Wednesday, December 29, 2010

Rock and Hard Place, Smoke and Mirrors


Gene Hayward writes:

Who is more selfish---Senior Citizens who won't take reduced benefits to help young people financially, or young people who won't pay more taxes to help old people financially? Good luck with that question...

Gene's question -- and it's not just Gene's question -- creates a "front" between young and old. As though there is enough money for only one of the two groups. And, well, yeah, that is how it looks.

But if that's how it really is, it's because we've used the wrong economic policies. And by "economic policies" I don't mean just the level of government spending and taxes. That's the only part of policy that gets examined, but it's not where the problem lies.

Not long ago, we were the richest country in the world. If we're no longer on top, we're still close to the top. Therefore, there should be no reason we cannot afford both Social Security benefits and reasonable taxes all around. No reason but bad policy.


Earlier, I covered a MacroMania post that set up a similar "front" -- on the one hand, taxes sufficient to balance the federal budget while expanding stimulus spending. On the other hand, taxes sufficient to eventually balance the budget while expanding stimulus spending.

No. We should not be lining up and taking sides on ridiculous issues like the timing of the tax increases needed to balance the budget.

We should be calling for policies to reduce the private-sector debt that inhibits economic growth. But we'll never even get to the discussion of private-sector debt if we insist on focusing on trivia like "taxing now versus taxing later."

8 comments:

Greg said...

Your last three efforts are outstanding.

I like the focus on changing the terms of the conversation. Its the terms of conversation which are wrong and if we start asking the right questions we can get the right answers.

This zero sum logic of most mainstream economists is staggering.

Gene Hayward said...

Art--Could you re-send me the links to your writings that specifically address suggested remedies to the debt/credit policies that you have us where we are. I need to get my head around how we put the credit "horse" back in the barn (who/what is the "barn"??)...I am tying to figure our how to introduce it to my students and not confuse the dickens out of them...A great analogy using a single dollar would help! :) As always, thanks for your patronage!

Gene Hayward said...

I need new glasses...Please forgive the fragmented sentence structure...hopefully you know what I mean....

The Arthurian said...

Gene, I wish I was organized enough to give you a good answer quickly. And then, the wishing somehow slows down my response-time. Anyhow...
Look at An Arthurian Future.

As I think of more, I'll let you know.

The Arthurian said...

Gene,
The Real Laissez-Faire expresses my view on business taxes.

It's from before I learned to break up long difficult posts into more, shorter, easier ones. So good luck with that!

The Arthurian said...

Forgiveness distinguishes between policy for escaping a slump and policy for preventing one. An important distinction.

The Arthurian said...

Oh! This is an important one!

Gene Hayward said...

Great! This will make for some nice New Years Day reading... Thanks!