Is the Left serious?

Obama, and other influential members of the Left who have a large stage and loud voice, don't seem to be doing their jobs. Is the Left's leadership in government trying to convince Americans that they are economically in favor of free enterprise, and that Obama's regulatory drive is no more than Republicans? Obama defended his support of oil in the first debate by claiming how much drilling is taking place -- it was dishonest, but why is Obama trying to convince Americans he's a free marketer in favor of drilling for oil, plus a hawk who brags continuously about killing Osama bin Laden while promoting drones which kill many innocent people? Is Obama trying to make the case that he's more conservative than Romney? This doesn't make sense, because Obama has continuously said that the policies of the past failed.

It's true that Obama is calling for infrastructure investment, but is doesn't appear to be enough. This is a small difference from what Romney is proposing. I would think that the Left would propose something grand and transformative since the economy is in such severe condition and there are more poor people and unemployed than in quite awhile.

Obama claims that cutting taxes on the middle class and small businesses is good for economic growth. This sounds like Laffer. Obama's supporters and political operatives tell us that it's ridiculous to associate Obama at all with socialism, and that to say Obama has increased regulations is silly, that Obamacare is not about government-run healthcare, and that Obama is not into central planning. So why should anyone on the Left want Obama in office? Has the Left accepted conservativism basically with only minor differences in who's taxed? I understand that orthodox socialism was discredited long ago, but the Left hasn't turned away from social democracy and socialistic policies, so why is the leadership running from the words and ideas of modern socialism?

It appears to me that if the Left is serious they will start demanding cap and trade or even more stringent reductions in oil drilling and production. The Left's representatives should push hard for policies that reward environmentally friendly production, while punishing "casino capitalism" that makes money out of nothing -- why hasn't Dodd-Frank completed the regulations and put the Banks on semi-nationalization status? The Left understands that the big banks should be broken up, so why isn't Obama putting this as a top priority? The Left should demand redistribution of wealth if they believe that recovey is a bottom up prospect. If the poor and middle class have money to spend it will spur economic growth, according to socialistic theories, so why not directly fund the poor? They might want to condition the funding on having a government job so that the poor are at least doing something for the money they receive, but if the rich are properly taxed, then government can create FDR like work projects, then supplement the pay with direct payments so that the poor have a decent living wage with which to begin their advancement in the market, and, in turn, helping all in the market.

According to Krugman's theory, spurring demand, even if it's a phony alien invasion that destroys property which has to be rebuilt, will create economic recovery. Once recovery is under way, a formula should be developed which tells us how much money each individual should have to sustain economic growth, then recessions will be a thing of the past. These are the ideas that the Left has pushed, but the leaders on the Left aren't fighting for the ideas. Why isn't Obama giving specifics regarding the Left's plan to spur economic growth and promote social justice simultaneously? Why is Obama afraid to embrace Leftist policies?

Morning Joe 11/25/2011 -- The economy and the Republican primary

On Morning Joe today they had a short discussion on the economy and the Republican primary which looped along with pretaped interviews. The interesting aspect of this morning's show was the discussion among Andrew Ross Sorkin, Harold Ford, John Meacham and the regulars Mika and Willie regarding the state of the economy. They talked about the question of demand and confidence and which comes first to create economic growth. Ford said government needs to act in order to spur demand, while Sorkin said there are no buttons to push to create demand. Ford stated that government can reform the tax code and present a long term plan to deal with the debt. Meacham recommended the Bowles-Simpson plan, while Mika discussed the soldiers coming back to unemployment.

If simple demand were enough to create growth, then stimulative military spending, infusion of money into the private sector, low interest rates and unemployment benefits should be sufficient, but these measures haven't created the level of growth necessary to turn around the economy. Unemployment is still high and companies are holding onto cash. So, this leaves confidence. It will take more than tax reform, at least the "tax reform" likely to come from this congress and president, and simply curtailing the growth of spending -- it will take much more.

The American public doesn't trust government. In order for confidence to improve in the private sector, evidence that government is changing direction has to be authentic and convincing. Gimmicks won't work, and neither will smoke and mirrors. The public is not so easily fooled as they were just a few years ago. Government officials have to prove they understand the need to get out of the way, and that they trust the private sector to grow the economy, then government has to shrink in size and scope of power so that money stays in the private sector and regulations don't support a rigged game.

Regarding the Republican primary, what's more important than who becomes the next president is what type of people control congress. If enough representatives are elected who understand the need to limit government and strengthen private sector enterprise, then we'll move toward economic growth. Changing figure heads in the same, failing, statist system is useless. The State itself should be brought under control, and the status quo has to change, so that systemic flaws are corrected. Otherwise, we'll experience steady decline for years to come.

But, why is there no demand?

In the current debate over whether or not to implement another round of stimulus, supporters point to low demand, while the other side points to high debt and government intervention. Supporters of stimulus say that consumers don't have money and businesses will not expand and hire unless there's demand for their goods and services. Is it true that people don't have money? There are many Americans still employed, but they're not spending much, especially on big ticket items, except for the really rich, but even the rich are cutting back on spending.

The Keynesians say that government should spark demand by pumping more money into the economy and funding infrastructure projects to create jobs and therefore more spending and revenues to government. Some of us believe that government intervention in the economy, which has been going on forever, has finally reached a tipping point, and this might be because the stakes are now higher and the global economy is more of a reality for businesses than ever before. Many large businesses have the world as their market, and their money will flow where it gets the best return and where risks and regulations are lowest. American companies are doing well, but not so much through activity in the American market as in foreign markets.

History shows us that mixed forces acting on the economy causes confusion, inefficiency, stagnation and decline, and it doesn't matter which force was primary to begin with -- communist countries with central planning who mix in "free" market reforms, or "free" market economies who mix in central planning forces -- either way the result is decline and eventual collapse. But a pure central command economy leads to collapse quicker, thus, the attempts to try free market reforms, and we don't really know what a purely free market leads to because there has never been a purely free market. All the world has known is central planning to one degree or another. The countries with the least central planning do better long term than countries with the most central planning. America has done very well to the extent central planning was kept at a minimum, but the accumulative effect of central planning has now frozen our economy, and more central planning and intervention is hardly the solution.

In eastern Europe during the existence of the USSR, several countries implemented market reforms which resulted in some of the problems we've faced since we began implementing more central planning at the turn of the 20th century. The USSR realized that central planning and liberalization don't mix. In his book, Red Flag, David Priestland writes:

...in socialist economies -- even those with strong market elements, like Hungary's in the 1980s -- politics mattered more than money or profits. Successful managers were those who expanded their empires (whilst, of course, fulfilling plans), and that meant pleasing the political bosses who controlled the purse-strings.

Whether a nation adds market reforms to a command economy or central planning to a once relatively free market, politics is the disease which destroys all chances of long-term, healthy growth and increased prosperity for all who work and participate to the best of their abilities. Government intervention into the American economy has placed politics above economics, and this can't last. Uncertainty in the market is why demand is depressed -- very few Americans feels confident that businesses will invest in America and that the economy will grow or that housing prices won't collapse or that they will have a job in the near future or their wages won't be reduced. There is so much uncertainty that neither consumers nor companies have the confidence necessary to spend and invest.

Short term stimulus is not an answer -- consumers and companies have become smarter, and they won't be led by government carrots or fooled by short-term gimmicks. Only fundamental changes to the statist system will inspire confidence.

Paul Krugman on ABC's This Week

As much as I disagree with Paul Krugman, I've come to respect him more than most on the left because he sticks to his guns and actually seems to believe what he says and willing to stand firm. Krugman has not veered from his insistence our economic problem is one of insufficient demand and that the stimulus was too small. There's the possibility Krugman knows he's incorrect and simply promotes statism for the sake of power and control, and that he's being stubborn beyond reason, but he appears to believe his Keynesian position. The problem with his position is that it doesn't answer some important questions -- the first question being that if the stimulus was too small, how can this be determined if it hasn't all been spent?

The second question has to do with stimulated, short-term demand and is a two-part question -- will an infusion of money into the economy give consumers confidence to buy big ticket items and businesses confidence to expand and hire? It seems to me that consumers and businesses are looking for long-term confidence that government actions will not interfere with long-term plans and contracts. If the mid-term elections create a split government, this might give businesses the confidence that regulations and policies, interference in general, will slow to a crawl, and consumers might feel more secure about going into debt, although they will probably be cautious for quite a while.

Where I think Krugman is wrong is in his insistence that demand is the answer. Short-term stimulus will likely be used in ways that help some but do very little to create an environment of confidence and enthusiasm for long-term prospects --- by long-term, I mean 5-10 years down the road -- and although Keynes said that in the long run we're all dead, for those in their 20s, 30s and 40s, they will be likely be quite alive, and they don't want to be in bankruptcy begging government for a few bucks to get a bowl of soup.