|
A recent NYTimes review article dealt with the economic policies pursued by the Bush Administration. In general such policies have involved tax cuts for the rich and cuts in medical and welfare programs aimed at the poor, the thinking being that the rich would then invest their money in efficient productive enterprises that would employ people and boost economic growth. Conceptually, this is the supply-side economics and trickle down effects of the Reagan era. But Bush has gone much farther than Reagan. From the budgetary surpluses of the Clinton era, Bush has moved the US government into a huge deficit position, estimated at a total of $1.7 trillion for the period 2002 to 2011. Enormous military expenditures required to consolidate the US role as the worlds lone superpower have been a major factor in this. Supply-side economics didnt work under Reagan and wont work under Bush. Why not? Well, it would appear that the rich wont do what is expected of them invest their increased incomes in efficient productive enterprises. They would rather use their increased income to get even richer via whatever is hot in the market. A principal beneficiary is big finance, which, instead of playing its traditional facilitating role in the economy, has become a dominant industry. Unproductive "bubbles" occurred in information technology and, more recently, housing and real estate. Because the costs of vital commodities and services such as housing and transportation have risen more rapidly than wages, consumers have found themselves in a bind. That hasnt stopped them from spending, however. Enormous credit card and mortgage debts have been rung up. And there is also the question of why anyone should bother investing in efficient and productive enterprises in the high-wage US economy when the Chinese and other Asians are doing it more efficiently and cheaply. The review article said a lot about the application of misguided supply-side economic policy. However, apart from a brief mention of Keynes, what it didn't tell us is what the demand-side alternative might be. Would putting money into the hands of ordinary consumers stimulate the creation of efficient and productive enterprises in the US, or would it simply go to paying for goods imported from China? Ed P.S.: State of the Union tonight. Wonder what Bush'll say about the economy? |
_______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
