Let's talk economics...

[HAZ-Matt]

The purpose of this thread is to discuss economic theory, and the current state of economic reality and policy within the United States.

[HAZ-Matt]

HoodedWanderer, on fark.com
As for this neocon debate, it is VERY important you realize the one and only following example to understand why everybody should be having a problem with "neocons".

Neoconservative is an American term, invented in America. It does not exist anywhere else. And no, Isrealis do not consider their government "neoconservative."

Neoconservativism is a warping of economic policy. Neocons are in reality "neoliberals". The problem with this term is that "liberalism" in US history has over the twentieth century become a tainted word. What neoliberalism implies is a very conservative system of economics. Neoliberals advocate an essentially free market with as few state regulations as possible. They take much of their ideology from Classical Liberalism, which focused on individual free exchange over state influenced exchange, and abandon all but the most fundamental market reforms of the late 1930s under John Maynard Keynes.

The most provocative aspects of neoliberalism stem from neoliberal's abandonment of Keynesian economics. Keynes was a British economics, who in 1938, began "modern" economics and pulled the US out of the Great Depression after the ho-hum results of FDR's New Deal. What Keynes basically did was simple- markets flow in cycles, meaning they're always going up (growth) and always going down (recession). What caused the Depression in 1929 was the market was on a recession, and it stayed there and bottomed out, turning into depression. During the depression, there was way way way too much underconsumption, making normal production unattainable by the vast majority of people. While maybe 1 in 10 could afford to buy 3 cars, it is economically more sound (imho) to have 9/10 making enough money to purchase 1 car each. That's the Great Depression debate, and there's more to it but I'm genralizing. Anwyays, Keynes suggested that when a market is growing (on the up) you slow it down with inflation, preventing the market from "cycling" too high. The money saved in this instance would then be applied to the market when it bottoms out, in recession. The ultimate goal of this system was to basically minimize the ups and downs of the market (which, when combined with the psychology inherent in stock markets, makes sense) by creating less of an up and down, and more of a strait line type of growth. (ie instead of a wavy line of growth, one that's strait).

In 1938, this meant "countercyclical" or "defeceit" spending. This essentially boils down to a government printing money and giving it to people who don't have any to kickstart the economy. It's like that shocker thing for heart attacks. Governments lost a lot of money to restimulate people buying stuff, but in the long run this was necessary and good.

That's Keynes, and that's how the majority of Western countries run their economies. They're laissez faire with government regulations to prevent the market from gaining it's true efficency.

And this is where the divergence begins. Whereas Keynesian and Post-Keynseian economists believe that government intervention is necessar to prevent the market from being too efficient (ie making a select few rich and the majority so poor that it can't affor stuff), neoliberals are the opposite. They see the government envolvement in the economy as the sole problem to begin with. Neoliberals insist that a truly free market would fix it's problems if there were absoulty no government oversight.

And it is from here that neoliberals extend their economic theories. They believe that government should not interfere with raising interest rates to counter inflation. They also take the view that minimum wage is an impediment to market success. But most of all, they see taxes (and especially income taxes) as the biggest problem of all. Neolibs believe that wealth redistribution by the state inherently disrupts the market, creating intrinsic problems in the way the market becomes efficient. It is from this idea that is the ultimate neoliberal vision, and simultaneously the reason neoliberals in America are also called neoconservatives:

Neoliberlist economics hinges on market efficency that is based on balanced budgets. That is the key. Market efficiency, in the realm of theory (which is all neoliberals really have...) is based on breaking even. The second the goverment begins making money or losing it is when the market becomes too "efficent" and displacing the wealth between the highest and lowest echelons of society. While making money is alright and can be adjusted by spending it (which is the point, neoliberals believe this will always be happening in an ever increasing spiral of growth), losing money is the death knell for the entire theory. As soon as a government starts defeceit spending, it's over. The whole point of doing so (as Keynesian economics points out) is to use the government to regulate the economy. Keynesian liberals have instituions in line to do this (healthcare, taxes, etc), while (theoretically) neoliberals do not. More importantly, by losing money neoliberals are in a precarious situation as they do not have the means to make that money back, as there is (theoretically little to) NO state interference in the economy.

Perhaps now you see why neoconservatives are called such. There are very few neoliberal countries on earth; as it is a theoretical end of an economic spectrum. Canada, Britain, and most of Europe (I believe) are predominently Keynesian and in Britian's case, Post-Keynsian economies. The US is the closet thing to a neoliberal economy, which began in 1980 with Regeans' tax cuts. The latest executive is branded neoconservative, but they techincally are not in pure economic terms.

This is why economists are simultaneously baffled and terrified about Bush economic policies. By removing the burden of the highest elite to support the state and the lowest of the low, the conditions taken to prevent major depressions are effectivly being undermined with a faith in the market. As we all know, this faith is bound to fail so long as the practioners fail to break even. And I don't think I need to point out that in the US, that ain't happening.

Plus, there is the religious and cultural connotations carried by the word "conservative." For often times tied in with this belief in the market is a belief in traditional conservative politics; hence "neoconservative". As well, there's the historical role of race relations that plays a factor in this as well. The word Jews always comes up with neoconservatives. While some members are Jewish, rest assured it is not an Elder Protocols of Zion conspiracy. Also tied into the American idea of neoconservativism is the idea of Isreal, which many of you here have already picked up on. Finally, neoconservativism, in a historical sense, has definite links to the previous century's movement towards imperialism. Whereas in the late 1890s it was to solidfy the Western Hempisphere and an open door in the mystical "market" China; today it is to pacify the mystical "oil" market of Middle and Central Asia.


That there is the history of neoconservativism in the US. It is also the contemporary analysis of why it has many economists, political scientists, and intelligent people up in arms- the advocation of a pure laissez faire market system that is systemically flawed by simply spending more money then you bring in. Without government intervention in this case, all it takes is a)a market crash or b)a resource crash or even worse c)both to end many people's ecoonoic lives.

With that in mind, what does it suggest when the advocaters of no state intervention are taking unfathomable steps in the wrong direction. When this happened with Reagan in the eighties, it was justified as "outspending the evil commies". It sure as hell wasted a lot of money against the commies, despite the fact that we now know Soviet defense expenditures stated the same relatvie to Soviet GNP, and began to fall when Gorbachev came in during the mid-80s.

What the fark is the justification today? If you can figure this question out (in terms of great power politics), you would become my personal hero.

Have a nice day.

[HAZ-Matt]

Clyde Prestowitz: 'The conservative case for Kerry'
Date: Saturday, October 16 07:37:06 EDT
Topic: Election 2004

By Clyde Prestowitz, Providence Journal

AS A FORMER Reagan-administration official, registered Republican, born-again Christian, and
traditional conservative, I am going to vote for John Kerry. So are many other old-line
Republicans. Here's why.

While the Bush administration calls itself "conservative," its use of the term is frankly Orwellian.
It not only deprives the word of meaning, but also presents the administration's philosophy as
the opposite of what it actually is.

Conservatives have always believed in fiscal responsibility: in being sure you could pay your
way and in providing for the future. Conservatives pay down debt, rather than adding to it. This
doesn't necessarily mean balancing the budget every year, but at a minimum it means striving
toward balance as a top priority.


The Bush approach is completely at odds with such thinking. If any proof were needed, it was
amply provided in the president's acceptance speech at the Republican National Convention.
With Congressional Budget Office projections showing oceans of red ink for the indefinite
future, President Bush promised more tax cuts. His audience cheered.

Conservatives are often well off, but they understand that the best way to preserve the society in
which they are doing so well is to ensure that all its members can survive at a reasonable
standard of living. It was the conservative Otto von Bismarck, after all, who first introduced
social-security programs in 19th Century Germany for just that reason.

Conservatives do not loot the Treasury or bet the future health of their society on the chance
that the best-case scenario will actually materialize. They provide for the worst case. So a
conservative would have expected that the president's tax cuts and promises of more to come
would at least have been accompanied by plans for cutting expenditures.

That expectation would have been disappointed, however, as the president promised about $1
trillion of new spending programs that, given his tax cuts, can be paid for only with red ink.

Which brings us to a second fundamental principle of conservatism: small government. From
the founding of the Republicoontil now, conservatives have feared the threat to liberty posed by
big government. Conservative icon Ronald Reagan came to power primarily by focusing on big
government as the source of most of the country's problems. But the Bush administration has
presided over a steady increase in the size of government, as federal expenditure has risen as a
percentage of gross domestic product, after declining in the late 1990s....

Clyde Prestowitz, who was counselor to the secretary of commerce in the Reagan
administration, is author of the recent book Rogue Nation: American Unilateralism and the
Failure of Good Intentions.

Reprinted from The Providence Journal:
http://www.projo.com/opinion/contributors/
content/projo_20041015_15prest.327dd1.html

[imported_admin]

Originally posted by HAZ-Matt:
While the Bush administration calls itself "conservative," its use of the term is frankly Orwellian. It not only deprives the word of meaning, but also presents the administration's philosophy as the opposite of what it actually is.

Conservatives have always believed in fiscal responsibility: in being sure you could pay your
way and in providing for the future. Conservatives pay down debt, rather than adding to it. This doesn't necessarily mean balancing the budget every year, but at a minimum it means striving toward balance as a top priority.

The Bush approach is completely at odds with such thinking. If any proof were needed, it was
amply provided in the president's acceptance speech at the Republican National Convention.
With Congressional Budget Office projections showing oceans of red ink for the indefinite
future, President Bush promised more tax cuts. His audience cheered.

This is what I have been screaming until I'm blue in the face for how long now?

Chalk up another conservative for Kerry.

[HAZ-Matt]

This is the story that prompted this post...

Treasury acting to avoid hitting debt limit
Snow urges Congress to raise limit by mid-November
By Corbett B. Daly, CBS Marketwatch
Last Update: 12:26 PM ET Oct. 14, 2004

WASHINGTON (CBS.MW) -- The Treasury Department has begun taking special actions so the federal government would avoid hitting the legally mandated debt ceiling of $7.38 trillion, Treasury Secretary John Snow said.

In a letter to Senate Majority Leader Bill Frist, R-Tenn., Snow called on Congress "to increase the debt limit by mid-November, at which time all of our previously used prudent and legal actions to avoid breaching the statutory debt limit will be exhausted."

Snow released the letter less than 24 hours after President Bush and Sen. John Kerry, D-Mass., faced off for their third and final debate, which focused primarily on domestic issues.

"This president has taken a $5.6 trillion surplus and turned it into deficits as far as the eye can see," Kerry said in the debate, held late Wednesday at Arizona State University in Tempe, Ariz.

Bush counters that he has pledged to halve the current deficit in half within five years by limiting the growth of non-defense, non-homeland security discretionary spending.

"I sent up my budget man to the Congress, and he says, here's how we're going to reduce the deficit in half by five years. It requires pro-growth policies that grow our economy and fiscal sanity in the halls of Congress," Bush said.

Congress has been reluctant to raise the debt limit before the Nov. 2 presidential election, just 19 days away. Lawmakers are expected to return to Washington for a special "lame-duck" session after the election to pass spending legislation to keep the government running.

Still, Democrats took the release of Snow's letter as another chance to attack the Bush administration's management of the federal budget.

"For the third time in three years, the government has run up so much debt that it has hit the legal debt ceiling. The Treasury Department can prevent default only by taking extraordinary actions, which amount to bookkeeping gimmicks," said Rep. John Spratt, D-S.C., ranking member of the House Budget Committee.

Last year, the federal budget deficit reached a total of $364 billion and it is expected to top $400 billion this fiscal year.

I need to study, so I'll check back in a few hours.