Map of life expectancy at birth from Global Education Project.

Monday, May 07, 2012

Yes we are ruled by idiots

It's apparently too technical for the general public or Columbia-educated journalists to grasp, but if you follow Brad DeLong and/or The Shrill One you have probably gotten the idea that the elite consensus about the economy in Europe and the United States is completely insane.

I've been thinking about a simple, non-technical way to explain our situation that a smart politician such as, say, president Obama could use if he had the courage. The reason there aren't enough jobs is not because rich people have to pay taxes or companies are worried about "regulatory uncertainty." The reason is that companies can't sell enough stuff to expand output, and therefore to hire more people. The reason they can't sell more stuff is that there are too many people out of work or stuck in crappy jobs. That's why investors aren't putting their cash to work building up companies, they're sticking it in the equivalent of the mattress, i.e. U.S. treasury bonds that currently are providing a negative rate of interest, that is less than the rate of inflation -- which is also very low. So that cash is just sitting there.

The way to put people back to work, and therefore cause them to have money with which to buy stuff and therefore cause companies to sell more stuff and therefore hire more people, is to spend that money. You could actually spend it to pay people to dig holes and fill them in again, but even better to invest it in stuff that will also do good in the world, such as mass transit projects, fixing bridges, educating folks, modernizing the electrical grid, energy conservation and sustainable energy production, you name it.

The government has to do it this, using that money it can borrow extremely cheaply. That will also cause tax revenues to go up and make it possible to pay the debt in the future and reduce the deficit without having to do horrible damage to society.

This is the simple truth. Department of stupid questions: will we hear this simple truth discussed in the next six months?  


roger said...


Daniel said...

Several weeks ago I heard this issue discussed on NPR (or was it PBS?? perhaps I have a mental illness, I forget).

The program interviewed several business owners and asked them if regulations were hindering their plans to expand and hire new employees. One person from Nashville said definitely yes. When asked to explain what regulations were hindering him he referred to a law that required a safety course for his fork lift operators. Hmmm, I thought he may be too stupid to expand his business.

Everyone else said that they would expand if they had more business, with or without regulations in the way.

What about me, what would I do? Actually, our company (energy related) has grown every year since 2008. Last year we won a large contract (in a foreign country). I didn't think twice about being hindered by regulations, I hired a new CS grad so we could get the project on track.

What I don't understand is this... why have the Democrats been so incapable of pushing back on this Republican nonsense?