Today, I am going to comment on two pieces of economic stupidity from liberals.
The first piece is from a Democracy Now! interview with Matt Taibbi (h/t: Clarissa), in which he writes:
Well, Mitt Romney is really the representative of an entire movement that’s taken over the American business world in the last couple of decades. You know, America used to be-especially the American economy was built upon this brick-and-mortar industrial economy, where we had factories, we built stuff, and we sold it here in America, and we exported it all over the world. That manufacturing economy was the foundation for our wealth and power for a couple of centuries. And then, in the ’80s, we started to transform ourselves from a manufacturing economy to a financial economy. And that process, which, you know, on Wall Street we call financialization, was really led that-sort of this revolution, where instead of making products, we made transactions, we made financial products, like credit default swaps and collateralized debt obligations. We created money through financial transactions rather than building products and selling them around the world. And that revolution was really led by people like Mitt Romney. And the advantage of financialization, from the point of view of the very rich and the people who run the American economy, is that it was extremely efficient at extracting wealth and kicking it upward, whereas the old manufacturing economy had the sort of negative effect of spreading around to the entire population. In the financialization revolution, you can take all of the money, and you don’t have to spread it around with anybody. And Mitt Romney was kind of a symbol of that fundamental shift in our economy.
Now, this kind of argument is made all the time by liberals: that evil businesses and bankers are destroying the manufacturing sector and traditional blue-collar jobs.
The problem is its wrong. Now, don’t get me wrong, the traditional blue-collar model is dying in North America, but the left has the culprit wrong. If they want to see why it is dying, they only need to look in the mirror.
The manufacturing economy is dying because of government overregulation, pushed by liberals. Between an increasingly harsh regulatory environment, brutal taxation levels, the manipulation of local zoning regulations, corrupt unions, political interference, etc., etc. the left has made it all but impossible for blue-collar industry to thrive.
As the Captain has written: capital flight is a built-in feature of socialism.
If you make it impossible for industrialists to create industry in North America, do not be surprised when no industry is created in North America.
As just one example of the war leftists are engaging on blue collar industry, we can look to the Keystone XL Pipeline. The US recently had a perfect opportunity to create thousands of traditional blue-collar jobs. Canada was practically begging the US to allow this pipeline to be built through the US and TransCanada had plans drawn up and was ready to build. XL would have created 20,000 jobs and huge revenues for both Canada and the US. It never happened. Why?
Because a bunch of idiot leftists protested it and the government killed it.
This is not an isolated event.
I lied earlier; I’m going to provide more than one example, to show it’s not just oil pipelines. Let’s look at a few examples of random blue-collar industries:
I could go on forever, but why bother. The simple fact is, at every step, across every industrial sector, leftist ideologues are trying their damnedest to destroy any industry here in North America.
These ideologues have created a government of over-regulation and over-taxation that is destroying blue-collar industry. The programs these people have put in place costs the economy $1.75 trillion a year.
After the huge swath of destruction they have wreaked across the North American industrial landscape, I can hardly believe they have the gall to turn around and complain about disappearing blue collar jobs.
Are leftists so stupid that they can not see the very visible side effects of their ideology or are they just plain evil?
As an almost completely irrelevant aside, there is at least one major company (the second-largest private company in the US) I can name of the top of my head that manufactures most of its products in the US. It’s called Koch Industries. Unsurprisingly, it is the target of constant attacks and smears by the left.
The second piece of idiocy I’m going to comment on is from Slate. Michael Moran writes:
Are we getting back to normal? Well, of course not: times were not normal to start. To get back to that normal would be national suicide – an asset bubble fueled normal more unsustainable than anything either of our political parties is flirting with today.
Do we really pine for the bubble years? Remember, folks, the “prosperity” now implied by those who as about “four years ago” were fuelled by a runaway financial system that treated peoples’ homes, jobs and lives like so many chips in a casino.
Would we be “better off” if the bubble loomed over us again? No, we’d be walking toward an even deeper cliff.
I agree with this, an economy based upon a bubble is stupid, and not something we want to return to.
In the same article he also writes:
First, the view that President Obama wants to emerge from Charlotte: Four years ago the country was sliding over the edge of an economic cliff. Today, we’ve got one leg back on top, and even with the Republican congressional caucus holding onto the other leg and screaming “I’d rather fall to my death than climb back onto that debt-strewn precipice” – we’re clawing our way to safety.
Ironically, his economic policies are not the real problem. Again, this was always going to take a long time to solve. We can argue whether there should have been more stimulus (I think so). But on the finer economic points, the general direction has been correct.
Recessions, as Europe demonstrates every single day, are no time to cut government spending: the result is a vicious circle in which austerity kills growth and deficits become nearly insurmountable (especially in countries that have to fund them on the open market). So even if deficits rise during a recession, the idea is to hasten the return of growth that, in the end, is the only real solution to such gaps.
It is very clear he is in favour of Keynesian stimulus and against reigning in government spending.
Somehow, he doesn’t see the contradiction between these two positions. One can not be against a bubble economy and be for economic stimulus, as economic stimulus is the creation of a bubble economy.
Government spending inherently creates economic bubbles.
An economic bubble occurs when the nominal value of something is inflated far beyond its intrinsic worth.
Government spending, particularly stimulus spending, is spending on goods or services individuals are not willing to spend on and invest in on an individual level.
In other words, stimulus is spending on goods and services more than its inherent market value.
Anybody advocating Keynesian stimulus is advocating the government creates a bubble by investing where the free market is unwilling to invest.
(There is one difference though, bubbles on the private market will generally pop at some point in the short-medium term when someone realizes its idiotic. On the other hand, government supported bubbles can be propped-up almost indefinitely through tax-payer funding, at least until the state runs out of money).
Anyhow, that completes today’s round of liberal stupidity.