Denerick wrote: »

When the American electorate is faced a choice between an unprincipled plutocrat and a visionary social democrat in 2012 its fairly obvious where their vote will go.

Visionary?! Tax, borrow, spend; that is the Obama grand plan. And not one he thought up, either. I thought we had dispensed with words such as 'visionary' along with the 'hope and change' spiel of 2008.

Overheal

The man puts on a good show but at the end of the day he turned out to be no visionary once he stepped into the white house. His Grandiose, community planner dreams of reshaping a better tomorrow and all that spiel went the way of regular political minutiae and like many men before him he was weakly swept into it. He pretty much gave up when he started complaining that the Republicans didn't want to pass anything (when the Democrats had a majority) and that was the reason for not getting anything done. Since then, it has been partisanship as usual.

Amerika

Denerick wrote: »

Obama's budget proposal calls for a new stimulus package that will boost overall demand in the economy whilst simultaneously reducing unemployment and poverty. He is going to fund this by raising taxes on the wealthiest Americans who enjoy criminally low tax rates. This class fought and won a class war in the 80s. That assault on the American middle class is finally at an end. Obama's proposals will be very popular with the electorate once the sound and fury of the tea party radicals dies down.

When have you last heard from the Tea Party?

And why do you suppose Harry Reid (who’s party is the majority in the Senate) refuses to bring President Obama’s budget to the floor, when only a simple majority is required to pass a budget in the Senate?

Permabear

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Chuck Stone

Permabear wrote: »

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Abuse was rife. Children were beaten and sexually abused in institutions. Many single mothers had children removed from them and were all but slaves in other institutions. I'd hazard a guess that domestic abuse was more prevalent and less reported. Higher reported crime rates doesn't not automatically equate to less virtuous society.

Hmmm. In the United States in 2009, the top 5 percent of earners paid 59 percent of federal individual income taxes. So this is really something of a myth that the "wealth of the masses" is being confiscated "at the behest of a wealthy elite." The bottom 95 percent of earners pay just 41 percent of income taxes.

Citing income taxes only is a 'letter box view' of taxation. If you were to take the average worker and compare how much he pays in all taxes and other flat rate levies as a percentage of his income and compared it the top 5% - the average worker has a far greater burden of tax. It's almost impossible to find studies on the burden of tax as a whole of income because it doesn't fit the current narrative.

The average household now has to have two adults working to achieve a reasonable standard of living - in the 50's and 60's one working parent was, generally, sufficient.

Permabear

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Eliot Rosewater

Denerick wrote: »

It boosted overall demand in the economy at a time of massive private sector deleveraging. While its impossible to say how many jobs were created as a result, the basic arithmetic stacks. A job is a job - bury boxes of money under the ground and then hire people to dig it up again. A job is a job.

I don't agree with the logic here. The problem is: who pays for the digging? And someone has to pay in a very real, tangible sense: after the diggers go home to their houses they and their family will eat food, consume fuels like gas and electricity, and do other stuff. These things - like carrots and potatoes - require economic resources to provide (as payment, after money exchange, for the digging). Someone, down the line, is diverting these resources from other potentially beneficial things (like running online discussion forums) to something inherently useless (digging and filling in holes).

The argument your employing seems to be based on the premise of a free lunch: if we don't get these guys to dig this hole then the economic resources they will then consume will simply not exist. Jack-and-the-beanstalk type things don't exist, in my experiance: you can't create something out of nowhere. If you're giving these guys money to dig and then fill in this hole you have to be taking that money from somewhere else. Where are getting it, and at what economic cost?

(I'm assuming you're being sincere here btw...)

I've never had this discussion before, so I'd be interested in having it. Certainly more benificial than digging holes.

Chuck Stone

Permabear wrote: »

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Again, citing the homicide rate doesn't give the whole picture. I've little doubt that the murder rate has increased because of drug gang feuding.

If there are no studies or statistics, we can't really have a coherent conversation about it.

That's true but it does need to pointed out that citing income taxes alone is not anywhere near a comprehensive synopsis on proportionate tax 'contribution'.

It appears that the definition of a "reasonable standard of living" has also changed quite dramatically since that time. How many people had cars, satellite TV, Internet, mobile phones, or were taking foreign holidays in 1950s Ireland?

Personally I would consider foreign holidays and pay-TV luxuries. A car, due to generally poor public transport, is pretty much essential for most jobs (not a new car each year granted).

Not having the internet or being able to use a mobile phone would render most people unemployable so I would see them as essentials

Permabear

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Denerick

Permabear wrote: »

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The American taxpayer pays. Or in other words, its paid for by borrowed money (Interest rates are at an all time low in the US) Your point is?

I'm sure the welfare state makes life "more relaxing" for some who would prefer not to work — but to claim that it reduces human misery and poverty ignores its long-term multi-generational effects. Even FDR, progenitor of the modern American welfare state, warned in his 1935 State of the Union address that "...continued dependence on relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is a violation of the traditions of America."
And yes, FDR was right. Welfare actually encourages dependency, poverty, sexual irresponsibility, non-employment, and crime, actively creating the social problems that its proponents believe it solves.

Beveridge had a more elegant proscription; that a welfare system has to encourage people to work by paying a base rate somewhat below the lowest paid jobs in an economy. I applaud the Tory party and its welfare policy in the UK - it is unconscionable that a household can earn more than 26k per annum by not working (And in many cases after decades of not working) whilst the working class stiff has to put in his 40 hour week for risible pay. But regardless, this is merely a discussion as to how to implement the optimal welfare policy. You want to abolish welfare absolutely. If option A doesn't work particularly well, it doesn't necessarily follow that option A is without virtue and should be destroyed. There is always option B. A little more moderation DF, a little more moderation.

If you're talking about the growth of the military-industrial complex, then certainly, I'll grant you that that's testament to the state's power to confiscate private wealth through taxation and spend it on armies and weapons of mass destruction so that the state can flex its muscles by slaughtering people in other nations. However, I don't personally applaud the growth of what Murray Rothbard called the welfare-warfare state.

Memnoch summed up the military industrial complex rather well, I feel.

But as you well know, I was making a tongue (firmly) in cheek allusion to your claim that the United States didn't become a great power by taxing its citizens.

Denerick

Eliot Rosewater wrote: »

I don't agree with the logic here. The problem is: who pays for the digging? And someone has to pay in a very real, tangible sense: after the diggers go home to their houses they and their family will eat food, consume fuels like gas and electricity, and do other stuff. These things - like carrots and potatoes - require economic resources to provide (as payment, after money exchange, for the digging). Someone, down the line, is diverting these resources from other potentially beneficial things (like running online discussion forums) to something inherently useless (digging and filling in holes).

The argument your employing seems to be based on the premise of a free lunch: if we don't get these guys to dig this hole then the economic resources they will then consume will simply not exist. Jack-and-the-beanstalk type things don't exist, in my experiance: you can't create something out of nowhere. If you're giving these guys money to dig and then fill in this hole you have to be taking that money from somewhere else. Where are getting it, and at what economic cost?

(I'm assuming you're being sincere here btw...)

I've never had this discussion before, so I'd be interested in having it. Certainly more benificial than digging holes.

The evidence is there Eliot- these jobs wouldn't exist if we didn't invent them. Full employment should be the foremost priority of any elected government. The fact that Europe and the US is suffering from mass unemployment is surely evidence that those resources don't exist. I'm all for a retreating state during times of plenty, but during hardship I'm afraid the only remedy lies with leviathan.

You're right - somebody pays for it. In the medium term when the economy responds to medication we can cut spending and raise taxes. If demand is stable then we can tinker with policy and sort out our debt pile accumulated during the recovery. I'm under no illusions; GDP growth will be a stable but anti-sexual 3% per annum or so. The boom bust cycle can be ended - sorta.

Now I'm sure that as a reliable Hayekian you'll start talking about malinvestment and the evils of central planning and the encroaching tyranny associated with this over dependance on the state. To which I pre-emptively rebutt - chillax. It'll all be ok.

The most chilling thing I find about the Austrian school is their notion that depressions are inevitable and somewhat necessary (So that the economy can 'correct' itself) that poverty is incurable, that opportunity can be decided mostly by the family into which you are born; Barack Obama has firmly rejected this thesis with his budget, and has embraced the postwar social democratic dream. The New American Dream, if you will.

Valmont

Denerick wrote: »

The American taxpayer pays. Or in other words, its paid for by borrowed money (Interest rates are at an all time low in the US) Your point is?

Do the hole diggers pay tax to pay for their own hole digging jobs?

Denerick

Valmont wrote: »

Do the hole diggers pay tax to pay for their own hole digging jobs?

I can't imagine they'd earn enough to pay a standard rate of tax. Do you not think it would be better to provide low paying jobs to people who would rather work than have them sitting at home all day watching Jeremy Kyle?

Permabear

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Eliot Rosewater

Denerick wrote: »

The evidence is there Eliot- these jobs wouldn't exist if we didn't invent them.

For sure - just like how I could have done my undergrad in Harvard if I wanted. Well, that's what I claim, and there's no way you can actually disprove it, so it has to be correct.

On a serious note, Karl Popper's story of how he came to change his political outlook is interesting. He used to be a Marxist and was attracted to Marxism because he felt it was irrefutable; that there was no way it could be proven wrong. But as time passed he began to feel that this supposed strength of Marxism was, in his later view, actually its greatest weakness: because one could never prove Marxism wrong (the revolution is always happening next year, after all) its views can never be really criticized at all, and it's predictions don't count for anything. You can't actually prove me wrong if I clam that there's a planet out in space with kettles orbiting it.

I think this is relevant because the issue of causation is tricky in a complex system like an economy. It's true that if the government didn't intervene there wouldn't be a guy digging this particular hole - but the guy reasonably could have been at home computer programming instead. Saying that the guy is only in employment because of the government's intervention is kind of untestable: we can't empirically set up the past differently to see what would have happened.

Denerick wrote: »

Now I'm sure that as a reliable Hayekian you'll start talking about malinvestment and the evils of central planning and the encroaching tyranny associated with this over dependance on the state. To which I pre-emptively rebutt - chillax. It'll all be ok.

I think your Hayekian paranoia argument has merit considering the way the welfare state has panned out since the War.

As regards the malinvestment, that's something I do believe strongly in, and I'm not sure how one could tackle it. This article outlines the problem pretty nicely.

Memnoch

Permabear wrote: »

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Crime has gone up everywhere in the world. Are there many places where crime has not gone up during the time period you described? I think the only fair comparison is between the systems employed in different countries. Even if we take your point to be true, you are nowhere close to demonstrating causal relationship between increasing welfare and crime, except for your imaginary idea that this is so.

Hmmm. In the United States in 2009, the top 5 percent of earners paid 59 percent of federal individual income taxes. So this is really something of a myth that the "wealth of the masses" is being confiscated "at the behest of a wealthy elite." The bottom 95 percent of earners pay just 41 percent of income taxes.

Yet another red herring. But let's look at it for a moment anyway. It doesn't matter how much of the actual tax total is paid by whom. It is the percentage of income that really matters when it comes to determining the quality of life, especially for people lower down on the income scale. To say that their wealth is not being confiscated is not only a terrible lie it shows the truth of just how little you care about ordinary people, which really is the essence of libertarianism. These people pay a significant chunk of their income in taxes. While it may be a small amount for the very wealthy, it means a lot to ordinary people and the average family.

More importantly, your red herring does nothing to counter the point that I made. The American taxpayer pays taxes so that the government can provide them with services at a cheaper rate and better quality than they could afford if they had to buy it individually. Roads, schools and yes, defense. Instead, that money is being spent on wars of greed in order to 'transfer the wealth,' of ordinary citizens into the pockets a few elite that had corrupted government of its true purpose.

What I don't understand is why you won't acknowledge corruption as a major issue. Whether you believe in government being big or small, surely the government in a democracy should serve the people who vote for it and not those who can make the biggest campaign contributions?

I keep coming back to the idea that libertarians are against democracy and all your talk of big government/small government is just a facade to hide your true motives which is the dismantling of what little there remains of modern democracy in order to further a total plutocracy.

Permabear

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coonecb1

Valmont wrote: »

Visionary?! Tax, borrow, spend; that is the Obama grand plan.

As opposed to the Reagan / Bush grand plan of Borrow, spend and reduce taxes during the good times, which were the main drivers of the colossal US debt.

Before you say it, I'll admit the debt ballooned since 2008, but this is mainly due to the bank bailout, auto bailout, stimulus and once-off costs associated with implementing Obamacare. These are not things that would have been done had Obama inherited an economy that wasn't taking at breakneck speed.

southsiderosie

Permabear wrote: »

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Well that's a mighty big brush you just tarred Democrats with.

Democrats don't necessarily think the answer to every problem is to make government bigger, nor do Republicans necessarily think the answer is less government (especially when it comes to the elderly and the military). That said, most Democrats don't believe that deregulation and liberalization will magically lead to economic growth that will have a tangible positive impact on the lives of the average American. The United States has undergone a tremendous amont of deregulation since 1980, and during that same period, real wages have been stagnant for most workers, and have actually declined in some sectors of the labor market. So while more government may not be the best answer, people are no longer drinking the trickle-down kool-aid either - especially since the easy access to credit that garnished stagnant wages has dried up.

Permabear

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Black Swan

Permabear wrote: »

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According to the US Bureau of Labor Statistics average weekly earnings have dropped from their 60's-70's highs:

Permabear wrote: »

But on a global basis, nations such as China and India are doing dramatically better they were in the 1970s, precisely because of liberalization.

The flight of capital from west to east has been going on since PRC became open to investment, and especially from the USA when PRC obtained Most Favored Nation status. Regulations (safety, environmental, etc.) are considerably lower in PRC than most western countries, as are labour and associated costs, so the ROI is generally higher to invest in PRC.

I would venture to guess that this flight of capital has been all about ROI, and arguments of helping the poor in LDCs at the expense of domestic workers made by investment capitalists are problematic if not entirely moot.

Permabear

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southsiderosie

Permabear wrote: »

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Why is that cynical? It is painfully naive to believe otherwise. And I find this to be a particularly ridiculous argument, given how opposed libertarians are to redistributive policies at a domestic level: so redistributing to poor people within a nation is bad, but redistributing wealth and resources to poor people in other countries is desirable? Mkay.

Let's put this another way: can you think any government in the world which operates under the governing principle that their economic policies should be oriented to increase the well-being of people in other countries? Of course not. No country would be that stupid: if they engage in trade, it is because they think (or the politically powerful think, anyway) that they will positively benefit. If anyone else does well out of the deal, well, huzza for them, but it is certainly not the driving principle.

I am not disputing that the economics makes sense, from an international trade perspective. But from a national perspective, and in particular a political perspective, it becomes increasingly harder to justify when the 'benefits' of free trade, i.e. relatively cheap consumer goods, seem to come at the expense of labor market stability - especially in a country with a huge domestic market like the United States. Free trade enthusiasts can fuss all they like about cars versus cloth (or whatever the metaphor de jour is), but if voters feel like liberalization is not working for them, they will begin voting against liberalization. And insisting on such doctrinaire neoliberal economics in the face of clear empirical evidence of declining standards of living encourages the very types of populist political campaigns that libertarians like yourself hate so much. There is a reason why in most democracies there is a direct relationship between trade liberalization and expansionist social policies: because, as Polanyi pointed out half a century ago, there needs to be a 'dual movement' of liberalization and social welfare net programs for liberal economic policy to remain politically palatable.

Black Swan

Permabear wrote: »

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This is a distraction move. To claim that venture capitalist motivation is driven in the slightest by a concern for the betterment of foreign poor is not credible, nor is it conceptually consistent with the free flow of capital to where it will receive the greatest ROI. In a free market, capital will generally flow to where the greatest ROI exists, be it in LDCs or elsewhere. Max Weber in Economy and Society addressed such capital investments that were considered means-ends instrumentally rational: cold, objective, and pragmatic reasoning to maximize ROI; nothing else.

Valmont

Black Swan wrote: »

This is a distraction move. To claim that venture capitalist motivation is driven in the slightest by a concern for the betterment of foreign poor is not credible, nor is it conceptually consistent with the free flow of capital to where it will receive the greatest ROI. In a free market, capital will generally flow to where the greatest ROI exists, be it in LDCs or elsewhere. Max Weber in Economy and Society addressed such capital investments that were considered means-ends instrumentally rational: cold, objective, and pragmatic reasoning to maximize ROI; nothing else.

What is your point? Altruistic motivations don't matter for a damn when it comes to ROI and that is the beauty of a free market: profits for those who provide the jobs and jobs for those who need them. No discrimination, just a mutually beneficial agreement. I can't think of a single free-market proponent who waxes lyrical about the charitable urges of business owners.

"The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.”

Milton Friedman.

Permabear

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kev9100

So far, this really has been a great thread! Even the arguments I disagree with are really interesting.

As far as Obama's record as President, I think its been mostly good with some disappointments along the way. When you consider the entrenched two party system that exists in the U.S and the fact that the GOP is no longer run as a serious political party, Obama has been a pretty good job.