History is Happening Now

December 23, 2008

An Econ 101 Question

Filed under: Paul Krugman, economics, taxes — Lee @ 1:49 am

Paul Krugman has a post on his blog relevant to some of the discussions about taxation that have come up here before. Against conservative notions that government spending might somehow make the economy less efficient — because government, according to conservatives, always spends money less productively than private individuals — Krugman writes:

When we’re asking whether it’s better to have the government stimulate the economy or to try to stimulate private spending, we’re asking among other things whether a marginal dollar spent on public goods is worth more or less than a marginal dollar spent on private consumption. And there’s nothing, even in Econ 101, that clearly favors private spending on private goods over public spending on public goods.

In other words, the attempt to claim the authority of economics for the idea that stimulus in the form of tax cuts is better, at a microeconomic level, than stimulus in the form of infrastructure spending is a case of bait and switch. Don’t fall for it.

In other words, the debate about whether to spend money on public goods has little to no relationship to the debate about whether money is better spent by government or private individuals when it comes to private goods. The only relevant controversy linking the public and private use of that dollar, I presume, is the controversy of values and priorities: how would we prefer to spend that dollar?

This reminds me that I still have not found a satisfactory account of why tax increases would necessarily harm the economy in a time of recession — as distinct from any other time. If in a time of recession we need government spending on public goods, partly because spending on private goods has significantly slumped, why would a dollar taxed from someone in the top 5% harm the economy were it spent on something like, you know, bridges, roads, or other infrastructure projects?

This is, I should add, a genuine question. I think the answer to this question is important because we’re going to be hearing a lot of economic arguments in 2009 that take the following form, “Since we’re in a recession, X follows.” I want to be very skeptical of such arguments — and to educate myself enough so that I understand the implicit reasoning — and, perhaps, logical flaws — behind such confident claims.

Otherwise, we must rely on arguments from authority — and the arguments of economists, at that! — which is a crippling position from which to form opinions.

November 25, 2008

After the Campaign

Filed under: Barack Obama, George W. Bush, netroots, taxes, torture — Lee @ 7:28 pm

I want to link to two significant stories I haven’t seen discussed as fully as I would have expected in the blogs.

(i) From the WSJ:

President-elect Barack Obama is unlikely to radically overhaul controversial Bush administration intelligence policies, advisers say

…

On the campaign trail, Mr. Obama criticized many of President George W. Bush’s counterterrorism policies. He condemned Mr. Bush for promoting “excessive secrecy, indefinite detention, warrantless wiretapping and ‘enhanced interrogation techniques’ like simulated drowning that qualify as torture through any careful measure of the law or appeal to human decency.”

As a candidate, Mr. Obama said the CIA’s interrogation program should adhere to the same rules that apply to the military, which would prohibit the use of techniques such as waterboarding. He has also said the program should be investigated.

Yet he more recently voted for a White House-backed law to expand eavesdropping powers for the National Security Agency. Mr. Obama said he opposed providing legal immunity to telecommunications companies that aided warrantless surveillance, but ultimately voted for the bill, which included an immunity provision.

The new president could take a similar approach to revising the rules for CIA interrogations, said one current government official familiar with the transition. Upon review, Mr. Obama may decide he wants to keep the road open in certain cases for the CIA to use techniques not approved by the military, but with much greater oversight.

Is this what Obama meant when he spoke about bipartisan cooperation and a turn away from ideology and a return to getting things done? Apparently, to call for the unambiguous end of the CIA’s use of torture would be shrill, non-pragmatic, ideological, the hallmark of the looney left. If so, consider me all of the above. Let us hope the WSJ is wrong in its assessment, and let us always remember that the Iraq war was implemented in a highly bipartisan way.

(ii) From Reuters:

President-elect Barack Obama may consider delaying a campaign promise – to roll back tax cuts on high-income Americans – as part of his economic recovery strategy, two aides said on Sunday

…

His aides’ comments suggest Obama may be wary of imposing any additional tax burden at a time of deep crisis, despite the outlook for record budget deficits and mounting national debt. He may also be seeking to bolster Republican support for his recovery measures.

“The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again, and that’s where we’re going to be focused in January,” Axelrod said.

Let’s get this straight: Obama campaigned on the promise of raising taxes on a certain segment of “high-income” Americans. He won. He might be said to have received a mandate from the American people to do so. Does anyone think it’ll be easier to return to this promise in 2011?

(iii) As I’ve written before on this blog, in agreement with Obama’s campaign rhetoric: Real change comes from below, not from above. If we want Obama to live up to his promises, to end the war, to end torture, to dismantle our unaccountable national security state, to fix our economy in a way we approve of, voting for Obama was never going to be enough.

The real work must happen now. Obama may be the nicest guy in the world, but one man doesn’t rule this country. There is a whole system of individuals and organizations responsible for our problems, which have been decades in the making, not the result of the maniac fringe of the Bush administration alone. Only a system can change a system. And a system that theoretically allows a Bush to go unchecked needs to be changed.

As I wrote:

Obama’s weakness, his dependency on large numbers of enthusiastic (mostly progressive, but somewhat cynical and alienated) voters, is our strength. Politicians should ideally fear their supporters. They should be terrified of betraying their supporters because doing so, theoretically, ought to destroy their credibility and careers in the long term.

So here’s to the so-called “netroots.” Keep twisting the screws. Keep putting on the pressure. Make Obama sweat.

This is even more true now than it was during the campaign. Let’s not deceive ourselves here: the netroots are weak in American politics. They wield little influence and are only now learning how to exert power in the political system. But eight years ago, there was no netroots.

Our goal needs to be systemic reform; our horizons in this medium- to long-term project should transcend individual election cycles and parties. We should create a system of government that can push back against and hold accountable a Bush or — god forbid — a Palin in the White House. Our current system is not up to the task.

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