Category Archives: Economics

The Core Of The Problem

It is a fundamental difference over the role and purpose of government:

Somewhat surprisingly, Mr. Cantor was in fact prepared to bargain on about $20 billion in higher taxes on “the shiny balls of the millionaires, billionaires, jet owners and oil companies” that Mr. Obama so often mentioned in public. “If they wanted to be able to claim the win on that,” Mr. Cantor says, he wanted net revenue neutrality in return, by lowering the corporate income tax rate or perhaps enacting an even larger tax reform. In effect, he was calling Mr. Obama’s bluff on “cheap politics.”

In private, however, the debate always returned to the status of the top marginal rate for individuals earning over $200,000 and $250,000 for couples—aka the Bush tax cuts for people who do not own private aircraft. Mr. Cantor argued that some large portion of the income that flows through the top bracket comes from “pass-through entities”—that is, businesses—and “to me, that strikes at the core of what I believe should be the policy, and that is to provide incentives for entrepreneurs to grow.”

By contrast, he says, “Never was there ever an underlying economic argument” from Democrats. “It was all about social justice. Honestly, one of them said to me, ‘Some people just make too much money.'”

We need at least one more election to remove enough of the Marxists from government to turn things around.

[Evening update]

Obama won’t escape part of the blame for the downgrade:

Defenders of Obama will attempt to pin the blame on his predecessor, President Bush, and on intransigent Tea Party radicals in the current Congress. But that would leave out the part in between. For his first two years in office, Obama’s party controlled both chambers of Congress – for part of that period, he had a filibuster proof majority in the Senate. During that time period, he and his fellow Democrats could have passed his supposedly ideal, long-term, deficit-reduction package — one that represented a “balanced approach” between spending cuts and tax increases. It also could have delayed the deficit reduction for several years, so it wouldn’t have affected the current weak economy or the “investments” he considers crucial. Forget about actually accomplishing serious deficit reduction — he didn’t even attempt it.

Of course he didn’t. Despite all his demagoguery over the last few weeks, he’s never favored a “balanced approach,” if that meant cutting anything other than defense. He, and his Marxist attitude (along with that of the rest of his party) is certainly one of the main perps.

Our Leaders Are Found Wanting

Walter Russell Mead:

The world’s leaders have been on trial these last few months. In Europe, a long running currency crisis has tested the commitment of Europeans to the social ideals they so often speak of, and to the community of nations they have worked to build since the 1940s. TEKEL: weighed in the balance and found wanting.

In China they have been on trial as the accumulating evidence suggests that corruption, incompetence and malfeasance damaged the country’s vaunted high speed rail project and led to the deaths of dozens of passengers. TEKEL.

In Japan they have been on trial since the tsunami last spring. Would Japan’s bureaucracy tell the truth to the public? After a lost generation of stagnation would Japan’s government come up with an effective plan to reconstruct the north and rebuild the country’s economy? TEKEL.

And in the United States we have a stagnant economy, a mounting debt and no real idea of the way forward. Would Washington come up with a constructive, future-oriented program to move the economy forward and start the adjustments necessary to prepare us to live within our means – and to grow our means so it wouldn’t be hard? TEKEL again.

Europe, China, Japan, the United States: the leaders of the world’s four largest economies are nowhere near passing the tests that history has set them. In all four places the instincts of the politicians are the same: to dissemble, to delay, to disguise and to deny.

The problem is that we want them to lie to us, and want to see our hopes in them, even when there is nothing behind the curtain. It’s a failure of the political class, but they in turn are the result of a failure of the electorate. Perhaps the last elections was the beginning of a turn around. We’ll see next year.

Does CO2 Cause Warming?

…or does warming cause CO2?

Darn that pesky “correlation is not causation” thingie.

[Update a few minutes later]

This seems sort of related — does iron-rich dust cause ice ages?

The thinking goes that, during warm periods, much of the Southern Ocean is an oceanic desert because it lacks the iron crucial for plankton growth. That changes at the start of ice ages, when a wobble in the planet’s orbit causes an initial cooling that dries the continents, generates dust storms – particularly in central Asia – and sends dust onto the surface of the Southern Ocean.

The plankton that then bloom take the carbon they need from the water, causing the oceans to absorb carbon dioxide from the atmosphere to compensate. This cools the atmosphere further, creating yet more dust-producing regions, and the cycle continues, sinking Earth into an ice age.

When the planetary wobbles, known as Milankovitch cycles, eventually choke off the cooling, the feedback goes into reverse: continents warm, dust storms subside, the Southern Ocean is starved of iron, and CO2 levels in the atmosphere rise again.

Emphasis mine.

Big-Government Morality

Thoughts from Timothy Dalrymple:

One of the great difficulties of this issue, for Christians, is that the morality of spending and debt has been so thoroughly demagogued that it’s impossible to advocate cuts in government spending without being accused of hatred for the poor and needy. A group calling itself the “Circle of Protection” recently promoted a statement on “Why We Need to Protect Programs for the Poor.” But we don’t need to protect the programs. We need to protect the poor. Indeed, sometimes we need to protect the poor from the programs. Too many anti-poverty programs are beneficial for the politicians that pass them, and veritable boondoggles for the government bureaucracy that administers them, but they actually serve to rob the poor of their dignity and their initiative, they undermine the family structures that help the poor build prosperous lives, and ultimately mire the poor in poverty for generations. Does anyone actually believe that the welfare state has served the poor well?

It is immoral to ignore the needs of the least of these. But it’s also immoral to ’serve’ the poor in ways that only make more people poor, and trap them in poverty longer. And it’s immoral to amass a mountain of debt that we will pass on to later generations. I even believe it’s immoral to feed the government’s spending addiction. Since our political elites have demonstrated such remarkably poor stewardship over our common resources, it would be foolish and wrong to give them more resources to waste. What we need our political leaders committed to prudence and thrift, to wise and far-sighted stewardship, and to spurring a free and thriving economy that will encourage the poor and all Americans to seize their human dignity as creatures made in the image of God, to be fruitful and take initiative and express their talents and creativity.

Fat chance of that. Not enough opportunities for graft.