Archives for posts with tag: Recession

OK, they actually walked into the Senate. And no, it’s not a joke. Senator Angus King (an Independent from Maine) and three others have introduced a bill that just might save our economic a**es when the next crisis rolls around. It’s a re-invention of the Glass-Steagall Act, which was stupidly repealed in the 90’s: said idiotic repeal being one of the causes of the Bush Economic Collapse. Here’s the story:

You’ll note that it is a Centrist Independent that is getting special praise here (well, DUH, it’s this blog). However, Senators McCain, Warren and Cantwell are also worthy of praise for working with King to get this bit of common-sense moving, at least in the occasionally- rational Senate (forget the House, they’re a load of loons these days). The idea is simple –  separate the risky bits of banking from the safer bits of banking.

You remember the banks, those putzes that crashed the world economy, never went to jail for their crimes, and even made money for themselves by causing the Great Recession? Right, those banks. They’re against this new bill. Therefore, we should all be for it.

Kudos to Angus King and his allies. If this becomes a trend, we may have to invent a new word for DC politics: “Tri-Partisanship”.

Mr. Blunt and Cranky

Not quite a century ago, America had the Great Depression. The government at first tried to let the free market fix everything, used a tiny amount of stimulus, imposed austerity measures, and made things even worse.  A subsequent administration used huge amounts of stimulus, which helped the economy to recover and made it possible for the United States to avoid being taken over by the German Empire later on. Only a few fringe theorists think that we should have stuck with austerity in that case.

A decade or so ago, Japan had a pretty severe recession. The government decided to impose strict financial discipline and imposed drastic austerity measures. Japan’s economy has not yet gotten back to where it was before the recession, even after all these years, and independent economists have pretty much reached a consensus that austerity didn’t work in that case.

A while back, China had no particular economic issues but DID have huge honkin’ political issues. The government used unnecessary stimulus to distract the populace and is now realizing that they are about to have a recession. Neither austerity nor stimulus should have been used in that case.

A year or four ago, America and Europe got whacked with the Great Recession. America hedged its bets and went with a small dose of government stimulus, and the EU went with drastic austerity measures. Today, America’s economy is slowly (very slowly) recovering while Europe’s is circling the drain. Once again, independent economists are saying that the Yanks’ stimulus approach helped to stop the bleeding, and  the Europeans’ austerity measures have made a bad situation even worse.

So why, despite its lousy track record, do so many of us still think that austerity is a good tool to use in fixing our current financial mess?

Mr. B & C

It has become an article of faith amongst many politicos that regulations kill jobs. In fact, this mantra shows up on talk radio, pundit blather sessions, and even in the official names of legislation, among other places. However, we should remember that “faith” is defined as believing something for which there is no (or insufficient) proof.

While Mr. Blunt and Cranky possesses a strong Libertarian streak, he knows that data supports a certain amount of regulation as a positive influence on the marketplace. And he humbly submits that any few jobs that might be lost due to a new regulation are not as big of a deal compared with the huge number of jobs lost due to the consequences of de-regulation.

Remember the huge financial crisis of a few years ago? That was caused by insufficient regulation and lax enforcement of existing regulations, and has resulted in the toss of tens of millions of jobs around the globe. In fact, the job losses aren’t over yet. These are tangible job losses caused by a tangible cause.

So against the hypothetical, faith-based loss of potential jobs maybe someday somewhere that might possibly be caused by future regulations, this writer presents the worldwide loss of actual jobs caused by inadequate regulations. Facts beat faith, as they so often do. 

Mr. B & C

There has been a wee bit of a kerfuffle in the media on the difference between “outsourcing” and “offshoring”, said kerfuffle obscuring the basic point.  So Mr. Blunt and Cranky will attempt to de-kerfufflify the terminology:

Outsourcing is when you used to do the job, and then gave it someone else’s company to do for you.  Outsourcing can send a job overseas, to another state, or even keep it in the same building.  It does not necessarily involve international job migration. (Mr. B & C works as a consultant, and has had jobs “outsourced” to him for years now, for instance. Almost always in the U.S.)

Offshoring is the actual migration of jobs from your country to another: call center jobs going to Ireland or India, manufacturing jobs going to Mexico or China, etc. This is what people get arsed about, rightly or wrongly. (Note that offshoring is not always a bad thing. Sometimes it can actually preserve American jobs, strange though that may seem.) Offshoring is what happened after NAFTA and other TAs (and various tax policies) were imposed that made it profitable to de-job Americans.

This is the basic point behind the word games: American jobs were taken away, and sent to people in other countries to do.

There is a difference between the two candidates for Prexy in their views of offshoring: Romney favors it, and Obama kinda sorta doesn’t, mostly maybe. We can see their views expressed in their tax policy proposals: Romney and his party promote tax benefits to companies that send jobs to other counties (Romney also showed his support for offshoring via his company’s private-sector activities). Obama and some of his party are beginning to feel that we should not be doing so, and are shifting some of their policies to encourage the return of jobs to the United States.

If we want jobs to be created in America (“inshoring” is the new buzzword: and no, this blogger is not making that up), we should adjust tax policy so as to encourage it. This is largely the role of Congress, which of late is so busy with inter-party squabbling that they can’t even do the few things that they agree on. The President can set a tone and encourage such policy, and even take some limited action via the Executive Branch, of course, so it does matter which schmuck you vote for. Romney and his party will try to send more jobs away, while Obama and his party will try to keep some of them here. How you vote will to some extent determine which way the jobs will flow. Note, however, that where jobs go is mostly dictated by market conditions.

Mr. B & C