Map of life expectancy at birth from Global Education Project.

Friday, April 21, 2006

The Decider hears the voices

One thing they tell him, consistently, is that cutting taxes causes faster economic growth, because if the money stays in your pocket, you spend it, so companies can sell more stuff and they hire more people who in turn have more money to buy more stuff with and round and round it goes. "It's Economics 101!" he yells, channelling the voices.

Well, actually, no it isn't. When the government collects tax money, guess what it does? It spends the money! Yup, and when government spends money, it buys things from companies that hire people who . . . etc. And government hires people itself, who spend money that . . . etc. Or government puts money back in people's pockets -- social security beneficiaries and so forth -- who spend the money . . . etc.

In fact, government can spend money in ways that create economic growth, that the private sector will not and cannot do. Government spending, in fact, is absolutely essential to the very existence of a modern economy. Government builds and maintains roads and airports, educates children, pays for basic scientific and medical research on which industry depends for technological advancement, but which private industry would not fund because the company that spends the money cannot monopolize the benefits of the resulting discoveries.

A pre-eminent example is biomedical, public health and clinical research supported by the National Institutes of Health. Guess what? National "defense" spending (the vast majority of which has nothing whatever to do with defending the country) is now $1,600 per person, per year; while federal support for medical research is $97 per person per year. Most of "defense" spending is indeed squandered: it buys bombs and missiles that just blow themselves up along with buildings and people; airplanes that fly incredibly fast but don't transport anything or anyone to anywhere except for those bombs that destroy; tanks and "fighting vehicles" and gas guzzling armored trucks that carry guns around the countryside of Iraq and shoot and kill people and blow stuff up. The economic payoff for all that: negative. It's Economics 101.

Unfortunately, the corporate media doesn't know that. They take it as axiomatic that lower taxes mean higher growth rates. It just is not true, and international comparisons prove it. Overall levels of taxation are far higher in other wealthy countries, but they are not correlated with growth rates. That's just being reality based.

If we raise taxes, eliminate this insane spending on the military, and invest the money in true national defense -- energy conservation; mass transit; renewable energy; universal, comprehensive, single payer national health care; quality public education including universal access to higher education without regard to family wealth; scientific research including medical and public health research; public health infrastructure; early intervention for children with special needs; development of the arts; and whatever you want to add to the list -- we'll be far richer than we are now and more important, we'll stay that way, because right now, we're headed for the worst crack up since Easter Island.

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