And you thought you knew what Draconian was!

I wonder sometimes if Paul Krugman may not need a little further education in economics. I specifically do not agree with Paul Ryan just about across the board. I definitely want to return the Tax rates to the pre-Bush 2000 settings. I definitely want to boost the fed fund’s rate. I want Business and Bank to have to work harder to make their Profits under higher taxation. They definitely cannot afford to stand idle, when and if it costs more to do so, and what Profits there are become taxed at higher rates. Like Ryan, I believe that Banks and Business will work harder if compelled with some degree of distress. I have to tell the two Pauls that there will be little incentive to achieve greater things, if the Businessman and Banker can sit still while the Profits roll in. The Question becomes How do We get this hard work out of them?

Paul Krugman believes We only have to supply more Cash, while Paul Ryan sees need only for Tax Cuts. I believe both are failed policies. Neither gives Business or Banking any desire to increase Profits in the face of declining Consumer Demand. It is time to take measures to both increase Consumer Demand, and to propel the work ethic of Bankers and Business. We need massive Hiring by the Government of Minimum Wage labor to increase the Income flow of Households, and higher Taxes on Banks and Business. This is the policy I have adopted, and wish that Government leadership would do the same.

I would go totally Socialist, to the befuddlement of no one, and pass legislation into law which states that all Corporate salaries and benefits must be tied to the Employment numbers. The law would simply state that if the Unemployment is higher, the Corporate leadership Salaries and Benefits must be lower by the same percentage. There is no attempt to impose a much higher taxation, just Jail time if the law is not maintained. One would need a base year from which to operate, and I would suggest the previous Employment High in the last Boom. And you people thought you knew how to build a totalitarian State. lgl

National Health Care

I do not like the tone of this article, but like some of the information in it. It becomes obvious there remains an overuse of both medical facilities and drug proscriptions. I favor a national health care system, but one where there are serious restriction of patient demand for services. The best Option for a sensible plan is one which insists the any Patient or Household parent must have paid 8% of the previous year’s registered Income of themselves in medical service expense before government contribution, double that amount with two contributing Incomes. Proscriptions will be treated separately, with a necessary expenditure of more than 1% per month of previous year’s Income before government contribution, multiplying by the number of contributory Incomes in the Household.

There will be some who question my settlement on 8% of previous Income, when health care Costs are effectively higher. This is foretold by the relative statistical amount of Income utilized prior to the advent of Medicare and Medicaid. We get the American Households back to paying the traditional amounts for medical care first, then We turn to control of the entire health care system; one which shows excessive economic Profits to the benefit of no one. We will let the traditional Conservatives still purchase health insurance, but allow them only 4% against the amount due for the registered Income through such premiums for health insurance. This means they must still prove a full 4% loss of Income directly from medical service Cost before any national health insurance benefit will be granted.

This may seem like a wildly inappropriate health program to Some. It must be recognized, though, that this lands medical Costs squarely in the Patient corner. No one will achieve an appreciable advantage by alternate source of financing health care services from government activity, and it makes national health care insurance a viable concern. It will also present great pressure on the health care industry to economize on their medical provision, and hold down Costs; as every major medical treatment will require negotiation with Government-controlled evaluation of the real Cost of medical procedures. I hold this to be the only method to bring the health care industry into viable integration with the rest of the economy. lgl

My View of Real Stimulus

One has to ask the Question on the necessity of further Stimulus. Here is some data for study on the issue. The Reader should remember that this is the peak Summer season where the greatest activity can be expected. It remains clear that We have no gang-busting spurt of activity to get Us back to normal employment. There might be an increase in Manufacturing activity for the Christmas Season in the Fall, though the Christmas Gifts mainly come from Overseas today. Secret of evaluating Fed data: When the Fed states that Retail Sales increases are modest, this means they are hopefully keeping up with the rate of Inflation. Deflation for Monetarists means that they are not getting their 1.4% Inflation, and has relatively nothing to do with Prices.

One can study this information and get an expanded view of the problem. The element I would point to within this article would be the absence of any indication that Business is trying to break out of its current trend. Core capital equipment shipments are tied to capital replacement levels, though economists would claim this is a good thing. It is not where there are a record number of Employed in this country; remember to include that Labor who are not counted simply because they have been out of a Job too long. Cliff Waldman probably has the best attitude to the data, seeing the hollowness behind the fancy dressing of the numbers.

It would seem obvious that there is need for further Stimulus. The trouble here is that Business will try to block any Stimulus which does not advantage themselves, claiming that more Stimulus costs too much with the rising federal debt; unless of course that it gives them greater Profits. I would attest that Business has gotten more than enough Stimulus, even greatly more that any need they expressed–check their record Profits under lower Production data. The Consumers, on the other hand, need a vast Shot in the Arm; not so much a heavy financial contribution, as they need more Jobs. I go back to my Plan to reduce Property and Sales Tax assessments, and connect it with a Minimum Wage increase plus a resurrection of the CCC. We need to send our Young out into the Wilderness to Clean, cut Firebreaks, and plant Trees; and pay them a slightly better Minimum Wage. The total Package will reduce Household expenses both with reduced taxation, and much lower Food and Entertainment Costs. Now here is what I would call real Stimulus. lgl

The Tax Debate

The Bush Tax Cuts and the Alternative Minimum Tax has plagued Us for years, basically because they were all designed poorly, and were set neither to Inflation or the percentage increase in federal debt. The cherished Private Sector of the Republicans would never set their own budget performance in concrete; as they insist that the federal government do. I personally prefer that all the Bush Tax Cuts and the Alternative Minimum Tax structure be abandoned as bad Tax policy, but readjusted with an alternate system granting Tax relief where needed, and relatively nowhere else. I also believe in the need for further Stimulus, but only if it is directed to Those in need of Tax Relief.

The Taxes which functionally everyone pays are Property and Sales Taxes. I previously stated I would allow both the Bush Tax Cuts and the Alternative Minimum Tax to expire, the later taking a proper legislative action. I would allow the Estates Tax to go into effect once more. This is the downside which will make Republican and Business scream. I would placate them with a Tax law reciprocating all tax revenue to States and Localities if they reduced their Sales Tax rates by 2%, and their Property Tax rates by 25%. I do not know exactly what the final price tag would be on this action, but it would basically return the Tax relief to All making less than $200k per year; all the while inciting Consumer Demand and higher tax revenues from Personal Income and Business taxes. I do know the federal government is spending about $1 trillion over tax revenues currently, and will continue this practice ad infinitum into the future under the current residue of Tax policy.

The Property Tax and Sales Tax relief will affect all equally, if not in real amounts. The Tax relief will be granted on a monthly or quarterly basis for the first, and daily for the second; this heightens the willingness to Spend rather than pay off debt as in the arena of some Reverse Income benefit. There is no doubt that the Rich will pay a lot more in Taxation, but there is no indication that the Rich truly increase their Investment portfolios under the current Tax policy. There is actually every indication that the Rich would advance their Investment capacity under the pressures of the higher taxation. There is the argument gaining ground out in the blogosphere that it is time for fiscal frugality, though it holds little Water with a federal government expanding the national debt as rapidly as it has set.

The one thing we Americans cannot afford is maintaining the current structure, which is just as dangerous as the Chinese not expanding their economy. We will go broke, while the Chinese will face Revolution and Starvation. We need Change, and We need it Now, if We expect to counter the troubles ahead. It is not the Time to play Politics. lgl

Direction

I love Paul Krugman’s work, precisely because it is correct, simply corrupted by his education. He was taught that more Cash during a downturn was the Answer for everything–a.k.a. Keynes–and that there was no limit to the potential largesse. He fails to understand that there are limits to the amounts which can be paid for production materials and labor, and that Stimulus over a set amount will only artificially hide Production declines by claimed business Profits. Less Product is produced, less Product is planned for, and less Product is delivered; but business proclaims record Profits. I hate to reveal this to Paul, but it does not make the economy better for the expenditure.

I know that this is a hard Concept to accept, and even more hated; but Stimulus must be driven from the ground up. This means that the Cash has to be delivered to the Consumers. Business will be already growling in anger, but it is to be expected. They will say this requires Tax Cuts for business, when nothing could be further from the truth. Such Tax Cuts only enlarge the Profits of business without any incentive to Invest, unless there is apparent Consumer Demand. The later will not be evident until there is a reduction in Household expenses. Stimulus under these conditions mean only that the Rich get Richer, while the quality of life declines for the greatest number.

What are the Options open to stimulate the economy? I like a moderate increase in Minimum Wage, something which produces a shelved increase in all Wage scales as Business pays for expertise. I say moderate increase because We do not want any increase in Consumer prices if We can help it; Business will scream, but the increase should be planned to not lose Business more than 3% of their Profitability. One of my most favored types of Stimulus is federal assumption of State and Local governmewnt expenses, but only if the local government authority can prove a reduction in Property and Sales Tax levels by the replacement. There are other Means at economy policy operations; I only wanting to outline the potential for achievement in this area. lgl

Does this make Sense?

One has to ask if there is anytime where it is okay to balance the budget. Mark comments that there are no easy Solutions for reducing the national debt, but there are! Martin Feldstein would concentrate on tax expenditures; a concept which would immerse all discussion into minutiae, a Hall of Mirrors from which no exit will be found. Mark states that the real problem is the Spending on Social Security and Medicare. The first Statement must say that Social Security is not really a problem at all, and requires only minor tweaks to put it on a sustainable path. The real problem is Health Care, and here the approach is all wrong! We must discuss the real factors prior to a resort to legislation, or else We only get printed Words whose enactment mean only further confusion.

We need a simple, canopy Tax law which supercedes all previous legislation. We try to take the Watch apart like children, having absolutely no idea of how to put it back together and make it work. We build a new Watch which worked, and throw away the Parts of the old Watch which conflict with the operation of the new Watch. I shall not go into the directions which We could take, but establish that the primary policy must be to raise sufficient tax revenues to constrain the national debt. Once We set an acceptable debt level, then We can understand what degree of tax change must come.

Health Care is also much easier if We target the expenditures, and not the Patients. I would first set out medical districts based upon geography, then set expenditure budgets for health care based on number of applicable Patients. I would then set the budget for the district, and tell all medical facilities they are responsible for the medical care of all people covered; it is here I would advocate universal health care, because anything less will only incite greater health care Costs in the long-run. I would be nasty, and tell all medical personnel that they will get only $2000 per Patient; with themselves distributing the health care to greatest advantage. The above distribution will be constrained by a national program of stated necessary services which must be provided; which will include Emergency Room care, Pain Suppression, necessary surgeries, and correction of the effects of Injuries. The Pay of medical professionals, publicly announced and maintained, will be dependent on the efficiency and quality of treatment directed at the permanent health of the Patients. I would get even nastier, and provision a limitation of Drug proscriptions to 3 per Patient over a year, though Proscriptions can be of a permanent nature until reversed by Doctors’ order. This is the way, I believe, that real change will come to the expenditure position of Government. lgl

A brand new Fed??

Ezra Klein gives us one view of financial regulation. Is it the correct view?–your guess is as good as mine! We are at least on the same page in considering this passage to be no real fix of the situation and danger. Some wildly inappropriate child asked me the very sensible question of How to fix the problem, and I said something like ‘Duh!" The entire embarrassment led me to study on the situation, and come up with a few ideas, though I doubt it is an original thought, or of esteem value.

My first generative concept is that the entire matrix of the Federal Reserve could be wrong. I would support a prohibition of the Fed from lending to financial institutions, or buying Government securities. I would allow the Fed to sell Government securities to aid the Treasury, but no purchase by themselves. I further would turn the Fed into a holding corporation, allowing them to only purchase Stock in private financial institutions. I would insist any such purchase must be of Voting Stock, granting the Fed capacity to intercede in lending and other bank practices. It quickly becomes a situation where the independence of the private financial institutions is restrained by national economic policy, if they desire to possess the funds for the expansion they crave. It also separate financial practice from Government public funding, forcing the Treasury to themselves enter the financial markets as a competitive player.

The question will arise at this point of How the Fed should finance their investment in the private banking industry. I personally believe that a new Pension Fund should be formalized, one that is mandatory, and somewhat rigorous in design. I would suggest that the new Pension Fund should have a mandatory 12% Payroll tax placed upon it, which must be matched by an equal Employer contribution, and one which is separate and independent of the current Social Security system; the later turned into a national Health Insurance system. All other forms of Investment by both Private and Public will be kept, though there is an obvious reduction to be expected in Wildcatting practices above normal 401k procedures. Private Accounts would be kept in all this, and the ownership of the Accounts specifically limited to the Contributor without Government intercession, but the Fed will retain the Voting power to continue their power over the banking sector. Did I mention that the Investment in this Pension Fund will be precisely limited to purchase of financial institutional Voting Stock, so neither Fed or Government develops an inclination to spread to other programs other than Contributor Savings? lgl

A Waste of a Good Saturday

I had zero plans to write anything this morning, then I read this article. Then Uwe went and asked his last question. The Answer to the question is the Consumer of the purchased Products manufactured. This is commonly known, and not truly so surprising. What is remarkable is the high favor I feel towards Capital Gains, not shared by many economists. So it be that I am writing on a beautiful Saturday morning, rather than watching the good-looking women in their Shopping for those Goods; no comments about dirty old men please!

Capital Gains are a wonderful form of taxation. They first tax only success! They don’t come bite you if you have not had a good year. It is a taxation of Profits alone. Poor business management is left to be punished with bankruptcy or loan payments. It has almost no impact on capital aggregation, another function almost totally based upon Profits; this function fuels little same sector investment, but serves to transfer Profits across Production Products so that saturated sectors do not become overfilled. Capital Gains provides further insurance from this over-fulfillment in sector, a genuine benefit though somewhat derided by economists.

What I like about Capital Gains is simply the impact it has upon Consumers. Economists would acclaim that this impact is entirely negative; but I will disagree. Capital Gains taxation is a form of Tax farming, enjoined only on successful production. The Consumers would wind up paying the taxation in the long-run anyway, though there is disagreement among economists over this Statement even. A certain level of tax revenues must be maintained to hold the borrowing power of Government, so taxation is a reality; even if some economists believe that Government does not have to be paid for. Capital Gains taxation, though, relies on Tax Farmers, who have liberty to assess the taxation of the Consumers to both their own and Consumer benefit. Taxes can be spread insequencially among Products–meaning higher tax rates on some Products, lower upon others. They are collected upon Consumer preference, and only when the Consumer has the ability to Pay; guaranteeing that Consumers themselves have the Profitability to endure the tax payment. Capital Gains has actual preference over Income taxation and Sales taxation, all because of its emphasis on successful Production. lgl

Through the Looking Glass darkly!

Arnold Kling probably sets the seminal review of the new Finance bill. What I fear is the lack of punishment of any form for collusion, artificial Price mechanisms, and evasion of personal liability from both Regulation and banking practice. Malfeasance leaves the arena of crime, and enters the concept of personal misconduct. I wonder seriously if the Too Big to Fail concept is not the culprit which must be chained. Arnold considers the free insurance as the serious fault, while I think any insurance is the fault. He would charge banks for their criminal commission, while I insist that all such institutions have violated the Public Trust; necessitating their automatic break-up, requiring a redistribution at preferred rates of all investment and stock. I seriously believe in the idea of hanging them all separately, so We do not get hung collectively!

You can find the real difficulty with attempting to forestall the growth of corporate excess. This can be accounted by the constant, and massive, desire of the corporate structure to expand with their desired goals; all while Regulators maintain only a periodic and splintered overview of the progression. The Wilson failure to extract meaningful compliance from corporate structure highlights the advantage corporations possess over Regulators, who are most often minor officials of unknown reputation and inadequate Means. This is especially true in the realm of financing any public campaign for support–where Corporations overwhelmingly lead. There remains relatively no way to sway the Public, until the Public already has been victimized.

The difference in attitude between Government and Corporation can be highlighted here. Corporations are overturning Government efforts to restart the economy through disinclination to spend on Rehiring, even though they are enjoying record Profits. They are simply piling up Cash; which they will neither spend, or distribute to their Shareholders. The last estimate I have seen places this load at about $1.8 trillion, which relatively cancels the half trillion dollars expenditure allocated by Congress to restart the economy. Corporations were pulling Cash out of the economy faster than Government could shove it in. And everyone wonders Why Consumers are not back to Spending more, when Household Income is down, and Retail prices are up; though in this area, it is only under the periphery canopy of Corporations–Banking, Utilities, and Communications access. It all points out that sharp and heavy punishments must be outlined to fight the corporate structure under conditions of malfeasance of corporate officers. Will We witness such real impact?–not as long as the lobbyists prosper. lgl

Trade Wars

Robert Reich makes a lot of sense in this Piece, but of course, I must tear it apart. The American trade deficit will never close under present policies, and will only widen with volume increase. He is only partially correct in his estimate of the loss of Jobs through trade, this coming only under conditions of a widening trade imbalance; still, refer to the previous comment. He does not recognize that current economic policy is specifically directed to switching American Imports from Consumer Goods to Industrial Supplies. This does have the prospect of increasing Business Profits, but only at the Cost of Income levels to Consumers. Robert goes back to the traditional Smoot-Hawley Act to defend Trade policy, an aged economic argument, while actual economic conditions have almost totally reversed. I will not explain the convoluted argument here, but a Tariff War would be a benefit to the American economy, lessen the power of the great International corporations. Trade wars do not always damage everyone, especially when started at high levels of economic development.

I find myself now stuck with explaining the obtuse economic argument that I tried to avoid in the paragraph above. I might as well explain it in terms of the American economy. We have now reached an economic plateau where technological development will not engender greater employment. Mechanized Production has already been introduced, and Software has been developed to a level where new Programming is simply a process of component implant. Energy development will never occur at Present, solely due to the lack of financial funding on a scale leading to massive deployment of labor and resource; in actuality, there must be a Trade War in order to achieve this deployment. The entire Business trend in place ensures that programmed mechanical Production displaces labor faster than any increase in Production could employ additional labor; there being real reasons why Production would not increase in volume even for added Trade (the increase of real Training Costs alter the competitive nature of Trade Provision), if Business has to resort to Hiring additional labor.

A Trade War breaks this planned Schedule of reducing labor roles in Production. It insists on the adoption of alternate options to obtain Product previously supplied by an interrupted Trade. It basically alters the flow of capital formation, and actually increases the volume of that Investment. Additional labor of different, more vibrant Skill levels are required at such times, and urbanization spreads to rural areas; Population concentrations start to disperse, and less Call for government services occur, as qualified applicants decrease in number while under movement. The switch in tax base insists upon disturbance of Tax Impact, and codified Tax rates are broken up with the actuality of higher tax impositions implicit under the economic conditions generated. Trade wars, therefore, themselves potentially generate a technological reform, one which re-employs a currently wasted Skilled Labor. Economists would avoid all this through lack of evaluation of the effects of Trade wars, but it is now Time to search for new Answers. lgl

The Politics of Leadership

Ordinary, or should I say little, people think there ought to be a direct line from Science to Production technique, without a necessary Run through the lobbyists. They write articles exactly like this one. They do not understand the major propellants behind all economic endeavors under an overpopulation. We have too many people to take care of, and too few resources to take care of them; and politicians who cannot withstand any drop in provision to any segment of the population which has access to public media. Leadership is always bombarded with outrage at lack of performance on any issue, and the use of inferior materials is always preferred over informed Science when there is a unavoidable delay in provision. Bad despersants are chosen over no despersants, and bad production is chosen over no production; especially were there is a loss of publicized labor. Such concepts of overgrazing of federal lands finds counter with estimates of price increases in Meat, and higher prices for bulk Wool. The mechanics of overpopulation Politics become Bread and Circuses even in the most intelligent environments.

Another reason for leadership failure comes from the existence of antagonist propaganda, as is discussed here. The main point here is the Conflict opinion to arouse Readers, it giving a high advantage because of the entertainment value; it equally being of poor performance in evaluation capacity. The real damage to leadership comes in the presence of countervailing disinformation to be utilized in opposition to leadership; information which has not been vetted, and consists of very inferior quality. Leadership finds itself compelled to defend every position taken, even when it is obvious such positions had to be taken.

The desire for esteem may be the final component within the matrix. It is not the desire, but the position which becomes important. Choice is propelled by desire, but achievement insists on new and daring proposals. A new arena must be created, with a different Take on the information, so that a fresh outlook is expressed. This only brings confusion to the leadership role, who must now assign gradients of value to leadership choice. Rancor and opposition is aroused through the simple act of making a decision, which is of no value to Anyone. One has to adjust priorities in the first place, but placate injured feelings in the second place, simply to establish any policy upheld by Consensus. lgl

Higher Taxes and Interest Rates

Stephen Williamson puts out a thoughtful short Piece; read it carefully three times, then ask yourself how much truth can be found in it. The New Keynesians are themselves responsible for the sticky price function, while the New Monetarists produce their own lack of liquidity. Both step away from natural market formulation, inciting unemployment and over-extension of debt. Each outline why Government should spend funds which the institution does not possess, and both demand such funds not increase through taxation of any type. Does this really seem like a sensible policy when championed through decades of Government interference in the economy?

I have long been an advocate that the Fed set the Overnight rate at 4%, and leave it there. Such a high Interest rate does not provide real obstruction to business performance, and grants Investment a necessary base of Profitability. It guarantees a protected platform of Savings for Labor not directly associated with Finance or the Market structure, and supplies adequate Consumption funds to a significant level of Consumer Demand. There is the unequivocal Statement that economical policy can make business performance too easy for business, allowing them to maintain inefficient Production operations with a vastly reduced Work load for themselves. Business ownership or management should not mean that one can spend 6 months of the year in leisure activities. There is something to fear in the fact that the Poor are still able to purchase Necessities, while the upper classes are still spending furiously; all while the middle classes are descending into poverty.

The above information may not make sense to some, but I will state for the Record that Consumption levels actually depend on the Income levels of the middle class. Provision of Consumption for the Poor only brings about a 4% Production profitability in tradition, with privation and reduced Consumption follow for the Poor when prices are raised. The Wealthy employ massive numbers in the luxury sectors in provision for themselves, but they gain such Income from control of the provision of Consumption for the middle class, where Production Profits often reach a real evolved level of 12%; potentially 20% if self-financed. The real threat here lies in the necessity of the middle class to handle the actual labor of Production, supplying it for Poor and Wealthy alike. Current Interest rates and economic policy ensure that the middle class is only receiving the Income rates of provision for the Poor, while paying highly similar rates to that paid by the Wealthy for a massive number of their own necessities. Such a system will obviously have a high rate of breakdown, hardly sustainable for half a decade at a time. The trouble comes when Recovery funds are drafted from the middle class who cannot afford the draft. It is kind of a sad thing to say for a man who is an advocate of both higher Interest rates and higher Taxes, but both the Poor and the Wealthy need to pay higher Taxes, and no one should escape the Costs of either Production or Consumption. lgl

Understanding on alternate level

Mark Thoma brings forth the great Question: Is the reduced Investment the result of lack of Demand, or lack of Supply? Here is a list of my own which may help the Student understand:

a) Consumers want Product, but can find no Suppliers;
b) Suppliers have Product, but can find no Consumer Demand;
c) Neither Consumer or Supplier wants Product;
d) Both Consumer and Supplier want Product.

It is a wonder how little is actually devoted in economic writings to study of those issues; a major factor being placing your reputation on the line on very fickle, and rapidly changing forces. There are certain observations, though, which can save both reputation and understanding.

1) The Concept of unlimited Want has always been oversold in economic study. There are several restrictions on both Consumer and Supplier of Product; some of which deal with the constraint of Income level, but not all. Every Consumer must handle the Junk once purchased, and there is no real overflow outlet other than to simply give it away. I remember the Snowmobile which had been driven 3 hours in 12 years of possession; Storage Costs, if accounted, would suggest One-Third of the Cost of the initial vehicle.
2) Suppliers of Product will not invest in Production unless they can find a real potential Consumption demand out there. Remember that Start-Up Costs with Mortgage and Employee Salaries equal an average 12 years before real Return at normal Profit ranges occurs.
3) Consumers and Suppliers are both constrained by Competition; Consumers cannot decide which consists of the best Choice as to model, and Suppliers fear the expansionary capabilities of competitive Producers. Neither can make an exact determination of the capacities they fear, or the value of success if they do make the right choice.
4) Government screws up all Plans of both Consumer and Supplier, while actual taxation makes up little more than a Production Cost which everyone must pay. Government policy interrupts natural economic forces, while Government regulation obstructs normal Production behavior to far greater degree, than it does obvious criminal behavior.
5) Financial institutions and instruments are designed to finance Production. Government absorbs the capacity of financial institutions to supply Production capital–raising the Cost of actual Finance–while regulation never reach predetermination levels of economic decision-making, and only cripples post-determination levels of Choice.

It may be clear that Government presents more danger than benefit to economic performance. It is equally clear that there must be some regulation of economic performance, as the descent into criminal behavior is too easy for everyone. It would actually help if the Court system was actually more liberal in interpretation than it is! I could wish that Courts would first determine by Jury decision if an activity was a criminal violation–just an Up or Down Vote–then have the Judge determine under what covering enactment the Violator should be prosecuted. The outcome would mean less need of legislation, and less time in prosecution. The term Let the Buyer Beware could be far cheaper under such conditions that the institution of Government observance. lgl

Two Ways of Thinking

It would be nice if I had evidence to counter this argument with more than Words, but I am sadly not doing research at this point. It is true that companies are hoarding much Cash, whether it equals $1.8 trillion cannot be proven by myself. David Leonhardt continues the tradition of treating Corporations with kid gloves. He wants further persecution of Labor, free Trade, remove Risk for Corporate decisions, higher Tax giveaways to Corporations, and suppression of any profitability in labor Savings by elimination of equitable long-term Interest rates. I do not think this is an Answer to anything, as Corporations are hoarding Cash simply because they spot no sincere Consumer Demand out there for a higher level of Product.
The supposition must be that Corporations have become a sinkhole where funds go in, but nothing comes out.

I think there is a Solution to this environment, though Congress is not likely to impose it. My suggestion would be tax law insisting that Corporate funds cannot be held over 3 years without becoming re-taxable at Corporate Income rates. This, combined with a limitation on bonus awards–something like 25% of the total Profits in the first year, with no down-the-road non-taxed award system–would insist that such funds would be distributed to Stockholders on a timely basis, or absorbed as Taxes at a high percentage rate where exemptions are difficult to defend. This lets Corporations understand that they spend it, or have backup Spenders to spend it for them.

The entire purpose of the legislation simply precludes a Tax system which encourages Corporate executive malfeasance in organizing slush funds which they eventually intend to spend themselves. It is not the responsibility of Congress to guarantee the lifestyle of any private citizens, though they do have a responsibility as an Employer. Why should Thousands of citizens be allowed immense Income, while Millions are denied Contractual Rights? Congress has made a Wrong Turn when they seek to penalize the Poor for simply providing the services demanded by the Affluent. I would suggest a law insisting that Government employees be laid-off when and if their Contractual Wages and Benefits cannot be met; the Government responsible for Unemployment Benefits for these Workers until Government can meet its contractual obligations to themselves. It makes much more sense to tax the Wealthy rather than the Poor, with many more tax revenues available. This is your sorta un-reconstructed Socialist. lgl

The Concept of austerity is an excellent idea, if utilized with the proper attitude. Robert Frank has some good suggestions, but lacks a coherent approach. Uniform persistence may be what is needed when the Crunch comes. The trouble develops because a positive posture towards Spending suffers when the economy starts to falter. Then everyone starts to claim special circumstance, and budgetary restraint is thrown out the window. Consistent programs are the Answer to the riddle of budgetary health, but How to organize becomes the issue. Here are some of my ideas.

1) The Interest Tax: Taxes are automatically increased to pay for the previous year’s Interest payments. The Tax burden is to be equally split between Excise Taxes, Personal Income, Corporate Income, and Capital Gains taxation. Tax authorities will automatically publish the Interest payment surtax in percentage terms on the last day of the current Tax year.
2) The Ticket Tax: Every Event requiring an entrance fee must pay a $1 tax for each attendant. Event holders have the option of either collecting the Tax, or simply considering it to be an additional Income taxation. This Ticket tax will bring in an immense source of wealth, with only a general taxation of Entertainment.
3) The Foreign Product Tax: Every Sale of a foreign Product receives a uniform Quarter per Sale tax. The Tax would be assessed directly at the Cash Register similar to a Sales tax, and of such nature that almost no Receipt will have over $3s in Taxation. It is not an excess taxation, especially if only one assessment is made for multiple identical items which are purchased on the same Receipt of the same item.

The enjoyable aspect about all three forms of taxation is the realistic evaluation that none of them would have any impact on Employment levels. The taxation is of too minute a nature, with the Products and Services so necessary for normal lifestyle conduct, that everyone would consider the taxation equal to inflation. I like this form of budget alignment because it raises huge tax revenue with little economic drag. It need be considered as it is somewhat neutral tax strategies at increased revenue levels. lgl

Points of Order

Bhagwati may be an excellent economist with finely tuned views, but he may also cheery-pick his positions as well. Read him, then ask yourselves if all your questions on the Trade issue are answered. I have a number of Myths of my own for which I would like an answer. Stay with me, and maybe we can achieve some understanding of the dilemma of Trade.

Myth 1: Production process would seem to be set up for long Transport, but where Product produced is of lighter weight and poorer quality, shortening Product life at greater ultimate use of materials.
Myth 2: Transport of Product across oceans seems to increase the Cost of Products by about 14% of the final purchase price, or 34% of the initial Wholesale Cost at Production center.
Myth 3: Transport Labor Hires increase by 40% due to cross-ocean traffic, producing an 80% Cost increase in the traffic.
Myth 4: Total Labor Hires for Production remain relatively the same when incurring the addition of Transport, though the Cost of that Labor goes up when Inputs to the success of that labor are added.
Myth 5: That the actual Productivity rate goes down, if Transport labor is included within the matrix Cost of Production.
Myth 6: That the Materials Costs of Production increases by 71% in Price, and 44% in volume, when Transport fuels and capital equipment are also inventoried.
Myth 7: The environmental Cost of Production rises to 2.3 times domestic Production when Transport emissions are included with ocean traffic.
Myth 8: Production Costs would triple, if the Public Cost of Port capital provision were included within the spectrum of Production.
Myth 9: The retention of Transport labor seeks the least-Paid, with the least benefits, of all known sectors of Production though the stated Pay provision seems high.
Myth 10: That the living standards of the World can rise without loss of living standards of developed nations, though the undeveloped world refuses to engage in greater benefits for Labor at any level.

I could come up with some additional Myths, but would like some Statements for the Record on these issues. Maybe I could find more Joy in the practice of International Trade. It is far more likely that I would find a more intense desire for a practical Tariff system which at least paid for the capital of Port facilities. Isn’t it lucky that Commentators can ignore Questions which place one ill at ease? lgl

Viva la Revolution!!!

David Frum came up with a measured argument which should be read. He seems to cover the ground fairly well. The bureaucracy entailed in any form of construction is easily found; just try to build something! He projects high accuracy in protesting the type of Government Spending which would be utilized; remember the Beltway is governed by lobbyists, all representing large Corporations who want the greatest Profit with the least labor Cost expenditure. His last Point deals with the damaged financial system. Here he might be a little off the Mark. David is still addicted to the Too Big to Fail complex. We are talking about a rotten financial system designed solely to enhance the benefits of Management and major Investors. The Fed position would assert that these economic Profits must be maintained, though the process has always been a discrimination against Debtors, Stockholders, and small Investors. I am of the belief that Too Big to Fail must be altered to Has to Fail before a bright horizon will ever appear. Government Spending must intervene to carry the flow of Cash within the banks’ failure process, but We first must get past Congress.

I witness nothing I would really desire to discuss today, much less anything that will buttress the previous paragraph, so I will digress into personal ruminations about the previous sentiment and the current state of the economy. The progress of the economy is suppressed to major degree because the Profits are channeled, and necessary sectors are not receiving the funds to properly act within the economy. The real trouble consists of the most successful of the recent boom, and their control of the policies of Corporation, Markets, Finance, and Government. They insist on the maintenance of their Share of any business endeavor, though the Recession resulted from the inadequacy of Profits to grant both their demands and fund the necessary sectors for economic performance. Failure was bound to arise, and return to success will not come until their stranglehold on the economy is removed.

This View will seem extreme to most Economists, and all Business personnel. I actually wonder at this cohesion, as small Business and small Banks endure the victimization as well as labor; themselves being a major factor in the necessary sectors which are not being properly financed and funded. Change will not be easy because of the entrenched wealth of the new Oppressors, but alteration must come before economic growth can be realized. Do I sound like a wild-eyed Revolutionary? lgl

The real value of great discourse

I don’t really believe this argument, but Readers need recognize there are different evaluations out there. Less or greater usage of temporary layoffs may make a statistical difference in the reported state of the economy, but I doubt if the laid off employees in the real world find a real distinction. It is basically an argument that business utilizes to feel better about themselves. The typical business will lay off a thousand employees rather than lose half of their Profits, all to protect a Stock value Drop of 25%. No one attempts to justify the real human loss of a potential 12 Weeks loss of Income for Employees; just to ensure that Investors and Management can maintain their extremely high Profits.

Here is a good source for reading material as far as the debate on economic orthodoxy. I am comfortably from the Outside, and can state that there has never been a model created which duplicated the economy precisely. This is not necessarily a bad thing, or is it entirely possible. There would be no markets, per se, if true values could be rationally defined in real time. The lack of possibility comes from the actions of Participants who utilize the advanced information of the models in the first place; if they were at all accurate, they would skew the movements of the markets. It is a major problem with the nanosecond Traders of the markets, who eliminate the uncertainty from the markets. Machine Trading will obviously impede the markets as they advance, all leading to distortions within the markets; a serious problem yet to be adequately addressed.

I like this article, especially its reference to Roubini. I didn’t read much of the thing, but thought it was indicative of the practice of economics. No one could exactly express what a billionaire prostitute could possibly pass on to any Intelligence agency. Incoherent data streams are inherent in both Intelligence and Economics, and anything made from those streams must at best be considered to be hunches. The whole situation for both, like the investigation of the young woman in question, has been over-explored, and in serious need of common sense. lgl