http://www.arktimes.com/arkansas/gop-suppresses-job-creators/Content?oid=2522489 Comments On: GOP suppresses 'job creators' by Ernest Dumas en-us Copyright 2013 Arkansas Times. All rights reserved. This RSS file is offered to individuals, Arkansas Times readers, and non-commercial organizations only. Any commercial websites wishing to use this RSS file, please contact Arkansas Times. robert@arktimes.com (Arkansas Times Webmaster) Sun, 19 May 2013 00:00:01 -0500 Sun, 19 May 2013 08:30:00 -0500 Foundation http://blogs.law.harvard.edu/tech/rss
Any analysis of economic performance has to include world events and other policies as well as tax policy. In the 1940s and 1950s when tax rates were over 90% there were many more tax deductions and credits for businesses than today. Also, the US was the only industrial economy left standing in the aftermath of WWII. All of our competitors were destroyed in the war. The world had to come to America for products and services because there was no one else able to produce them. That enriched America with 50% of world GNP.

Another factor however, is the 1940s and 1950s was an era known as the National Industrial Model, better described as regional economies - that too along with a lack of any international competition to speak of and the skillful ability of US businesses to quickly convert defense industries to commercial products contributed to US economic growth.

But in the 1960s and with our help largely through the Marshall Plan and NATO, Germany and other European nations began to rebuild their economic might and claim a larger share of world GNP. Japan followed in the 1970s, the mini-dragons of Asia in the 1980s, China and India in the 1990s and in the 2000s we've seen the nations of Southeast Asia, Africa and Latin America emerge to compete for a greater share of the world's wealth. The reduced growth that Dumas is referring to has nothing to do with reduced tax rates rather increasing international competition. Economic growth following Bush's tax cuts in 2003 varied from a post recession quarter of 7%, leveling off in the 3 to 4 percent range. It wasn't until the Bill Clinton's mandate to mortgage guarantee associations to purchase subprime loans, creating the CDO securities market that collapsed Wall Street that growth dropped off. President Obama's Keynesian model, the model that Dumas is advocating in this editorial is the reason growth has remained in the 1 to 2 percent range and the deficit remains high not because of the Bush tax cuts as Obama declared but because the unemployment rate remains high and fewer people are working and paying taxes.

But it doesn't matter how many times these contributing factors to the economy are argued to Democratic Party ideologues. Their dominance of the communication system will not inform the public to any extent about the Keynesian economic model's short comings. That's why president Obama was reelected and that's why there is a second great depression on the way that will collapse the US in a way never before.
Posted by Thomas Pope]]> Mon, 12 Nov 2012 17:27:39 -0600 Arkansas Times
Therein lies the failure of the Keynesian economic model in too numerous to count attempts in many nations such as the periphery of Europe: Spain, Greece, Portugal, Italy, Ireland and even Japan, as well as President Obama's stimulus package to restore growth, employment and revenues.

Businesses hire people for a variety of reasons; sometimes it is demand however, depending where the economy is at in the business cycle determines the reason. When the economy is at the bottom of a recessionary trough, businesses are not at all convinced there is sufficient demand to risk investing in resources, people or otherwise even if the government is borrowing and spending for the so called "shovel ready jobs" or spending for infrastructure and education.

No, what motivates businesses to hire workers and invest in resources to expand operations is the considerable fiscal stimulus but also PSYCHOLOGICAL stimulus that occurs in the minds of WEALTHY people when they receive cash in their hands through an across the board tax cut at all levels. Not only do they have cash in their hands but because it was across the board they know that businesses and consumers at all levels have received cash they didn't have before the tax cut was enacted. It's an explosion of excitement that produces a post recession quarter of at least5 7% growth to generate a self-sustaining recovery. (Econ 201)

The Keynesian "demand theory" was proposed even before there was any evidence to support it and fails miserably in almost all cases. The only time it has even reasonably performed well is when the nation has a comparative advantage such as Germany's high quality manufacturing, China's currency manipulation or Scandinavia's oil wealth. One other feature of European Keynesian policy is to downsize their defenses and rely on the US for national security.

The evidence for the superiority of Reaganomics is overwhelming. Labor Department unemployment and revenues data following Ronald Reagan's and George W. Bush's tax cuts show a rapidly declining unemployment rate to below 5% within 3 years and a return of revenues to the treasury; the economy in Clinton's second term following an 8 point cut in capital gains taxes. It's the one policy that missing from Obama's economic policies and the reason the US and Europe are still in recession.
Posted by Thomas Pope]]> Mon, 12 Nov 2012 17:01:51 -0600 Arkansas Times Posted by Olav F. Knudsen]]> Wed, 07 Nov 2012 08:15:27 -0600 Arkansas Times