The president who did more to expand the federal government than any other in modern history began his first term assuring Americans that the only thing they had to fear was fear itself. Flash forward seventy-six years and FDR’s spiritual successor wants his fellow countrymen to live in fear—so his administration can achieve the same Big Government goal. Lets call it the Fram filter doctrine. Remember the old Fram filter ad? “You can pay me now or you can pay me later.” There’s your philosophical justification for the Detroit bailout. We have to bail out Motown (and everyone else) NOW or the whole economy will go to hell and we’ll WISH we’d made the “investment.” Rubbish.
There’s only one way Bailout Nation makes sense: if you accept the supposedly “inevitable outcome” of failing to prop-up failed enterprise. Oh, hell. You don’t even have to accept it; you just have to be afraid that it’s true. If GM catches a cold, Americans will die of plague. Are we really that stupid?
Cravenly, disgustingly, to their eternal shame, GM and Chrysler Gulfstreamed to Washington to flim-flam the fruits of their epic mismanagement as a threat to all taxpayers. Their CEOs testified that if we didn’t hand them $19.4B worth of taxpayers’ money, the “ripple effect” of a Chrysler and GM Chapter 11 would kill the economy dead.
No! Worse! If we “let” GM and Chrysler slide into bankruptcy, it will destroy America’s entire industrial base. Foreigners—foreigners!—will steal our middle class and, eventually, turn us into their bitch.
So we paid up. And now the zombies are back, using the same tactics that loosened the public purse strings the first time. Pols and press are busy perpetuating the same flawed, fear-based logic which obviously, catastrophically, nearasdammit immediately failed. In fact, we’re post-Fram. The new thinking: we can pay them MORE now and we can pay them MORE later. And… that’s it. Oh yes, we eventually get electric cars.
Here’s another idea. How about we pay Chrysler and GM NOTHING now so we don’t destroy the entire United States economy later? I’m serious. Forget debtor-in-possession financing. If the markets won’t embrace Chrysler and GM’s C11 turnaround plans why should the American taxpayer?
If America wants to clean up the aftermath of a Chrysler and GM C11 by creating a new health care, pension and unemployment safety net, if John Q. Public feels sorry enough for displaced auto workers to spread boondoggle billions over the bankruptcy-blighted landscape, go ahead. But for God’s sake, let these automakers die. It’s gonna be ugly. But over-capacity is over-capacity. There’s no way for GM to avoid the consequences of its inability to make itself indispensable. None. When the bailout music stops, GM still won’t have a chair.
If we continue to bail out Detroit, and extend that largess to automotive suppliers, dealers, etc., we’ll screw-up the economic fundamentals that made this country the world’s greatest economic power: minimal government intervention in fair, free and open markets. We’ll be stealing food from the tables of those companies and workers that didn’t end up in DC. Who didn’t use threats, bribes and extortion to avoid the consequences of their own actions. And we’ll be running-up the price of transportation for the average consumer.
Bankruptcy was designed for this exact situation. Do we really have so little faith in our existing institutions that we want to create some special exemption for a gang of bombastic millionaires that somehow got the idea that they deserve a pass that we, the people, would never receive? What’s wrong with Chapter 11 anyway? GM and Chrysler are afraid of that no one will buy a car from them in bankruptcy. And they want us to “take ownership” of their fear. With our cash.
Someone needs to stare these fear-mongering whiners in the face and tell them to man up. If it’s true that consumers won’t buy your products after you’ve declared bankruptcy, it’s your fault. Not ours. YOU killed your brands, not US. Instead of holding a gun to our head, why don’t use your valuable—make that expensive—time devising a way OUT of bankruptcy. Find some way to come back from the dead that doesn’t steal money from the mouths of productive citizens and taxpayers.
Yes, we’re afraid for our economic survival. Yes, we feel for others who will suffer for their boss’ incompetence, arrogance, short-sightedness and greed. But we must not abandon who we are as Americans and what we believe in.
Faith, hope and charity are wonderful, noble ideals. But they’re not what makes America strong. That would be independence, creativity, hard work, determination and a deep-rooted belief in fair play. Now is not the time to abandon our principles. Now is the time to embrace them, come what may. Yes, we can pay Detroit now. But mark my words: we will pay for it later.
As GM goes, so goes America?
The prophecy will come true.
The problem is America abandoned her principals years ago and now it is time to pay the piper.
Peter Schiff predicts the economic collapse very accurately. From 8/28/2006
This is well worth watching.
Yes, we’re afraid for our economic survival. Yes, we feel for others who will suffer for their boss’ incompetence, arrogance, short-sightedness and greed. But we must not abandon who we are as Americans, and what we believe in. Faith, hope and charity are wonderful noble ideals. But they’re not what makes America strong. That would be independence, creativity, hard work, determination and a deep-rooted belief in fair play.
… That would be independence, creativity, hard work, determination and a deep-rooted belief in fair play. Might as well throw in something about being thrifty, brave, loyal, etc.
The implication here is that the govt. has traditionally taken a “hands off” approach to the economy, letting the winners win and the losers loose and never causing higher prices for consumers. That is simply false.
All one has to do is look up the history of tariffs to see how they were used to foster the growth of American industry – at the initial expense of consumers. One can see how shipbuilding was helped by protectionist legislation. Govt. loans and land grants helped to build the railroads.
There are many cogent arguments against bailing out the automakers. But conjuring up an image of a “traditional” America, one that never existed, isn’t really a sound argument.
That said, I do agree the D3 should be filing Chapter 11. With the govt. providing the DIP financing.
The “ripple effect” would kill the U.S. economy dead.
No, but it will hurt it. The hyperbole is disingenuous, but the general point is accurate.
You’re at what, 8% unemployment now? Were a major automaker to crater, that number goes up to 10-12%. Without a comprehensive social safety net (which you don’t have) that’s not sustainable. People will fall between the cracks, and the eventual bill for the fallout will be significant, both social and economic.
The problem isn’t the bailout itself (whether you’re talking banks, automakers or what-have-you), it’s the utter lack of conditions. Bridging the economic chasm isn’t a bad thing, but the current methodologies are bridges to nowhere. Unlike the Chrysler bailout of nearly a quarter-century ago, there’s no strings attached. The bailout should be a means to extort GM et al into developing competent management and a viable business model. The bailout should be an arm-twisting, not a buffet.
That’s not happening. That’s the real problem.
If we continue to bail out Detroit, and extend that largess to automotive suppliers, dealers, etc., we’ll screw-up the economic fundamentals that made this country the world’s greatest economic power: minimal government intervention in fair, free and open competition.
Side question: how do you ensure free and fair competition? Because as soon as someone starts to “win” the playing field is no longer level.
Now, I’m sure someone’s going to dig up brown people, Carter or FDR as why things have gone wrong today—and they’d be wrong—but what we’re watching is what happens when the market self-corrects, and the correction is at it’s most horrible, both in economic and human terms, in the “freest” market on the earth. Comparatively, the country with the most locked-down, regulated and grossly unfair financial systems (Canada) is doing much better, hurting mostly because of the US’ weight on it’s economy rather than it’s own fundamentals.
I don’t think the problem is intervention. The problem is stupid intervention. This (the auto bailout) is stupid intervention.
Dynamic88:
Reductio ad absurdum?
I’m not saying that America has– or has had– a perfect free market. Far from it. Nor am I saying that there shouldn’t be (i.e. there should be) protections for consumers.
But the further we stray from free market capitalism, the worse it is for our economy. An effective (or, in this case, ineffective) nationalization of GM and Chrysler is a long, LONG way from laissez faire.
psarhijinian:
This reminds me of OCD checking. The compulsive checks to make sure the gas is off, the house doesn’t blow up, therefore their action prevented an explosion, therefore they check again.
The economy hasn’t totally cratered, therefore the bailout worked, therefore we need more bailouts.
And anyway, I’ve lived in the UK. Not for me,
An effective (or, in this case, ineffective) nationalization of GM and Chrysler is a long, LONG way from laissez faire.
Where do people get the impression that we’re nationalizing anything? Nationlization would imply control. There’s no control here: we’re just handing them wads of bills to burn.
The Europeans are in much worse shape than the USA. The financial people know this and it is why the Euro is cratering. The Canadian economy is in no better shape than the USA.
The voters voted for big government and regulation with high spending and taxes. Now they are reaping what they sowed.
Quote–Alexander Fraser Tytler
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.
Where do people get the impression that we’re nationalizing anything? Nationlization would imply control. There’s no control here: we’re just handing them wads of bills to burn.
Really, in that sense nationalization would be preferable. That’s my biggest beef with the bailout, for all the money that’s spent we don’t get any say over what is done.
The nations in the absolute worst shape are Ireland and the Baltics. They have low corporate taxes and a flat income tax with lax regulation. They’re screwed. But don’t expect any glibertarian to mention that inconvenient fact.
We don’t need these companies. Americans can just buy cars they want from the survivors, namely the transplants, who came here and made it. I have far more respect for those companies than the crybabies we have here who feel entitled to our tax dollars.
Fuck them. If the rest of us don’t deliver we get screwed, no one bails us out to the tune of 20 billion dollars. And since when did a UAW job become more important than a non union job? Is there some great romance associated with the teamsters too?
RF, one question that you left out–what of the parts suppliers that will lose all this business? If they go under the transplants are SOL too.
We don’t even have to get into a discussion about free-market vs regulated economies and their theoretical benefits.
As far as the Detroit bailout goes, the failure point of all arguments is the all-or-nothingness of it all. E.g. If the auto industry employs, say 200,000 people, and the auto-industry fails, the simpleton arguments being put forth is that ipso-facto, 200,000 people are out of work.
Grossly inaccurate.
1. There is value in the D3 that would be identified and retained in a C11. Examples: the Jeep brand; CTS-Corvette-Viper; Volt technology; EV1 technology; dozens of top-notch manufacturing facilities, etc…
These would be bought up / acquired / maintained and would continue to produce something for someone, employing many of the same people. Difference is they’d be producing something that the market wants
2. The size of the US automobile market is a certain size. If suddenly 25% of its capacity disappears, Toyota, Honda, VW group, Ford, etc… will inevitably fill the void. Those 25% of consumers are still seeking cars to buy. This increased production employs people. And again, employs them to produce something that the market wants.
3. Even *with* bailout money we know — and have already seen — that there are massive layoffs. Makes sense, as the product produced is unwanted. So what jobs is it that we are saving by bailing out failed companies with failed products? Ah yes, we are saving jobs which produce something that the market does not want and is not willing to pay good money for. It is a loosing proposition.
Let Chrysler and GM go bankrupt and restructure them.
Like I mentioned before on this forum: GM has turned itself into the corporate equivalent of a suicide bomber: you will give in to it’s demands or it will blow itself up and take the rest of the economy down with it. What happened to the policy of not giving in to terrorists? I say call their bluff!
The nations in the absolute worst shape are Ireland and the Baltics.
I would say bankrupt Iceland is worse. Great Britain is in a huge amount of trouble and Austria is staring at a banking collapse.
bluecon,
nice fairy tale
The bottom line is this crisis started in the least regulated, lowest tax nations and was exported to the rest of the world.
Twenty-eight years of de-regulation and tax cuts for the wealthy has brought us back to the 19th Century boom-and-bust cycle that the reforms of the 1930s-1960s had tamed and controlled.
I hate having my money stolen from me. What I hate even more is being lied to while my money is being stolen from me.
But worst of all is being lied to by a bunch of incompetent morons who are killing their own company while being compensated far in excess of all us whose money is being stolen to prop up said failing company.
The “nobody saw this coming” defence doesn’t play either. I saw it coming, and started changing my behaviors in 2002. If these guys are so frikking smart, and worth their big salaries, they SHOULD have seen it coming too, long before an average guy like me!
–chuck
Good point. I figured out the economy was going down the drain long before it happened. Why didn’t the government?
“Well, I’ve got a different idea. How about we pay them NOTHING now so we don’t destroy the entire United States economy later?” – Excellent idea, however, it’s too late. Between TARP, February Stimulus 2009, and the trillions pledged by the Federal Reserve and the Treasury Department it’s far too late for nothing. The question now is: How deeply will we dig the (w)hole?
“It’s gonna be ugly” – Say it loud, brother.
Marcus-
If the economy returns to 3% growth or more within two years, the deficit from the money we spent won’t matter. In fact, it will be meaningless.
http://www.optimist123.com/.a/6a00d83451c0c869e2011168a104d0970c-pi
Deficits are the last thing people should be concerned about during a recession or depression. The first priority should be for the government to stop the bleeding and then return to growth rendering the increased deficit meaningless.
The Dems aren’t going to let the Little 3 go bankrupt. They owe the UAW so the taxpayer will pickup the tab.
“…what makes America strong. That would be a independence, creativity, hard work, determination and a deep rooted belief in fair play.” Perhaps in other areas of the economy, but not much in the light vehicle sector.
We gave up our independence when we chose to import our oil rather than make the sacrifices and changes necessary to hold down oil imports.
We once were the Saudi Arabia of the world. That was the time when GM was put together. Now wealth leaves the country in huge amounts every day to pay for imported oil. That drains purchasing power.
Nowadays anyone who talks of liquid fuel independence is treated as a crack pot. Even this site runs periodic attacks on alternative fuels like ethanol. How we are to achieve independence is always put off for another day. Well another day is here.
And in the auto business, America has lost it’s creativity. The innovations like the Prius come from abroad. It has been determined that creativity is too risky. The mediocre and the safe are the order of the day for American car companies.
Hard work? Don’t make me laugh. Does anyone here think either the UAW or management are engaged in hard work. As RF has pointed out many times they are looking for the easy way out.
Lastly, fair play went out the window a long time ago when globalization became the force it is today. Fair play implies an umpire. There is no umpire. It is dog eat dog and what ever you can get away with in the auto business.
Export jobs to low wage countries to get around high labor cost and environmental regulation. Fix the yen artificially low so that exports are cheap in America. Rebate the value added tax in Europe on exported cars. I could go on and on.
The reality is fair play does not exist in the globalized auto business. It is fiction. And belief in fiction is a delusion.
If these guys are so frikking smart, and worth their big salaries, they SHOULD have seen it coming too, long before an average guy like me!
If you had the choice between making reduced profits and missing the iceberg versus making obscene profits and hitting it, what would you do? Now, imagine you have shareholders, directors, managers and so forth baying for your blood, wondering why you’re not turning the kinds of results your foresightless-but-successful competition is.
That’s the problem. It’s not just that the erstwhile kings of the world lack foresight, but that having foresight and being fiscally conservative was actually detrimental to your career. Unless your position was absolutely secure (eg, like the Canadian banks) there was no incentive to play it smartly because you’d either be outcompeted by a rival or replaced by a hungry underling.
This is why capitalism, to be truly effective, requires regulation. You must curb the tendency to excess, lest the pendulum swing to far and kick you in the ass on the return.
BDB
If the supply chain is disrupted (to use a 1984-type euphemism), the transplants will suffer. But keep in mind that there’s a 120-supply (and the rest) of GM vehicles out there– and everybody else’s as well. And there’s STILL a huge amount of over-capacity in the system, as well.
There will be a shakeout. There may even be chaos. And then the market will recover. As long as there’s money to be made in cars, someone will make it. Unless the government steps in. And then, like with the Motown bailout, all bets are off.
For those of you who say free markets don’t work, I ask you to fully contemplate the failure of government intervention. As Winston Churchill almost said, capitalism is the worst of all possible systems. Except for all the rest.
Reductio ad absurdum?
No, I don’t think so. We’ve never been a completely free market. That’s the only point I was making.
If I read more into your editorial than you intended, then that was my fault. It did seem to me you were pretending that America has always been about fair play. History doesn’t support the notion.
I agree with psarhjinian, it’s the lack of any strings that is the problem with the bailout. Both for the financial industry, and the automakers.
Twenty-eight years of de-regulation and tax cuts for the wealthy has brought us back to the 19th Century boom-and-bust cycle that the reforms of the 1930s-1960s had tamed and controlled.
I think you’re exactly right, BDB. And it’s amusing to watch those who read Ayn Rand but didn’t get the joke bleat for more of what drove the world economy off the cliff in the first place! (More cow bell!!!)
Well, it would be amusing, but economic collapse usually precedes world war, and that would be no fun at all.
Luckily, Rush Limbaugh is now a punchline, and the conservative movement in the United States has thoroughly discredited itself for at least a generation.
We are now on the brink of a fundamental restructuring of the world economy, just as in FDR’s time. How Obama, Brown, Merkel, Putin, et al., proceed remains to be seen. The result may not necessarily mirror the FDR/Bretton Woods approach, but I’ll bet it will be more similar than not.
“In the long run we are all dead” certainly beats the hell out of actually dying — economically or otherwise!
“This is why capitalism, to be truly effective, requires regulation. ”
Capitalism is like nuclear power. If you just let it run free all you’re going to get is destruction and chaos, but if you tame it and regulate it, it will do wonderful things.
In the 1950s we had 90% top marginal tax rates, a pretty much unionized economy, and heavy government intervention. So, was Ike a “socialist”? Were the 1950s a horrible low point in American history?
pfft. If foreigners weren’t such pinkos, they’d buy more Pontiacs. Now, on the subject of usury, debt-bondage, slavery, apathy, dependence, and no more Skittles … which would you theoretically prefer, bondage or ten lashes with a wet Pontiac Grand Am plastic cladding noodle?!
I reported, but also decided. Or not. After all, it’s time for Chrysler and GM to wake up. As Leon the replicant says in Blade Runner: “time to die.”
It would be (will be?) interesting to see how fast the Transplants can repair the supply chain. It will also be interesting to see how fast they can boost production to meet the demand created by the disappearance of at least 2 of the D3.
It’s our curse to live in interesting times.
Dynamic–
What will really be interesting is if they cut wages since they will no longer have to even appear to be competitive with union shops. They’ll only have to compete with Wal-Mart and low wage service industries.
@BDB I’m not sure about that argument, and not sure about that guy’s credentials. He may have been a CEO but there are plenty of economists who think this spending is a bad idea. And don’t get me wrong, growth is great, growth is groovy, but unsustainable growth gets us into the kind of trouble we are in now.
“If the economy returns to 3% growth or more within two years” – There’s a big ‘if’…
His Deficit falsehood #1 Rebuttal – “Bill O’Reilly…What a pinhead.” – Bill O’Reilly is a bit of a pinhead. No argument there.
His Deficit falsehood #2 Rebuttal – “But fiscal deficits don’t cause inflation. Fiscal deficits are funded by borrowing dollars that already exist” – We are currently printing trillions of dollars that do not exist. That causes a problem.
His Deficit falsehood #3 Rebuttal – “Steady, uninterrupted interest payments buy us our nation’s creditworthiness” – Depends on what we are using that money we borroed/printed to invest in. Get it to companies/people that will spend it wisely, sure, that might work. Give it to companies/people that are going down anyways and are unsustainable? Not so much.
“We are currently printing trillions of dollars that do not exist. That causes a problem.”
No, we’re borrowing them.
I don’t know where this meme that we’re in great danger of hyperinflation comes from, but by far the vast majority of economists are petrified we’re on the verge of a 1930s-style deflationary death spiral.
Just look at how heavily cars are being discounted. Prices are falling off a cliff, not rising.
There are only about 100,000 people working at GM these days.
Laying these guys will not cause some economic implosion, no matter what these guys say.
Sorry, but it’s painful but necessary. You guys at the big 3 screwed over your loyal customers for too long.
This is what is supposed to happen in a free market economy.
@BDB – Right, we’re printing the trillions of dollars and finding borrowers for them (China, et al – who by the way, are experiencing economic issues, too, and may not be able to continue financing our debt). In this case, while our economy is going down and not backed by goods and services, is muy malo.
There is something I’ve been wanting to say for a while.
Why do the Big3 act like they are on the same team? They really are not.
Ford wants to beat GM and Chrysler just like they want to beat Honda Toyota and all the rest.
Yet remember how the heads of all 3 went before congress asking for a bailout. (Even though Ford did not take it.)
There is something rotten about this, it reeks of collusion. Shouldn’t Ford really be hoping that the other two go belly up? Then they would be left with a lot more market share and be stronger in the long run. Why don’t they ever talk this way? Why doesn’t Ford run commercials making fun of the other two, saying something like, “Buy a Ford, you don’t want a car from bankrupt losers who won’t be around to honor the warranty and service the car.”
Aren’t they colluding somewhat like a trust? Could there be a problem here with the Sherman act?
Thoughts anyone?
… Why doesn’t Ford run commercials making fun of the other two, saying something like, “Buy a Ford, you don’t want a car from bankrupt losers who won’t be around to honor the warranty and service the car.”
Something to do with stones and glass houses, I would guess.
@Darrencardinal1 – I think the Sherman Act was created mainly for price collusion. Non Big 3 auto manufacturers may have some legal recourse under the Clayton Antitrust Act, but I don’t think that has legal legs.
First, the title, “Bailout Nation Must Die”, and the first thing that came to mind was “America Deathwatch #1”. So I did the double-take and re-read the title. No deathwatch for the US. Yet.
But then I read the very first response from bluecon, and my mind thought “Deathwatch” again.
As GM goes, so goes America?
See what I mean?
To answer the original question:
Not all of us are that stupid, only those of us voting in Congress.
Hello, fellow readers,
While we sit and squabble about the D3 and the relative virtues of C11 vs. the bailout, and we take sides blaming either the evil unions or the idiots managers, perhaps we need to look at what we really face.
The Village Voice has a frightening article “What Cooked the World’s Economy?,” and we might all do well to read that over. If they are correct, then the tens of billions of dollars we are talking about for GM, Chrysler, and even soon Ford, will seem paltry.
As an economist for Deutsche Bank says, we can pay for the mess up-front, or we can pay for it with years of 20% unemployment.
ruckover
An excellent illustration of my point: using fear to extort money from productive members of society.
Believe what you will, but what if we “pay for this mess up front” and we still get 20 percent unemployment? Will you then say, well, it would have been 40 percent?
In the land of the hysterical, the person with the loudest voice is king.
Luckily, Rush Limbaugh is now a punchline, and the “conservative” movement in the United States has been thoroughly discredited for at least a generation.
I beg to differ.
The economic collapse we’re witnessing is the direct result of the fiscal policies favored by the liberals in the democratic party.
And Bush has never been a “conservative” on the economy.
It will take another Reagan (not Obama, an FDR wanna be) to bring this country back to greatness.
ruckover,
Do yourself a favor and stop reading the Village Voice.
Letting these companies die will allow the adjustment to be made, and will bring unemployment down the fastest as these people can go and get new jobs. Trying to keep them hanging on will only prolong the pain.
The economic collapse we’re witnessing is the direct result of the fiscal policies favored by the liberals in the democratic party.
Wha? Who controlled the government for the past eight years, with complete control for six of those years? It certainly wasn’t “liberals” nor the “democratic party.” It was conservative Republicans, who inherited and squandered a budget surplus, lowered taxes for the corporations and wealthy, deregulated, and presided over increased unemployment and poverty.
As this past election showed, conservatives are blamed for the mess, and rightly so.
And Bush has never been a “conservative” on the economy.
Sure he was. He did what conservatives do — took care of his wealthy buddies and let everyone else take it in the shorts.
BTW, conservatives remind me of communists in many ways (belligerence, blind faith, absolute conviction, group-think, etc.), but one glaring similarity stands out.
Communists, when faced with the reality of the failure of their philosophy, always contend that the Soviet Union, Cuba, Vietnam, China, or whatever country wasn’t a “real” communist state, so their theories just need to be adhered to even more strongly.
The very last thing we need to do to sort out the breathtaking mess we have right now is to pursue further the policies that created the disaster in the first place.
As this past election showed, conservatives are blamed for the mess, and rightly so.
What the past election clearly showed is that the conservatives are greatly disappointed to the point of disgust with what the Republicans had to offer, and simply stayed home.
Conservatives remind you of Communists???
Are you saying you had a privilege to meet with the Soviet Style Communists?
How about the folks who lived and survived under the regime?
I don’t think they’d agree with you on that point.
Well, I don’t.
Darrencardinal1,
I think it wise to read from many different source, so the Village Voice is a source I go to, just as I try to stay current with The Economist. All I suggested was that there is an excellent article that help us understand the underlying source of the economic downturn.
Robert Farago,
I am not suggesting anything or resorting to fear; I was just paraphrasing a memo I read from a Deutsche Bank staff economist. These economists working for banks tend to be a bit more conservative than academic economists, so I have some reason to believe that his comments were not too politically motivated. I was just trying to say that there are conservative capitalists out there who believe the banking system is in peril, and we are all going to be on the hook for it.
@ruckover “I was just paraphrasing a memo I read from a Deutsche Bank staff economist. These economists working for banks tend to be a bit more conservative than academic economists, so I have some reason to believe that his comments were not too politically motivated.” – Not politically motivated? How about financially motivated: “Goldman Sachs Group Inc. and Deutsche Bank AG were among at least two dozen financial institutions that were paid $50 billion from the bailout funds received by American International Group Inc….Goldman and Deutsche got about $6 billion each between September and December.”
Robert Farago hit it on the head – Bush, Obama, much of Congress and many in the corporate world all said we had to act now or there would be dire consequences. So far it does not seem to have helped much.
Farago, I take it you looked at GM’s claim that bankruptcy will cost the feds $100 billion and decided that they pulled that number out of thin air?
Frankly, given the choice between the Dodge Challenger, Chevy Camaro and Ford Mustang, and considering the situation all three are in, I’d take the Mustang. My inner Camaro fan probably didn’t want to hear it, but I have more faith in Ford than I do the other two. IMHO, of course.
Speaking of, when is TTAC going to have a 2010 Mustang review?
Seems obvious to me that the US auto manufacturing needs to restructure and bailout money just delays the inevitable. There is more capacity to build cars than demand for cars and the least desirable models and manufacturers get hit disproportionally hard. One can argue politics all day long, but in the end some plants have to quit making cars. I believe that its better to let consumers decide what cars are built with minimal input from government in areas like safety standards.
Just spent the afternoon walking among parking lots full of new cars in search of buyers. I was surprised at how high the sticker prices were on models from Dodge, Chrysler, and Pontiac relative to their cheap appearance. Those brands are probably toast. Most of the Fords looked ok up close with refinement and price matched up fairly well. The F-150 and the Flex look better in person than I expected. Down at Acura, the new TL is an epic failure except for driving up demand for the old TL. Lot was full of dozens of already discounted new TLs and two expensive used ones of the previous body style.
Gentlemen and Ladies,
I am all in favor of C11 for GM and death for the once proud Chrysler. I think that everyone of us knows that some car companies will have to fold simply because of the excess production capabilities that exist worldwide.
My fear is this: with this downturn, like an iceberg, there is far more trouble beneath the surface that cannot yet be seen. From what I have read, we are in a serious mess, a mess that will be long and ugly to clean up. Mr. Farago believes that natural market forces will right the ship, but I am not certain of that, at all. I believe that in many ways this economic situation is not part of a “natural” economic downturn. It is more than a housing/tech/beaniebaby bubble. And if we simply let companies go out of business (especially the weasely banks that are at the root of the problem), it will be a long time before our economy comes back.
Mr. Farago is dead on accurate.
We’re currently destroying our economy. Our new president is taking what was a banking crisis and is rapidly, with his henchwoman and henchmen in Congress helping, turning this into a full scale Depression.
All of the efforts from the stimulus and new budget to spend money as though we had it do not affect the underlying value of the assets in our economy. Actually, all this accumulation of debt for current spending simply degrades the worth of those assets.
That makes if much more difficult to pull out of the current recession and actually raises doubt that we can do so, without having a major change in the Obama ‘spend more in every way’ approach.
In one way, though, the Detroit auto industry does reflect the underlying problem, one which the government is refusing to address because to address it would be to admit they created it: Detroit is vastly overvalued. It’s not worth the money being pumped into it. It is, in a sense, another burst bubble, just like housing, that we’re trying to keep inflating, rather than admitting that the underlying value just isn’t there.
Any realistic look at GM tells you that it’s not likely it could ever be made into a going concern, no matter what. Even if you could eliminate the UAW, the legacy costs, and all the debt, you’re still left with old and obsolete plants, and an almost complete absence of viable new products in the pipeline. Given the lead time required to develop new cars, if you eliminated all of these factors tomorrow, it would still be at least seven years before GM could show a profit, assuming everything else went its way. That ‘everything else’ would have to include no CO2 limits and repealing the fuel mileage standards the Congress passed a little over a year ago, standards which GM could not possibly meet while simultaneously having to devote capital to keeping the doors open and developing new product.
In short, it’s living in dreamland to pretend that GM can make it.
Just as it is dreamland to pretend that we’re going to keep housing prices “stable,” i.e., at the artificially inflated value created by past government policies, by making one person pay his neighbor’s mortgatge,
And just as we are living in dreamland thinking that raising taxes on the “rich” is going to solve our economic problems.
But, we have a president that prefers dreamland to reality, and GM’s president is at least smart enough to know that he’d got a job only so long as the dream lives,
So, we’re going to a long and painful time before we wake up from what is rapidly turning into a nightmare.
If the government had to intervene, then here’s what we should have done. U.S. taxpayers are currently on the hook for about $9.7 trillion. There are approximately 116 million households in America. Give each household about $83000 and let them spend it as they see fit (house, rent, car, food, school, whatever). The money gets pumped into the economy, liquidity issue is gone, people have homes and apartments, consumer confidence is restored, goods and services are in demand, jobs are kept and created, health care is affordable for all, rainbows appear in the sky, faeries dance in the streets, America rides slowly into the sunset.
Every purchase is a vote…
Great editorial RF.
I would add one other point:
Why would anyone listen to the D3 about ‘what would certainly happen in the auto market” if one of them went under.
These are the same companies, that have shown zero ability to accurately predict anything that would happen in the market over the last 10 years.
Detroit will get the second bailout. The issue is not about finance or profit or viability. The issue is only politics. The third bailout will not include Chrysler.
There was no Conservative government in power in the US. The government increased spending like drunken sailors.
There is a reason they do this. The voters vote for the government that gives them the most. And now that Obama is waging war on those with the means to invest and correct this economy, this will turn ugly real fast.
Not only is the government hugely increasing spending but they are also seeing a huge reduction in tax receipts. No more of the huge capital gains tax, a big reduction in sales tax and much less income tax for the government. You see the government is actually in the same situation as GM. They just don’t realize it yet.
Contrary to what people think the government can go bankrupt just like GM(should).
“The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get rich quick theory of life.” – Theodore Roosevelt
Can I have my oil filter back now? The Fram PH16 is the exact filter I need to change the oil in my 1992 Dodge Dakota (with 197,000 miles).
His spiritual successor wants his fellow countrymen to live in fear so they can achieve the same Big Government goal.
Not really. Obama emphasized the economic risk involved in not taking prompt action to stem the slide. As for fear mongering, this does not compare with the pumping up of the communist threat that had people digging holes in their back yards and building ‘shelters’ in their basements. Or dreaming up the domino theory that got us involved in Vietnam. Or the recent WMD stunt. Or the red/orange/yellow alerts that suddenly came and suddenly went.
The Europeans are in much worse shape than the USA. The financial people know this and it is why the Euro is cratering. The Canadian economy is in no better shape than the USA.
Uh, no. Europeans have no where near the credit card debt that Americans do; this house of cards is just beginning to collapse. Other than England and Spain, the real estate bubble is absent in Europe. Other than misplaced investments in US banks, Canadian banks are in comparatively good shape. Currencies are down relative to the USD because the USD is the world’s reserve currency. When the investments in USD went to hell, people needed more USD to cover their obligations and therefore had to liquidate holdings in other currencies.
As of March 9, 2009 the Euro is worth .65 USD, vs. .79 USD a year ago. On March 9, 2009, the $C is worth .70 USD vs. .99 USD a year ago. So until the bottom fell out here, currency relationships were much different and more nearly normal. It’s the good ol’ USA that has been running a huge and increasing current account deficit for years.
The voters voted for big government and regulation with high spending and taxes. Now they are reaping what they sowed.
Hopefully, Obama will be effective, but he’d have to be Superman, Captain Marvel, and the Green Hornet combined to have such an impact less than 2 months in office. No, I think we’re reaping the ‘benefits’ from 8 years of deregulate, borrow and spend.
This one really bothered me.
Robert, if this violates board rules, please accept my apologies and do whatever you need to…
Another Member Said: BTW, (“X” political party) remind me of communists…”
This (and the reasons that followed it in the original post) is wrong and it does nothing to encourage a friendly conversation, or at least an understanding of the minds!
It’s well documented that communism has resulted in the deaths of millions. Many people have ancestors who fled communism. Others have paid dearly; lost loved ones, or lost their own lives.
To be so loose and ready to issue such an accusation; to generalize and compare an entire MAINSTREAM political party/philosophy with communism…that’s wrong.
You should be aware that to a lot of people in the world, by comparing anybody with communists , you are comparing them with murderers! I hope you rethink your ideas.
My apologies to the other members; but the thought makes me sick to my stomach. I just could not let that stand unchallenged!
bluecon wrote:
“The Canadian economy is in no better shape than the USA.”
bluecon, Just because one may wish it were so, does not make it so.
“As banks everywhere implode, get nationalized or survive by shedding assets with alacrity, the Canadian and Spanish banks are, relatively speaking, soaring. Regulatory regimes that once seemed stifling now appear enlightened, and seem to have done the trick.
The Group of 20 nations has taken notice and are looking to the Canadians and the Spanish for inspiration. Designing regulatory and risk-management systems that could prevent another financial collapse is the goal.”
http://www.globeadvisor.com/servlet/ArticleNews/story/gam/20090216/RGSEVEN16
RF: I don’t think there is much support on this site or in the country at large to continue to support the big three. But, can you give me one single example of a nation in a depression that has cut back government spending for job creation and has not had to shoot the rioters in the streets?
Once unemployment and foreclosures get to the twenty five percent range, there are going to be a large number of folks with time on their hands. What is your solution, a police state?
The war in Iraq has now been estimated at three trillion dollars, I never heard a squeak from any Republicans about saddling this debt on our future generations.
Just think what would have happened if we would have listened to Bush and privatized our Social Security? Would we have invested with Citi, Morgan, Merrill, Bear Stearns, Lehmann, AIG? Then who would have to pay when they blew it all on toxic investments? Yes, and the bill would have been much higher.
So, instead of repeating over and over how much you want to see the automakers die, please tell us your plan for the the five million workers in the allied parts industries.
So, instead of repeating over and over how much you want to see the automakers die, please tell us your plan for the the five million workers in the allied parts industries.
How did you come up with the figure of 5 million?
Another scare tactic?
carlos.negros:
…please tell us your plan for the five million workers in the allied parts industries.
This is the problem. Who am I to tell anyone how to make plans for five million workers (an epic inflation, but there you go)? And if you think I’m unqualified to make those kinds of decisions A) You’re right and B) Neither is the PTFOA.
I don’t know what you do for a living, but would you want a group of political appointees deciding your fate? Government interference in private enterprise is a bad idea, even when it’s a good idea.
Put another way, I’m not against safety regulations, but you have to draw a line somewhere.
In Bailout Nation, lines draw you. If you know what I mean.
I saw a study done back in November by the Center for Automotive Research.
“Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total
employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy—
comprised of 239,341 jobs at the Detroit Three, 973,969 indirect/supplier jobs and over
1.7 million spin-off (expenditure-induced) jobs. The employment picture recovers
somewhat in 2010 (2.5 million jobs lost) and 2011 (1.8 million jobs lost), due to
increased U.S. production by the international automakers, and the process of
dislocated workers finding new employment.”
http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__001.pdf
The total shown in the report is well over 5 million but is based on the demise of all of the big three. I apologize if my estimate was too high. Do you have a better source?
RF: I don’t want anyone deciding my fate, including the banks who just cost me half of my retirement. Have you ever known anyone who didn’t get the Social Security they were promised by the government because the government said they lost it? Who would you rather trust than Geithner, Orzag, Summers and Volker? Jim Kramer? Rush? Christopher Cox?
We live in a democracy and over the years, the population has elected people to regulate our markets, provide protection, build roads, provide infrastructure, inspect our food, deliver our mail, and provide a safety net for those who need it. That safety net may include providing foster care for a child whose parents are killed in an accident; medical care for an older person who has a heart condition; unemployment benefits for a worker, and so on.
When the government fails to do its job, such as what happened with the past eight years with the SEC, there are consequences. Voters get upset, they vote people out of office. They don’t like being lied to. Obama has made a lot of big promises. I think it will be hard for him to keep them all. But I am willing to listen and give him and the new congress a chance because I think it was a fair election. If he fails, which I hope he does not, it should be something we can clearly blame on him, rather than because we are bitter and have tried to sabotage his policies because they don’t fit into our particular dogmatic view of how things should be. As Obama says, we have to do what works. Clearly, our policies that brought us to where we are today have not worked.
FDR was honest about the reality of our situation in 1933, and he proposed a solution. If that honesty is now called a “scare tactic” or a “Big Lie” then America is in trouble.
We have to be able to discuss what the problem is, and what solution to apply. If Obama is not allowed to outline the problem (and it is a bad one) … it makes it impossible for him to get to/explain the solution.
I think you are off the deep end on this one point.
I enjoyed the rest of your writing.
Thanks,
Mc
carlos.negros
TTAC (and others) have thoroughly discredited that CAR report. But I’m glad you brought it up: it was exhibit A during the dawn of the dead. The fact that you recognize the study’s inherent bias is… refreshing.
The PTFOA is an unelected quango, albeit one appointed by democratically elected politicians. But you might want to ponder the fact that well over 60 percent of Americans oppose further bailout billions for Detroit– even if the PTFOA doesn’t.
And lest you consider me partisan, I stated my complete and utter shock and horror at President Bush’s eleventh hour decision to over-ride Congress’ decision NOT to bail out Chrysler and GM. A lame duck president over-riding the will of our popularly elected Congressional representatives. Sweet.
mc:
Read the passage closely. I was not criticizing FDR’s statement. Quite the opposite. I was saying that the Big Government’s supporters are now instilling fear, rather than telling us to jettison it.
To remove ambiguity, I’ve removed the words “It’s ironic.”
Actually, I think they’re telling us, “We’re going to do whatever we can to protect the American people.”
The flip side of that viewpoint is, “But what if that part of America continues to get worse and worse? Do you feed a cancer more white blood cells?”
Our North American automotive operations are not competitive in a global marketplace. We have the largest market in the world and yet the home team can’t create the product needed to maintain profitability.
GM needs to be dramatically restructured and chapter 11 is the only viable way of getting that done. Chrysler simply needs to be liquidated.
Steve Lang
Our North American automotive operations are not competitive in a global marketplace.
Do you include Mexico and Canada in “our” then?
By the way to the whole TTAC team of writers:
I see no evidence in history that Chapter 11 has ever successfully save one car company… ever! Where is your evidence that Chapter 11 would work for a car manufacture?
I think you are proposing an untested theory… an experiment … and not a reliable/real solution. I see no evidence that your Chapter 11 theory would work at all for a car company.
When I look at all the companies that have been saved and re-organized successfully (Mazda, Nissan, BMW, Mercedes, Fiat, Chrysler,.. that’s the short list! ).. none were run through a Chapter 11 type drill. They all had a combination of debt write downs, new owner investments, sweetheart bank deals, cutbacks, under the table govt. money, and even new laws were passed… etc. The results? No.. NOT disaster.. but huge economic gains.
Why not consider doing what has worked well in the past during these downturns? Why may I ask is TTAC hell bent on an untested shaky solution that has no relevant track record for this industry? Chapter 11 does not fit every situation. It is just one of many tools, and it is not always the best one!
Now you got to understand, I love your website. I may not always agree, but you all do a great service. Keep up the good work.
Mc
If the supply chain is disrupted (to use a 1984-type euphemism), the transplants will suffer. But keep in mind that there’s a 120-supply (and the rest) of GM vehicles out there– and everybody else’s as well. And there’s STILL a huge amount of over-capacity in the system, as well.
Robert,
Not only will the transplants suffer due to supply chain bankruptcies, but the 4-6 mos supply of GM and Chrysler vehicles will be sold at distressed merchandise prices. I think a failure of GM & Chrysler would mean almost no sales for the transplants for many months. It wouldn’t be fatal for Toyondissan, but their losses would be staggering.
I love TTAC, but I come here to avoid the realities of politics and economics to talk and read about cars, not politics and economics. I’d rather hear car people write and rave and rant about cars than public policy…
This sounds whiney, I know, but I think TTAC should stick to cars and stay out of politics, bailout or not.
Right on Bro!
And lest you consider me partisan, I stated my complete and utter shock and horror at President Bush’s eleventh hour decision to over-ride Congress’ decision NOT to bail out Chrysler and GM. A lame duck president over-riding the will of our popularly elected Congressional representatives. Sweet.
The concept of a lame-duck executive or legislature is fictional.
In any case, the Democratic leadership in both the House and Senate, that was trying to pass legislation said that the president had the power to do it. Dodd & Frank et all complained that the prez dumped it in their laps when he had enough power thru the TARP, 136, and the Fed to loan money to the automakers.
That’s hardly over-riding legislative will.
The people of the US have been voting for high spending big government for years, it didn’t start with Obama, he just amplified it into a bigger mess. The Keynesian spending won’t work, it never does.
And the Europeans are in extreme trouble because they loaned large amounts of money to the emerging Eastern European countries who now cannot pay it back. Austria is on the verge of collapse.(Iceland already has)
http://www.globaleconomiccrisis.com/blog/archives/199
And the government was running Fannie, Freddie and installed the people at AIG that were so key in insuring the bad money. Who knows why the government has not launched a an investigation into the meltdown? This makes Enron look like small potatoes and yet no government investigation. As Maxwell Smart would say,”Very interesting”.
Best to stock up on gold and silver.
@Mc: But C11 has worked for other large manufacturers — how is a car company any different? Besides, a lot of the tools you mention would come along with C11, plus the reduction of considerable organizational and external pressure that you can’t really get any other way. If GM were fundamentally sound, then I could see your point, but it’s not.
Can someone explain away how the fastest growing economy in the world (China) is doing so while at the same time remaining a centrally managed economy?
Chinese government at all levels is deeply enmeshed in every aspect of commercial activity. I do not wish this for the US, but it does fly in the face of the argument which says that commerce only grows and flourishes when the gov’t stays hands off.
Similarly, the US airline industry was much healthier in the days when it was heavily regulated. Yes, prices for advanced purchase tickets were higher (though gotta leave now prices were probably no worse than today’s) … and the service was generally excellent, the employees happy and well paid, flying was fun and investors made a predictable profit. Deregulation, on the other hand, has turned air travel into a nasty business all around. I have yet to find anyone who prefers today’s air travel experience to that of thirty years ago.
Regulation and government interference isn’t the answer to every question, but government isn’t always the problem either.
“This sounds whiney, I know, but I think TTAC should stick to cars and stay out of politics, bailout or not.”
Unfortunately, it is impossible to separate politics, public policy and the auto industry right now. They are joined at the hip throughout the world.
Detroit Todd: It was conservative Republicans, who inherited and squandered a budget surplus, lowered taxes for the corporations and wealthy, deregulated, and presided over increased unemployment and poverty.
As this past election showed, conservatives are blamed for the mess, and rightly so.
If you think that the past eight years represent “conservative” economic thinking, you really need to do some reading.
Detroit Todd: As this past election showed, conservatives are blamed for the mess, and rightly so.
As recent polls show, the majority of people oppose a bailout of GM and Chrysler because they believe that management and the union are to blame for this mess, and rightly so.
Contrary to the wailing and squawking by the pro-bailout contingent, our nation, automobile industry and manufacturing sector will do better if we allow the inevitable to happen.
Detroit Todd: Sure he was. He did what conservatives do — took care of his wealthy buddies and let everyone else take it in the shorts.
If you are referring to the tax cuts, you might want to research who actually pays federal income taxes. Hint – it’s the top 50 percent of earners.
One can only cut taxes on those who are paying them.
When the bottom 50 percent of earners pay federal income taxes, we’ll talk about tax cuts for them, but until then, tough.
mel23: Uh, no. Europeans have no where near the credit card debt that Americans do; this house of cards is just beginning to collapse. Other than England and Spain, the real estate bubble is absent in Europe.
The real estate bubble is also present in the Netherlands and Germany. Europe is in big trouble, too. Iceland’s economy has already collapsed, there have been riots in Greece and France over economic problems, and leftists are burning cars in Berlin as the German economy continues to sour.
This is what is supposed to happen in a free market economy.
The Big 2.78 have fought CAFE, trade restrictions, etc. because it’s a “free market economy”. Now that they’re in the dumper, that idea magically disappears.
Hey, my Dakota uses that filter, can I have it?
John
“If you think that the past eight years represent “conservative” economic thinking, you really need to do some reading. ”
Just like the Marxists who tell me the USSR wasn’t “really” Communist, right?
John Horner
Because China is coming from such low levels of development. Its productive because its government is rapacious but predictably so and corrupt. Once you put a couple of generals on the board and nephews of local pols in cushy jobs, you can do what you want. They have have had their Cultural Revolution, they have had enough of that.
BDB: Just like the Marxists who tell me the USSR wasn’t “really” Communist, right?
Bush greatly expanded federal government spending through an earlier infrastructure bill (remember the Bridge to Nowhere?) and the Medicare drug prescription program benefit.
There were plenty of people on the right who criticized him.
You just weren’t paying attention.
And you have to remember who his opponent was in the General Election. Bush didn’t run in a vacuum. In early 2004, an analysis was run of all the Democratic presidential candidates’ spending platforms, and the bottom line is that their plans would have resulted in deficits even WORSE than the ones Bush created – and that was with the repeal of the Bush tax cuts. Just because he was conservative compared to his opponents doesn’t mean he was a conservative.
President Nixon ran as a conservative. When one actually looks at his record, one realizes that he was anything but – given that he imposed wage and price controls on the economy, oversaw a vast expansion of the federal government (the Environmental Protection Agency was created on his watch) and imposed the 55 mph speed limit on the country in the wake of the first fuel crunch.
But he was conservative compared to many of his congressional opponents and his opposition in the 1972 election, George McGovern.
Yes, a free market isn’t free without some regulations. That’s true, but it’s not a refutation of capitalism. It’s also interpreted differently by everyone. Just like history, interpretations seem to depend on ideology.
RF and those who point out that avoiding the consequences by government bailout are absolutely correct. The reason the recession won’t turn is because the losers haven’t had to sell out to the winners. That’s not happening at a rate it needs to. There are other reasons, but this is a must have for a turnaround. That’s how the system works.
No one can manage a car industry better than the market. It’s too big, it can’t be done for more than a year or two. Really, it’s the same with the banks (which did not fail due to deregulation, but to BAD regulation – interpreting that incorrectly is killing us).
Lastly, our new president has already shown he is an old pro at talking out of both sides of his mouth. Look at what he is doing, not saying. The latest news is that the billionaire bankers are NOT getting a haircut in exchange for TARF funds. The SAY they are going after the rich folks, but in fact, they are helping the super rich and super powerful while everything they do oppresses the folks who are the necessary replacement players.
It’s like saying you will cut NFL player salaries because they don’t deserve millions, and then taking 100k from each player’s contract while cancelling all college football contracts. The $10 million a year club doesn’t care a bit, the league minimum and college players get smacked instead.
That is what is going on in DC right now.
Keep telling yourself Bush was really a secret Democrat, chief, but the rest of the nation isn’t going to buy it.
Tax cuts for the wealthy and de-regulation is conservative economics. That’s all they really want, that’s what they got, and it’s what drove the country into a ditch.
All the “free market” rhetoric is for their $50,000 millionaire useful idiot base who think they’re going to be in the top one percent someday, or think they already are.
BDB,
No one is saying Bush was a Democrat. I hear him accused of not being conservative.
Will you at least admit that under Bush the wealthy paid more taxes? If so, what’s the problem, if not I won’t bother you anymore. I just want to know if you are a “fair share” or “more revenue” guy.
By the way, tax cuts for the wealthy is not conservative economics. Low taxes is. Non punitive taxes is. Fair taxes is. Less taxes is. The overwhelming agreement in conservative circles is that everyone should keep more of their own wealth, not just the wealthy. We believe this is better for rich and poor alike.
Most of us also realize that we do a very poor job of taxing wealth, and instead are taxing earnings. “Tax the rich!” is a leftist battle cry which always seem to end up being implemented as “Tax the productive.”
See what I did there? Instead of just popping off a partisan line about how all the left are being duped by their elitist leaders, I made a point about what really happens.
BDB: Keep telling yourself Bush was really a secret Democrat, chief, but the rest of the nation isn’t going to buy it.
That’s too bad, because they are obviously ignorant of what Bush did, and what constitutes a true conservative.
I would suggest they stop going by what they think they know, because what they really know obviously isn’t that much.
BDB: Tax cuts for the wealthy and de-regulation is conservative economics. That’s all they really want, that’s what they got, and it’s what drove the country into a ditch.
First, as I said above, the wealthy pay most federal income taxes. Only the top 50 percent of wage earners pay federal income tax. Please explain how we are to give tax cuts to those who don’t pay taxes in the first place. I’m dying to hear an explanation for this one…
And you are also apparently unaware that more regulations were approved under Bush II than under any president since Carter. Perhaps we have differing defintions of what
constitutes “deregulation,” but I’d suggest you look at what he DID, not what you think he did, or like to imagine he did.
BDB: All the “free market” rhetoric is for their $50,000 millionaire useful idiot base who think they’re going to be in the top one percent someday, or think they already are.
Funny…both my wife and I make around that much, and we end up paying federal income taxes. So we appreciate any tax break. You might want to find out just who pays taxes before calling anyone names. You don’t seem to be too well-informed.
“Will you at least admit that under Bush the wealthy paid more taxes? If so, what’s the problem, if not I won’t bother you anymore.”
Not true. Warren Buffet is fond of pointing out that he pays fewer taxes than his secretary.
“The overwhelming agreement in conservative circles is that everyone should keep more of their own wealth, not just the wealthy”
In practice, conservative policies re-distribute income from the middle class to the top one percent. That’s what has happened since the 1980s (with a brief pause in the later 1990s) and accelerated in the past eight years.
“Funny…both my wife and I make around that much, and we end up paying federal income taxes. So we appreciate any tax break.”
Well, you won’t have to worry about your taxes going up, then.
Anyway I’m going to take a moratorium on talking politics on this board and stick to cars before this turns into a Politico-esque flamewar.
BDB: Not true. Warren Buffet is fond of pointing out that he pays fewer taxes than his secretary.
That’s because he receives lots of income from trusts and other devices used to avoid federal income taxes.
Raising the upper rate on people won’t make much, if any, difference in the amount of federal income taxes he pays, because he knows how to avoid these taxes in the first place.
During the 2004 presidential campaign, when candidate John Kerry was advocating higher federal income taxes, it turned out that his wife, Teresa Heinz Kerry, didn’t pay much in federal income taxes, because most of her income came from trusts set up by her late husband, heir to the Heinz fortune.
That’s one reason he’s very rich, and can afford to advocate higher federal income taxes. He probably won’t pay them. Same with Teresa Heinz Kerry.
BDB: In practice, conservative policies re-distribute income from the middle class to the top one percent. That’s what has happened since the 1980s (with a brief pause in the later 1990s) and accelerated in the past eight years.
If the tax rate allows a high-income person to keep more of his or her money, we are not “redistributing it” from lower-income people.
It was never their money in the first place.
BDB: Well, you won’t have to worry about your taxes going up, then.
If you believe that Obama can pay for his ambitious spending programs (which already rely on a wildly optimistic set of projections regarding economic growth in the coming years) by only taxing those who make over $250,000 annually. Non-partisan analysts who have looked at his plans have already said that this isn’t possible. He is going to have to either dramatically raise rates on upper-income earners, or extend any tax increases farther down the income scale.
Plus, the federal income tax isn’t the only way the government has to raise money. There are lots of other taxes it can raise as well.
The Warren Buffett point completely makes my case. It’s also anecdotal, and proves to me that it’s not worth trying to argue with you. Keep it up, and I will simply add you to my ignore list. Want to try again? Did the wealthy pay more or less taxes.
Also, which conservative policy redistributed the income? If you aren’t specific, then there is no way to figure out how to change the system.
“Conservatism is bad” is not an argument. It’s not helpful or even interesting.
@geeber If you are referring to the tax cuts, you might want to research who actually pays federal income taxes. Hint – it’s the top 50 percent of earners.
One can only cut taxes on those who are paying them.
When the bottom 50 percent of earners pay federal income taxes, we’ll talk about tax cuts for them, but until then, tough.
Small but significant point here: I made less than $16000 last year – which I am guessing puts me in your bottom 50% number – and I paid both federal and state taxes.
Best editorial in ages, well said Mr. Farago.
If these companies were horses, they would have been taken out and shot already.
Marcus,
That would definitely put you into the bottom 50%. I would be really curious why you paid any significant amount of federal income taxes. Most families in that bracket supposedly get back more than was withheld.
Also, which conservative policy redistributed the income? If you aren’t specific, then there is no way to figure out how to change the system.
Laissez-faire.
It redistributes income, just not in a way that people like me happen to like: to the people who already have it, from the people who don’t really have as much to give.
I don’t think the point of “who is more liberal than whom” is really going anywhere, here. What we do have is a problem of value: even to pro-bailout, Che-T-shirt wearing, latte-sipping, Times-reading, Banana Republic-shopping metrosexual pinkos like myself, there’s not a lot of value to shoveling money at GM or Chrysler (or the financial industry) and getting nothing back in return. No equity, to oversight, no change. Nothing.
I’d rather no bailout at all. Then I wouldn’t feel so damn dirty.
“I don’t think the point of “who is more liberal than whom” is really going anywhere, here. What we do have is a problem of value: even to pro-bailout people like myself, there’s not a lot of value to shoveling money at GM or Chrysler (or the financial industry) and getting nothing back in return. No equity, to oversight, no change. Nothing.”
Right on. Even Chapter 11 would be better than giving money to them with nothing in return for taxpayers (equity, oversight, SOMETHING). Again, we currently have all the costs associated with nationalization, but none of the benefits or control.
For me, temporary nationalization > chapter 11> government money with virtually zero strings.
BDB:
Do you have an example of a successful “temporary” nationalization? Now how about one in the auto industry.
Not even during wartime did the U.S. nationalize its auto industry.
It would be uncharted waters for sure, but wouldn’t you say it is preferable to just keep handing over checks to people like Wagoner no questions asked with precious little in return?
I doubt its possible for the government to do any worse than the current leadership of GM and Chrysler. It might even lead to the government doing the very things that you’ve been saying GM should have been doing for years–killing off redundant brands, making the Unions sacrifice, slimming down the overgrown dealer network, etc.
John Horner,
You are also ignoring the fact that almost all of the income growth in China is in the south, and much of it is illegal in their system. They have already almost gone to war over this. The north has always had the political power in China, going back hundreds of years. The south has had the economic power, also going back hundreds of years. Several years ago, the government actually dispatched a tank column from the north to force Shanghai to revoke permits they had issued to allow foreign banks to build there. A southern commander dispatched his own tank column to block the government one. There was a somewhat tense standoff, eventually both sides backed down. But if you believe that China’s economy is booming because of government policy there, then I have a bridge to sell you.
And now that Obama is waging war on those with the means to invest and correct this economy, this will turn ugly real fast.…
That’s a joke, right? The people you say are the answer to our problems are the same selfish, opportunistic pigs who created it. When the “saviors” pay more than the same percentage of income tax than average people do, then your argument will have some merit. Till then, its just the usual right-wing rhetoric.
The video that you posted, however, was quite interesting.
All that said, this bailout is just a bigger bilge pump. The hole in the hull lets in more water than can be removed. GM, in the long(er) run, would be best to get the inevitable behind it. However, long range planning is not GM’s forte, so why would its last decision be any different?
BDB
I’ll take that as a no; you can’t name a single example of a successful “temporary” nationalization. That’s probably because there isn’t one.
However, there are PLENTY of examples of nationalized companies and industries. Thousands of them. Some died. Some of those companies/industries/companies are still going, in their own special way, But none of them (that I know of) were ever returned to private hands, never mind healthier than when they were before they were nationalized.
British Leyland died for the sin in favor of which you argue. History > Forget > Repeat.
And to answer your question, yes, there are people who could do a worse job of running GM than Wagoner. They’re called “politicians.”
Mr Farago,
Between 1981 to 1995, Renault was majority owned by the French state.
George Besse (who was assassinated), Raymond Levy and Louis Schweitzer all went to Renault and slimmed down a bloated company, under national ownership.
When it was pared down correctly, it was decided that Renault couldn’t go any further under national ownership, so, the majority of it was privatised with the French Government retaining a 15% stake in Renault.
“, But none of them (that I know of) were ever returned to private hands”
I can name four just in Britain.
British Airways, British Telecom, British Gas, British Rail.
“Yes, we can pay Detroit now. But mark my words: we will pay for it later.” – That’s a nice summary. Unfortunately we already paid now and will pay later no matter what; Nationalization, Chapter 11, and the bailout all mean paying now and paying later.
@Landcrusher “I would be really curious why you paid any significant amount of federal income taxes. Most families in that bracket supposedly get back more than was withheld.” No idea. Must have ticked off the tax fairy last year. Although define “significant” when one grosses less than $1333/mo.
Marcus Topia: Small but significant point here: I made less than $16000 last year – which I am guessing puts me in your bottom 50% number – and I paid both federal and state taxes.
You paid other federal taxes, but probably not federal income taxes.
State tax rates are not under the control of the federal government.
golden2husky: That’s a joke, right? The people you say are the answer to our problems are the same selfish, opportunistic pigs who created it.
Those who “invest” aren’t just Wall Street bankers and traders. It also includes those who take a chance on creating a new business, or try to expand an existing business. Are they selfish, opportunistic pigs, too?
golden2husky: When the “saviors” pay more than the same percentage of income tax than average people do, then your argument will have some merit. Till then, its just the usual right-wing rhetoric.
Usually they do. Unless they are like many left-winger trust fund babies – i.e., Teresa Heinz Kerry – who use various devices to avoid federal income taxes. Or simply don’t pay taxes, like many Democrats in line for a high-level position with the Obama administration. It’s pretty easy to advocate higher taxes when you don’t really worry about paying them.
Do you have an example of a successful “temporary” nationalization?
Do you have an example of a successful privatization, because I can cite a lot of ones that failed miserably.
And privatizations that failed have a large and colourful history, where nationalizations (outside of the “wrest the means of production from the bourgeoisie, comrades!” ones, which don’t count) doesn’t really have much of a history one way or the other.
Currently, GM is getting public money without public oversight. Nationalization could at least affect change and give us a modicum of control, assuming it was done by people with a spine and a sense of a purpose, instead of this by-committee nonsense where anything we do is so watered down by ad-hoc bi-partisanship as to be useless. The theory is “No taxation without representation.” If we’re paying for, I want some shares in public hands and a few seats on the board of directors.
Actually, why not just do that? After all, what’s GM market cap, about five bucks? How much could it possibly cost to just buy the bastards outright instead of the nambly-pambly bailout nonsense?
The fact that two major industrial powers have nationalized their auto industries before–Britain and France–also means that a nationalized GM could learn from the mistakes of British Leyland and the success of Renault.
psarhjinian
The problem with your theory can be summed with one word: “we.” Who is this “we” of which you speak? Should I as a consumer have the last word? To put GM into the hands of the government is madness.
Just let it go. The strong carmakers will survive. As Marcus rightly points out, that sucks. But it’s also the truth.
The nationalization of Renault “worked” in large part because the French government was very aggressive about protecting the French auto industry from Asian imports, most of which were superior to what Renault was producing at that time.
Somehow, I doubt that this would fly in the U.S. And even if the government did try to hamper or severely restrict automotive imports, that would just encourage Honda, Toyota, Nissan and Hyundai to shift more production to the U.S. and Canada.
psharjinian: And privatizations that failed have a large and colourful history, where nationalizations (outside of the “wrest the means of production from the bourgeoisie, comrades!” ones, which don’t count) doesn’t really have much of a history one way or the other.
Governments have an incentive to “hide” serious problems with nationalized companies, so many of the companies that were privatized by government and then failed were hardly healthy. If we think that the GM’s accounting is “funny” now, just wait until the federal government takes over…
Besides, if the company couldn’t succeed on its own, it SHOULD go out of business. At least a privatized company that failed ultimately brought about a good result – it flushed a failed company from the market. The capital it was consuming can be used for more productive purposes.
The problem with your theory can be summed with one word: “we.” Who is this “we” of which you speak? Should I as a consumer have the last word?
That argument swings both ways, it just depends on which “we” one belongs to. We who have jobs or live in areas tangentially connected to the automakers have a different opinion, and would argue that continued job losses really are a bad thing. That you find yourself sufficiently isolated from the ripple effect is a good thing, but it doesn’t necessarily make your version objectively correct, just conditionally appropriate for you.
I’m not a GM cheerleader, but I do recognize the need for a stable major employer, especially in an economic crisis. If this were, say, 2005, I’d have the pitchfork out and the torch waving. Now? No, not so much.
To put GM into the hands of the government is madness.
No, putting GM in the hands of government is an alternative. Just shoveling money at them without demanding change is madness, and just letting them fail in the midst of a recession is an experiment in applied risk that I and others would rather not take.
What we have here is an opportunity to force the necessary change that would result in a viable company without the confidence-losing aspect of Chapter 11. What we’re actually doing is maintaining the status quo because our leaders are cowards.
His Deficit falsehood #2 Rebuttal – “But fiscal deficits don’t cause inflation. Fiscal deficits are funded by borrowing dollars that already exist” – We are currently printing trillions of dollars that do not exist. That causes a problem.
We’re not printing trillions of dollars yet, and the current plan is not to. The Fed has increased the money supply by only about 10% in the last year or so, to improve liquidity. Deficits by themselves are not harmful if they are repaid either through taxation or (better) through growth. In the 1980s many alarmists assumed the Reagan deficits would prove hyperinflationary. That didn’t happen because we borrowed instead of printed, and much of that added debt was repaid during the boom that followed. On the other hand, during the 1960s boom, when Lyndon Johnson elected not to tax early to pay for the war in Viet Nam, and with a Congress still averse to raising debt limits, we did print money which built inflation pressures into the economy that burst to the surface in the early 1970s even before the 1973 oil price shock rippled through the economy.
His Deficit falsehood #3 Rebuttal – “Steady, uninterrupted interest payments buy us our nation’s creditworthiness” – Depends on what we are using that money we borroed/printed to invest in. Get it to companies/people that will spend it wisely, sure, that might work. Give it to companies/people that are going down anyways and are unsustainable? Not so much.
While money borrowed for production, infrastructure and education tend to have more, and more lasting, economic leverage than that borrowed for bridging faltering companies that might not make it, the money put into the latter still circulates through our economy, especially if it isn’t concentrated in the hands of a few very wealthy individuals.
Europe, by the way, has tended to fare worse than the US during periods of recession and financial crisis. During the 1970s, both unemployment and inflation ran about 2X levels in the US, even though the stagnating effects of the US having to absorb a larger new and inexperienced labor pool in the form of massive Boomer influx plus fast-rising migration of relatively-untrained women into the workforce added drag on productivity.
Today, the banking systems of Ireland, Iceland, Britain, Austria are all in acute distress. Germany, France and Scandinavia are not immune, and if the Germans and French leave EU member states high and dry, expect some fraying of the fabric that is the artifice of European unity.
As ever, the US be a relatively favorable place to be, through this crisis.
There should be conditions on bailout money, particularly going forward for large sums intended for considered bridging, compared to the emergency allocations made available in the heat of the moment in Q4 and Q1. But there’s absolutely no economic harm in spending $100B+ to bridge damaged companies through a market trough. No scaled multinational manufacturer is doing well or avoiding losses, and as GM’s and Ford’s product catalogs show, both were in transition from both quality and cost-management perspectives, with progress ambushed by precipitous decline in economic confidence and evaporation of normal credit.
It’s absolutely true that we’ll either pay up front or pay in extended downstream consequences to correct accumulated mistakes by the carmakers in question. On balance, $100B, $150B, even $200B lifelines will be quite inexpensive if sufficient oversight accompanies the cash, to effect necessary restructuring in the least traumatic way that still gets the job done.
As with the relatively smaller and less critical Lehman Bros., no one knows how far the damage of a collapsed General Motors reaches. Had Lehman been managed, we’d have a less acute crisis today. Paulson threw Lehman under the bus without understanding the intricacies of its reach, and his capriciousness undermined confidence in government consistency. It was the thread pulled too far.
There’s more to life than the purity of economic theory. We had our long period of laissez-faire unbridled capitalism and had to judiciously add regulation. Like most things political, that went too far (though far too far in Europe) and we back-tracked, which went too far, too. There are good political reasons as well as economic to buffer the middle-class-supporting manufacturing element in our economy, without upending the balance of capitalism. The US has both capitalist and communitarian roots, which can exist in ideological harmony.
Moreover, mass unemployment has incalculable future costs beyond the contraction of monetary flow: citizen productivity never recovered, kids who drop out of school or don’t go on to college or trades, escalating health care costs, domestic violence and more subtle forms of abuse.
People can’t be sheltered from every risk, nor should they be. But systemically, bailouts with conditions at outlay and continuing performance objectives can bridge damaged markets for companies whose progress was interrupted by a pervasive crisis that also renders their implosion inadvisable. The *cost* of these bailouts is not remotely worth worrying about if the time they buy is used effectively.
Phil
Governments have an incentive to “hide” serious problems with nationalized companies, so many of the companies that were privatized by government and then failed were hardly healthy. If we think that the GM’s accounting is “funny” now, just wait until the federal government takes over.
And private ownership has no such impetus? Please, everyone cooks the books regardless of who ultimately pays the bills. Which examples you cherrypick from just depends on your political leaning, but there’s no greater or lesser chance of shenanigans either way.
The reason you’ll see more money flushed in crown hands is that the government has the will to fund things that don’t have a six-month ROI, where private industry in the west has no stomach for short-term losses.
Besides, if the company couldn’t succeed on its own, it SHOULD go out of business. At least a privatized company that failed ultimately brought about a good result – it flushed a failed company from the market. The capital it was consuming can be used for more productive purposes.
The problem with GM (and the banks) is that they don’t exist in a vacuum. As I stated in my reply to Robert above, were the economy in such a state that it withstand GM collapsing I’d say give’er and let them die. I don’t think that’s the case right now, and between the choices of a) letting them fail, b) giving them “bridge loans” to prop up a broken business model and c) recognizing this as a golden opportunity to kick ass and take names, well, C is for Cookie and and it’s Good Enough for Me.
“And private ownership has no such impetus? Please, everyone cooks the books regardless of who ultimately pays the bills. ”
Really! It’s like some poeple have never heard of Enron or Bernie Madoff.
psharjinian: And private ownership has no such impetus? Please, everyone cooks the books regardless of who ultimately pays the bills. Which examples you cherrypick from just depends on your political leaning, but there’s no greater or lesser chance of shenanigans either way.
Not “everyone” cooks the books.
If the government is doing the cooking of the books, it is less likely we will find out what is wrong. That is why many companies fail after privatization. We didn’t know the true condition of the companies until after they were privatized.
psharjinian: I don’t think that’s the case right now, and between the choices of a) letting them fail, b) giving them “bridge loans” to prop up a broken business model and c) recognizing this as a golden opportunity to kick ass and take names, well, C is for Cookie and and it’s Good Enough for Me.
The history books will decide who and what are to blame for this mess.
The main problem is that GM is not a viable entity, even with an injection of goverment funds. Under your scenario, we still end up flushing lots of money down the toilet and have next-to-nothing to show for it.
BDB: Really! It’s like some poeple have never heard of Enron or Bernie Madoff.
If Enron had been a government-controlled entity, and it had gone broke, the government would have covered it up, attempted to prop it up with infusions of funds, and we’d still be paying to keep a dead company on life support
Now, it’s at least gone.
Marcus,
Good point, significant means different things. I would be surprised if you paid more than 10% or even 5%. 10% is significant for anyone. As far as significant for actually supporting the government, then you must realize that there are plenty of people who work with their hands (and I don’t mean athletes) that paid more in taxes than you earned.
Those people aren’t rich, advantaged, or any of the other nasty liberal labels by any means except their incomes. Many conservatives are very concerned that the amount of people paying much taxes at all is getting very close to less than half the voting population. I will bet that hits all our lives a lot harder than global warming.
At any rate, it appears to us on the “right”, that those on the “left” talk about helping low earners, but actually do more to keep them that way.
“Many conservatives are very concerned that the amount of people paying much taxes at all is getting very close to less than half the voting population.”
You know, there are other taxes besides income taxes. And you’re talking about income taxes.
BDB: You know, there are other taxes besides income taxes. And you’re talking about income taxes.
This doesn’t change the facts that lots of revenue is raised by this tax, and that only Americans in the top half for income actually pay it. Any cut in the income tax rate will only benefit those who pay this tax. Which, of course, includes the rich (and lots of middle income and upper-middle income people, but we somehow conveniently ignore them).
Enron, Enron, Enron.
As a guy who was warning about Enron before most people had heard of it, let me explain to you why you should never invoke Enron as an example of laissez-faire failure (As I seem to do once a quarter).
First, there was criminal activity. Regulation won’t stop crooks, only help identify and catch them, which it did with Enron. Second, it was actually regulation that allowed them to attract so much capital from investors, and regulation that let them screw even more out of Cali residents.
It was government regulators that APPROVED their use of mark to market accounting, which most investors did not understand, and which led directly to their phony profits. Added to that was the so called deregulation of the California energy market. Left and Right got this one wrong because they thought they could simply create a free market with regulation. What they built was a highly, and yet poorly, regulated market.
So, unless you want to look like an idiot, you should never invoke Enron against capitalism.
OTOH, if you want to point out the relationships with the Bush family, I won’t call you a paranoid conspiracy nut (not that I believe it, but at least there are some facts in that mix).
“This doesn’t change the facts that lots of revenue is raised by this tax, and that only Americans in the top half for income actually pay it.”
Well, duh. That’s the point of having a progressive income tax.
Yes, I was only talking about income taxes.
How about we repeal the income tax amendment? Or do you really think they are important? Can’t have it both ways.
If you have money best to invest in gold, silver or cash or outside the USA.
Landcrusher: OTOH, if you want to point out the relationships with the Bush family, I won’t call you a paranoid conspiracy nut (not that I believe it, but at least there are some facts in that mix).
If we are going to tie the Bush family with Enron, then I suppose turnabout is fair play, and we can tie the Democrats to Bernie Madoff, as he gave quite generously to the party.
BDB: Well, duh. That’s the point of having a progressive income tax.
You were the one complaining that Bush instituted tax cuts for “the rich.”
If the rich are the ones paying a large part of the tax, any tax relief will benefit them accordingly. They pay the lion’s share of the tax; therefore they will also benefit from any cuts.
One hopes you will keep these facts in mind next time before complaining that these tax cuts only benefitted the “rich.” As a recently deceased radio personality said, now we have “the rest of the story.”
And a tax is more than “progressive” when the bottom 50 percent of wage earners don’t pay any of it.
“One hopes you will keep these facts in mind next time before complaining that these tax cuts only benefitted the “rich.” ”
*facepalm*
I did. That’s why I think we should have never have had the income tax cuts.
“And a tax is more than “progressive” when the bottom 50 percent of wage earners don’t pay any of it.”
Am I supposed to be outraged about this? Because I’m not.
BDB: I did. That’s why I think we should have never have had the income tax cuts.
Yes, it really is terrible when we allow people to keep more of their own money.
And, as I explained above, more than the just the “rich” benefitted from those tax cuts.
You ridiculed (I believe the term you used was “useful idiots”) those making around $50,000 a year for hoping to benefit from those tax cuts, and, lo and behold, plenty of married couples where each partner makes that much did benefit.
I guess you believe that we shouldn’t get a tax cut. Or that we are somehow “rich” because we benefitted from them.
One hopes that you are now better informed.
BDB: Am I supposed to be outraged about this? Because I’m not.
No, but it did show that you understand just who pays taxes…which, judging by your prior posts, you didn’t.
“You ridiculed (I believe the term you used was “useful idiots”) those making around $50,000 a year for hoping to benefit from those tax cuts, and, lo and behold, plenty of married couples where each partner makes that much did benefit. ”
They would have benefited much more from a payroll tax cut.
And please, please stop using “taxes” as a synonym for “income taxes”.
Landcrusher wrote: ““Tax the rich!” is a leftist battle cry which always seem to end up being implemented as “Tax the productive.””
Do you have any statistics comparing the productivity of the top one percent of the population versus the rest of us? How is this productivity measured?
It would also be helpful to know how many of these top one percent started from modest means, and how many inherited a fortune and basically managed it.
Sure, there are a few people who have had the luck, good fortune, and intelligence to rise up. But I would be curious to know how many of our current crop of failed bankers and CEOs really deserve to be called our most productive citizens.
Flash forward seventy-six years and FDR’s spiritual successor wants his fellow countrymen to live in fear—so his administration can achieve the same Big Government goal.
Really? How is this justification different from that of investment by definition?
This is pretty rich irony when compared to how the last guys played the emotional strings. Maybe it’s just a lingering feeling on the part of some people.
Landcrusher wrote: ““Tax the rich!” is a leftist battle cry which always seem to end up being implemented as “Tax the productive.””
It’s based on the idea that wealth and its creation comes from a vacuum.
Sorry but the social contract is a creation from all its constituents. Just because the result of the rules benefits some doesn’t exclude them from rules that may be detrimental to them.
“Tax the productive” is especially hilarious because it’s the perfect moral shield for the absolute wealthiest who are the most effected, and according to the conservative philosophy, the most “productive” members (because a cash grab is excellent productivity).
The fact is, real growth only comes from changes (usually technological) that transform the way work is done. That and maybe population growth. Everything else is either shuffling paper or redistribution, which are not surprisingly much easier than real innovation or achievement.
So if someone really cared about productivity and growth, at least they can try to be honest and seek to reward those responsible for it instead of assuming incorrectly that cash money is a measure of long term value.
Geeber, when discussing taxes, why do you only focus on the percentage of taxes paid by the top income earners and omit any reference to how much of the total income pie is consumed by those top earners?
Sure, it makes it sound like the wealthy are paying most of the taxes. But hey, they are taking in an unbalanced amount of income. The last time this happened, we had a great depression. Guess what? It happened again. The correct name for this is greed.
“Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.
The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.
While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.
The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.
The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980. Emphasis mine.
http://www.nytimes.com/2007/03/29/business/29tax.html
According to this study, it would imply that the top 300,000 taxpayers should actually be paying as much in taxes as the bottom 150 million income earners. Do you argue they are paying this much?
“According to this study, it would imply that the top 300,000 taxpayers should actually be paying as much in taxes as the bottom 150 million income earners. Do you argue they are paying this much?”
Leaving aside your (in my opinion) false assumption that people should pay taxes according to their earnings, let me just step in and point out that yes, they are paying this much:
http://www.house.gov/jec/publications/109/rr109-36.pdf
This is from tax year 2003. The top 1 percent of income earners (although only 60 percent of Americans are in their earning years (20-64), let’s assume everyone is included in the House publication and therefore this represents 3 million people) pay 34.27 percent of all income taxes. The bottom 50 percent pay 3.46. I’m not sure if the Times article means 150 million to represent half of all Americans or 150 million legitimate income-earners, and I do not have access to a breakdown of the top 1 percent so as to arrive at what percent they are paying. However, even assuming an even distribution of income within the top 1 percent (which is of course silly) one arrives at 3.43 percent. I think it’s a fair bet to say that the top 300,000 earners in the U.S. pay >7 percent, and likely >10 percent of all income taxes, and therefore almost assuredly do pay more than the bottom 150 million.
Interesting that I am able to do this ‘research’ in ten minutes at home in my pajamas, but the Times refused to do the same in what was obviously a politically tinged article.
BDB,
I already covered that, did you miss my post?
Geeber,
Yes, there is that Madoff connection, but really, it’s just as silly as the Bush Enron connection, only you won’t hear about it as much because our side has a few less loons.
Carlos,
I wasn’t referring to the top 1% as the most productive. You should look for the work Thomas Sowell has done on these stats though. It’s actually the next 5 or 10% who pay the same effective rate (or higher) than the million plus club. They aim at the million a year guys, but they HIT the quarter a million plus folks. There are many more of us, and most of us don’t make it every year for all of our thirties through sixties. As you will get when you read Sowell, nearly half of us are in the top 10% (or something like that) at some point in our lives. Almost everyone is capable of being there. The whole point of capitalism is for all of us to be motivated to succeed, and as many of us as possible to both be at top productivity, and at top ability to manage wealth well. Government does best not to hinder this or incentivise failure.
Another important point is that capitalism is the best way overall to measure the productivity. Not that it’s great, just that ALL the other ways are MUCH worse, and have been proven so EVERYTIME.
Now, if I may get into what you said to Geeber, it’s REALLY key to understanding conservatism.
First, the pie is not set. The economy is not a zero sum game. The billions that Bill Gates made did not come out of IBM’s pockets, to the contrary, he helped them make billions as well. Sure, IBM might have made more if OS2 had become the standard, but that doesn’t mean they lost the same amount that Gates and MS made.
Second, the top earners are not “taking” too large a share of income. They are “earning” it. Taxation doesn’t change that (IMO, income taxes actually worsen it, but I will save that esoteric bit for now). Does your income come at the expense of someone else? Do you see it that way? How about professional sports figures, do their incomes cost others money? No, people got value for that work, wealth was CREATED.
Now, don’t get me wrong. There are plenty of crooks at the top, and taxes are all supposed to get even with those guys. Well, they don’t. Those guys only get taken in when the law catches them, not the tax code (Capone would be the exception here). Besides, do you think every family who makes over 250 is crooked? Did they TAKE too much? Why do they OWE more to the folks who didn’t make that much? Really, why?
I bet the reason is because you read some really slanted press like the NYT. Did you not notice the complete bias? It’s right there in front of you. The over 100k folks “received” their pay, the others “earned” theirs. It’s total crap.
I bet if you really went out and started looking at folks over and under 100k, you will find the overs work much harder, and mostly have valuable talents which they worked very hard to develop.
The left wants us to believe that ALL the over 100k folks are selfish asses that found a way to get over, while the under 50 folks are all “disadvantaged” and “hard workers”.
Let me tell you something, that’s a ridiculous myth that needs busting. You can bust it yourself by simply working your network to examine the truth and norming it for age. Instead of simply hating people who make more, examine how they got there, and you will start becoming more conservative without a doubt. We all love to hate lawyers, but if it’s so easy, why don’t we just go to law school and make millions ourselves?
Heck, even the crook I know who makes seven plus figures (likely much more given how well he cheats on his taxes) work ridiculous hours. If you want to fix income disparity, taxation is not the solution. (BTW, most of the disparity numbers are being purposely exagerated because they use average household rather than individual incomes while the average household keeps shrinking. Individual incomes have stayed much closer over the period that is usually quoted and that period usually gets chopped off at a suspicious spot). The seven figure plus crowd will ALWAYS find ways to beat the system, while the 250 plus crowd will pay the full bill. The folks who get burned are the ones who can’t afford teams of accountants and other employees and services.
I say forget about it. No one ever does a good job of talking about what problem it is that some people make or have huge wealth. The brilliance of our system is that they really can’t waste it. If they leave it in the bank, the bank uses it to make money for others. If they spend it, they pay others for their labor. If we did something like the fair tax, we would get a much more fair system without all the hassles and emotion of the income tax.
Well, that was all too long, but I hope you get it.
Interesting that I am able to do this ‘research’ in ten minutes at home in my pajamas, but the Times refused to do the same in what was obviously a politically tinged article.
That doesn’t have anything to do with the point of the times article.
Another important point is that capitalism is the best way overall to measure the productivity.
What’s really funny with these discussion is that “capitalism” gets defined to be whatever is convenient. Sort of like:
I bet if you really went out and started looking at folks over and under 100k, ….folks are selfish asses that found a way to get over, while the under 50 folks are all “disadvantaged” and “hard workers”.
Let me tell you something, that’s a ridiculous myth that needs busting.
All of a sudden, 250k – 1mil gets to be 100k or 50k because the point is erroneous with consistent figures.
The fact is the most valuable folks to innovation and long term productivity gains are some of the individual contributors making in the 100k+ ballpark on the fortune 500 pay scale. The reason why this is “low” in the system is because it’s non-trivial for individuals to raise the capital to cover this sum for a long enough term to realize the “profits” from an often margin but key improvement to a substantive sector.
You’d think the latest banking debacle would’ve clearly shown the massive paper shuffling empty wealth creation that is the pinnacle of capitalism. When the exclusive goal is capital creation, the ultimate methodology should do so with as little real cost (ie. work) as possible.
The goal that most benefits society in general is how to control the system to filter out all but the meritocratic elements. Anyone who tells otherwise is either with the profiteers or the gullible followers who are predictably poor at logic and math. Just look for the trademark simplistic and inconsistent logic (“fair tax”, lol, targeted at people who don’t have a clue about econ so the incentive is to make it easy for the naive).
You would also do well to read my prior post and learn from first principles how the system works.
That doesn’t have anything to do with the point of the times article.
Really? An article clearly designed to engender class envy on the basis that a small group of people earns an enormous percentage of the income in the U.S. should not have pointed out that they pay a correspondingly enormous portion of the taxes?
The goal that most benefits society in general is how to control the system to filter out all but the meritocratic elements. Anyone who tells otherwise is either with the profiteers or the gullible followers who are predictably poor at logic and math. Just look for the trademark simplistic and inconsistent logic (”fair tax”, lol, targeted at people who don’t have a clue about econ so the incentive is to make it easy for the naive).
Leaving aside the ad hominem attack on the intellect of those with whom you disagree (by the way, I spent two years working on a doctorate in mathematics before quitting to pursue a higher paying career in the financial world- I assure you that my understanding of math and logic far exceeds yours), your point is false in that you see this war between the ‘profiteers’ and the workers who are supposedly driving the economy. The profiteers employee the workers. Without the hard work and risks taken by those with capital our economy would never grow. I hate to use anecdotal evidence, but since I work with business owners on a daily basis I feel compelled to do so. I just met with a business owner; he’s one of the ‘profiteers’ and worth a decent amount of money. He didn’t take any income for a couple of months this winter to avoid laying off employees. He drives all the sales at his company; without his efforts 15 people are looking for another job. My most successful client (worth in excess of 200 million) took a tremendous risk; he was a successful practicing attorney, left his practice to purchase his father’s company (that’s right, the IRS won’t just let you give it away) and grew it from employing 200 to employing over 2,000. These people deserve your scorn and derision? I could go on, but the vast majority of businesses in this country were formed/acquired at incredible personal risk to the owner(s). It took unbelievable effort to grow them. Most high earners deserve what they earn. Without them, most of us wouldn’t be employed.
Also, given that you clearly misunderstand ‘how the system works’ it is quite impossible to glean anything useful from your previous post.
By Robert Farago
March 8, 2009
The president who did more to expand the federal government than any other in modern history began his first term assuring Americans that the only thing they had to fear was fear itself.
No, he just stepped down.
Now we have a true hope in the new president reducing the size of the government. Maybe first by laying off the thousands of spies that are recording our phone calls.
Really? An article clearly designed to engender class envy on the basis that a small group of people earns an enormous percentage of the income in the U.S. should not have pointed out that they pay a correspondingly enormous portion of the taxes?
Why is that surprising given the progressive tax code? The point of the article, the change worth reporting, concerns the growing imbalance of wealth.
The delicious irony here is that this is following the prediction of Marx.
your point is false in that you see this war between the ‘profiteers’ and the workers who are supposedly driving the economy. The profiteers employee the workers. Without the hard work and risks taken by those with capital our economy would never grow
There is no real discussion of the compromises as the result of economic decisions here so who knows where you get those simplistic notions.
This is a basic discussion of the first principles on how economics systems can be built and therefore understood. If you had the flexibility to step outside your dogma and actually took the time to study it, it makes sense since it’s constructed to be naturally predictive instead of for propaganda (ie. marked by post-hoc rationalization).
For example, in your story, you attach monetary and moral value to risk, which extends from the profession. I use this because it’s something you’re familiar with and therefore may hope to understand. So putting aside your implied support for nepotism, what can you identify in his case that created 200mil worth of value?
Without knowing the specifics of his business, it’s difficult for me to evaluate the nature of his success so that’s your homework. Since you have math background, you should understand that in diff.eq. (ie dynamic) systems, structures reflective of naturally occurring ones can arise, without any emphasis on value/productivity. Since the discussion is about appropriate reward for productivity (which is btw an open value judgment question), what do you think would a fair or unfair cost to him after the fact (taxes). In other words, comparing him to the similar systems (competition) as is nature of capitalism, how much of his success was as a result of benefit to society compared to the competition as opposed to initial conditions, rules, luck, etc (basically value-neutral system stuff). You do at least believe it’s a deterministic system, right?
Back of napkin arguments/estimates are fine. What would also be entertaining is to consider his initial assessment of the opportunity costs.
Frankly, until you can be rational at a very basic level, it’s not really worthwhile to discuss the specific compromises that actually matter.
by the way, I spent two years working on a doctorate in mathematics before quitting to pursue a higher paying career in the financial world- I assure you that my understanding of math and logic far exceeds yours
Perhaps you can also show us all your prowess by explaining and extrapolating the fair (ie pure consumption) tax model, since that’s part of what you quoted and all.
This is going to be enlightening; and possibly very entertaining.
Why is that surprising given the progressive tax code? The point of the article, the change worth reporting, concerns the growing imbalance of wealth.
I did not state that it was surprising. I was merely pointing out that the ‘article’ was nothing more than a propaganda piece.
The delicious irony here is that this is following the prediction of Marx.
Yes, Marx was undoubtedly visionary; his economic theories have held up remarkably well in practice.
This is a basic discussion of the first principles on how economics systems can be built and therefore understood.
You have yet to mention any first principles (no, Marxist ideology doesn’t count).
You do at least believe it’s a deterministic system, right?
Not at all.
Perhaps you can also show us all your prowess by explaining and extrapolating the fair (ie pure consumption) tax model, since that’s part of what you quoted and all.
Given that I’m relatively ambivalent on the fair tax, it’s somewhat odd that I’m being asked to describe it, but I’ll try anyway. The idea is that the current tax system is inefficient and discourages the earning of income, which in turn reduces the creation of capital. Therefore it is theorized that a consumption tax would lead to a more productive economy than that which exists under the current income tax. I haven’t read enough on the subject to offer an opinion on whether or not this is true. And what exactly do you want me to extrapolate? The economic impact as reflected by GDP? The tax neutrality of the concept? The distribution of taxation? All of the above? Unfortunately, I have a family and a career and cannot afford to waste that kind of time on such a project (unless you are offering compensation better than I currently receive).
Here’s a thought (apologies if I’m repeating a point someone else has made): Suppose the U.S. automotive market has changed permanently so that it can no longer support three, or even two, large domestic auto makers, but can still support one. In that case, the long term survival of the domestic auto industry would best be served by letting Chrysler and GM go bankrupt, so that Ford could inherit the remaining market. And propping up Chrysler and GM could end up leaving all three of them so weak that they’d all end up failing. In that case, it would be the bailout of the auto industry that would end up being the thing that killed it.
Landcrusher: The size of the pie may change this year or in a future year; but the study was retrospective and based on IRS data. The size of the pie in 1928, one of the years cited in the article, cannot grow.
thebigmass: The article reported on a study. The study was not done by the Times. Instead of viewing it in strictly political terms, why not take a market view for a moment? The study was released in 2007 and it seemed to imply that one of the conditions that caused the crash of 1929 was the inequality of income distribution. It showed that the U.S. was, for the first time since 1928, close to the same ratio. If I were an investor, and I was aware of consumer behavior, I would take that as useful information.
The link you cited does not comport with the study cited by the Times, although they concern different years. In the study I cited, which reported on 2005, “. . . the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.” In the link you provided, “To be counted in the top one percent, taxpayers needed an Adjusted Gross Income (AGI) of $295,495 or more.” This could possibly be explained by the use of AGI versus average gross income.
In any case, the point is clear enough to me. The U.S. has growing income inequality. Taken too far, this will have (and is having) an impact on consumer behavior. Eventually, the vast majority of people will stop buying things. And the fewer number of people with means to purchace cannot make up for the lost purchasing power of the vast hundreds of millions of people who are excluded.
Does this imply Capitalism is bad or dead? I don’t think it does. It only implies that our present trend is counter productive to a healthly society and market economy. One of the ways to fix that would be to return to the kind of tax rates for the very wealthy that we needed in the past. I don’t buy the arguement that by raising tax rates on the the top one percent we are punishing productivity. I would like to see proof of that assertion and I have not seen any.
I did not state that it was surprising. I was merely pointing out that the ‘article’ was nothing more than a propaganda piece.
No. It reported current changes that many people didn’t know, which is what journalism is for. What’s really astounding is the “media” is far and away a corporate interest, yet some people love to feign moral indignation whenever it dares even remotely stray off the acceptable party line.
BTW, you should look up the fox bgh monsanto issue if you want to see propaganda in action. The implication of that suit with respect to what is allowable on public airwaves is pretty interesting.
Yes, Marx was undoubtedly visionary; his economic theories have held up remarkably well in practice.
Isn’t that why it’s so ironic? Remember one of the most important things he predicted was the overthrow of capitalism due to the social turmoil and stratification it tends to create.
I would also note that socialism as define by marx is never really practiced. The guy is just about the most misunderstood theorist ever and that’s a high bar.
The pertinent point of that aside is populist representations of ideas are mostly wrong, in large part because people are too lazy to read the lit. For example, the bed-time story of Adam Smith is particularly popular, but what he actually wrote was substantively different.
Anyhoo, this has little to do with old man Marx:
You have yet to mention any first principles (no, Marxist ideology doesn’t count).
I can’t really help you if you don’t read the posts. In fact I’ve posted what should be quite controversial points to indoctrinated capitalists, like creation of capital is often ancillary to any fundamental increases in productivity. It’s interesting that Marxism isn’t among them yet it’s what you pick up on likely because it’s a teachable ideological enemy and the extent of one’s economics education which is unfortunate for someone in finance.
OTOH, that’s not at all surprising given the magnitude of systematic selfishness and willful negligence that led to the economic crisis.
–
You do at least believe it’s a deterministic system, right?
Not at all.
So I guess pop capitalism teachs its tenets as divine ordinance, and attempting to be rational is an affront to doctrine.
–
Unfortunately, I have a family and a career and cannot afford to waste that kind of time on such a project (unless you are offering compensation better than I currently receive).
Lol, spoken like a career capitalist. You know, it is theorized that knowledge has value beyond what can be easily monetized.
The “project” should be pretty quick, because a quick peeks shows that even the wiki entry is bountiful. I was hoping that you can explain it to landcrusher since he’s more likely to believe a fellow man of the cloth.
The U.S. has growing income inequality. Taken too far, this will have an impact on consumer behavior. Eventually, the vast majority of people will stop buying things.
That isn’t going to be true as long as there are cheap (ie poor) base of production for those goods (and natural resources don’t run out), which will last into the foreseeable future.
To be fair, the income (and even more ginormous wealth gap), is probably sustainable in the US because there’ll always be enough crumbs to justify the doctrine. It’s more a question of what kind of society we want to live in.
On a more serious note, here’s the PBA for this editorial.
The current admin is attempting a liquidity trap escape. Basically it can spend as much as necessary to counter private sector layoffs. There may be an inflationary overshoot due to lagging metrics, but a subsequent fed rate hike will induce a controlled recession to get out of the woods.
It’s really quite abject that the “liberal media” won’t report this, huh?
carlos,
I don’t know what your obsession with this one study is. If I debunk it, what will that change in your opinon about taxation? Also, is it desirable to reduce overall income to reduce disparity? Which one is more important? Lastly, if we want to reduce disparity, should we really be doing it on the tax side, instead of the income side?
bigmass,
Several of us have tried to have a discussion with agent, and gotten the same result. I recommend ignoring him. Circular pseudo intellectual reasoning without any realization of one’s lack of communication skills peppered with indiscriminate and unwarranted condescension and rudeness gets old quickly doesn’t it?
BDB: And please, please stop using “taxes” as a synonym for “income taxes”.
We have been using “taxes” as shorthand for federal income taxes throughout this discussion.
carlos.negros: Geeber, when discussing taxes, why do you only focus on the percentage of taxes paid by the top income earners and omit any reference to how much of the total income pie is consumed by those top earners?
People earn income; they don’t “consume” it until they spend it.
Income isn’t given to them by the federal goverment or the great big Money God. Unequal distribution tends to reflect unequal inputs on behalf of those seeking income.
carlos.negros: Sure, it makes it sound like the wealthy are paying most of the taxes. But hey, they are taking in an unbalanced amount of income.
It sounds like they are paying the lion’s share of federal income taxes because they are.
carlos.negros: The last time this happened, we had a great depression. Guess what? It happened again. The correct name for this is greed.
The Great Depression wasn’t brought about by unequal income distribution. It was brought about by a Federal Reserve that choked the money supply in the name of fighting inflation when the problem was deflation.
Another contributor was the Hawley Smoot Tariff of 1930.
agenthex: So if someone really cared about productivity and growth, at least they can try to be honest and seek to reward those responsible for it instead of assuming incorrectly that cash money is a measure of long term value.
Usually the people who bring about technological advances also become very rich. So this is largely a distinction without a difference.
agenthex: What’s really astounding is the “media” is far and away a corporate interest, yet some people love to feign moral indignation whenever it dares even remotely stray off the acceptable party line.
“Corporate” and “conservative” are not synonomous. Look at GM – a coporation seeking a government bailout and basically agreeing to more direct government involvement in its operations in exchange for these funds.
Who is opposing this? Virtually all libertarians, more than a few conservatives, and even some liberals. (And, incidentally, “Republican” is not always synonomous with “conservative” either. Do not confuse a party pandering for votes for adherence to a particular worldview.)
Corporations are concerned with staying profitable (Toyota and Honda right now), or, in extreme scenarios, survival (GM and Chrysler right now).
They will easily use both “liberal” and “conservative” means to achieve those ends.
Circular pseudo intellectual reasoning
I know you’re displeased that I tend to reply to specious logic with mockery.
The sad truth is that there is no serious intellectual support for any conservative econ position because they tend to be results of political self-determination rather than serious science. Maybe you’re confused as what “intellectual” means, because it’s not about trying to force a very general (and compound) numbers fit a personal philosophy. That would be what pseudo-intellectuals do (and think tanks).
Now I know it’s confusing because that just makes you want to attack “liberals”, but I’m sorry the straw version is not an intellectually meaningful position either.
The fact is, “conservatives” and “liberals” fanbois like to play out their never ending meaningless parody of arguments. It’s like watching people who probably don’t qualify as techs arguing Ford vs GM or Mac vs PC. If you have a burning desire to channel Adam Smith, at least read his book first.
Usually the people who bring about technological advances also become very rich. So this is largely a distinction without a difference.
This is pretty laughable. Most of the contributors are not even widely known to people who make these ridiculous claims. Wealth is rare in academia, and those on the industry side are typically wage earners, too. Is bill gates and the “great industrialists” your prime example or something?
And ignoring the tangent that doesn’t go anywhere, this is interesting:
They will easily use both “liberal” and “conservative” means to achieve those ends.
To clarify that, you meant manipulate rubes who think dictated opinions matter to do their bidding.
agenthex: The sad truth is that there is no serious intellectual support for any conservative econ position because they tend to be results of political self-determination rather than serious science.
That was the funniest post of 2009.
Congratulations!
I have the sneaking suspicion that, in your case, the “intellectual” position is the one that agrees with agenthex’s view on the matter in question.
You seem awfully long on theory and woefully short on real-world experience.
agenthex: This is pretty laughable. Most of the contributors are not even widely known to people who make these ridiculous claims. Wealth is rare in academia, and those on the industry side are typically wage earners, too. Is bill gates and the “great industrialists” your prime example or something?
Coming up with an idea is not sufficient, in and of itself, to make it marketable. It often takes someone who is a good promoter, or someone who can refine it and make it feasible for implementation.
Henry Ford I didn’t “invent” mass production, interchangeable parts, the assembly line or the automobile. He did, however, put them together to create the first low-cost automobile, and thus became very rich in the process.
agenthex: And ignoring the tangent that doesn’t go anywhere, this is interesting:
You were the one posted the following sentence, to which I originally responded:
What’s really astounding is the “media” is far and away a corporate interest, yet some people love to feign moral indignation whenever it dares even remotely stray off the acceptable party line.
You were attempting to equate “corporate” with “conservative,” which I’ve shown is incorrect.
These two terms are not synonomous.
The idea that just because media outlets are owned by business organized as corporations is not proof, in and of itself, that said media will always be biased in favor of the “conservative” viewpoint.
Saying that the media follows the “corporate” viewpoint because most media organizations are corporations is lazy and, unfortunately, not accurate. At least, to those who have actually examined this question.
I would also note that socialism as define by Marx is never really practiced. The guy is just about the most misunderstood theorist ever and that’s a high bar.
Isn’t it because Marxism as an ideology is unsustainable?
It’s a theory based on Utopian principles that have little to do with human nature.
It’s been tried numerous times throuhgout the history leading to the same disastrous results.
And yet people like you are still preaching the same old mantra.
Enough already.
I have the sneaking suspicion that, in your case, the “intellectual” position is the one that agrees with agenthex’s view on the matter in question.
You seem awfully long on theory and woefully short on real-world experience.
It’s pretty funny you’re drawing a dichotomy between theory and real-world experience in favor of the latter in reply to a statement about how a political position is not scientific. Because we all know how politics is the correct one.
–
Henry Ford I didn’t “invent” mass production, interchangeable parts, the assembly line or the automobile. He did, however, put them together to create the first low-cost automobile, and thus became very rich in the process.
You will note that my guess was unerring, because the notion of the omnipotent industrialist as a pervasive figure was invented to inspire the rubes. Real industry is compartmentalized between inventors and financiers, and the risk/reward of capital is mainly concerned with the latter. That’s fine since it’s a workable system, but leave the fairy tales to the kiddies.
–
You were attempting to equate “corporate” with “conservative,” which I’ve shown is incorrect.
No I didn’t, you think that because to you there are only the two perspectives, and assumed that I thought “corporate” is within the exclusive domain of “conservative”.
The two perspectives as used nominally in the US are political conveniences, memes, to control the pleb’s thinking process. For example, to counter your prior post, “Republicans” are nominally defined to be “conservatives”. The split that you perceived was a result of necessary changes in party direction last couple decades. From that, a small segment of old-time hardliners didn’t follow the movement and clung onto the archaic and dead political ideas. There is some temporary coincidental reversion to those “ideals” as a convenient political position now that is no action required on the party’s part.
—
Isn’t it because Marxism as an ideology is unsustainable?
Nobody in practice actually read Kapital, and certainly not its most ardent supporters who used it to rationalize particular types of authoritarian regimes that were useful to them.
In any case, it’s an archaic oddity in the modern world mostly useful for poking fun at people still fighting their war against it.