NeoCon-Artist Economic Delusions

[unlawflcombatnt]

The NeoCon-Artists are claiming that today's economic report indicates the overwhelming success of their economic policies. As such, they are using today's report to justify extending the tax cuts on the wealthy. Some are begrudgingly acknowledging that our huge national debt is a major problem. I completely agree that our $8 trillion national debt is a huge problem. However, the Republican "solution" is the same illogical economic mythology that they are famous for. As expected, extending the tax cuts on the most affluent is the key to their plans. And it still makes absolutely no economic sense. However, that's never stopped them in the past.

At present, cutting taxes on the affluent has no benefit whatsoever. The justification given is that if we increase the take-home pay of the affluent, they'll have more money to "invest." However, there is simply no need for increased investment capital at present.

The markets are already glutted with capital, because there are few investment opportunities. In other words, the amount of investment capital exceeds investment opportunities. (The Wall Street Journal states that the markets are "glutted with capital at present.") Capital does our economy no good sitting in Corporate cash-on-hand accounts, or being invested in foreign production facilities.

Why don't we role back the tax cuts on the top 2%, and use that money to pay down our debt? The capital created by those tax cuts is in excess of that which can be productively invested, so eliminating those tax cuts would NOT hurt our economy. In fact, reducing excessive investment capital might reduce the amount invested in foreign production facilities, which would reduce outsourcing and increase demand for American workers, increase aggregate American labor income, and in turn, increase wage-financed consumer spending.

Such changes would increase utilization of our current over-sized, under-utilized production capacity. A capacity utilization rate of 79.% indicates underutilization. And that indicates that our industrial capacity exceeds the demand for the production it provides. The goal should be to increase the utilization of capacity. It should NOT be to increase investment in an already over-sized, under-utilized capacity.

Why don't we stop listening to supply-side propaganda that believes that economic growth is related exclusively to the availability of investment capital, and its corollary that tax cuts for the rich ALWAYS help the economy? This is simply self-serving economic fantasy. Economic expansion is related to the PRODUCTIVE investment of capital, which is related to demand for the production that capital facilitates. There is no capital investment without anticipated returns. And those returns are created by consumer spending, and the production demand it creates.

We need to put more money in the hands of consumers, not Corporate America. Only then will we have true economic "growth."

unlawflcombatnt
EconomicPopulistCommentary
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The economy needs balance between the "means of production" & "means of consumption."

[texpatriot2004]

1. You're right nm

[unlawflcombatnt]

2. Thanks

The Republican spin machine never rests, so we need to keep posting the truth to counter them.

[texpatriot2004]

3. kick nm

[unlawflcombatnt]

4. Wage Graph

Just thought I'd take advantage of my new ability to post graphs and pictures. Below is a graph of "real" wages. They certainly are not indicative of an economy that is "strong, and getting stronger." They are indicative of an economy that is "weak, and getting weaker," and a president that is "dumb, and getting dumber."