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Wednesday, November 01, 2017

The truth about tax cuts

As George Carlin said: "They're comin' for your Social Security."

Funny, innit? Massive deficits are always a problem when a D is in the oval office, and the problem always disappears when an R is in that position. Aren't there any on the right honest enough to confess that this double standard is, in fact, a double-standard?

Keynesians favor deficit spending -- even massive deficit spending, if necessary -- only in times of depression or severe recession, in order to get the economy going again. In flush times, belts are to be tightened and borrowings repaid. That sensible approach is what Keynesianism actually is, as opposed to the bogus Keynesianism you sometimes see described on conservative blogs.

As always, the Republicans want to do everything in reverse: They seek to run up massive deficits during relatively good economic times, but when recession hits, they insist on belt-tightening.
May I commend to you Thom Hartmann's old but still extremely relevant article on the Two Santa Claus Theory: Sometimes Republicans do spell it out in black and white.
But in terms of long-term class warfare, that's exactly what you want to do. Sharp, hard recessions (that have deep credit crunches) serve the purpose of bankrupting smaller corporations, reducing the absolute numbers and overall percentage of the middle class, and buying a wide range of distressed assets for pennies on the dollar. The saying in every recession and depression is "Cash Is King" ... and guess who benefits when all other assets are selling at fire-sale prices?

This process consolidates wealth into fewer families, and removes competition from monopolies. Exaggerating and deepening the business cycle with GOP or Euro-style austerity policies has the same effect; consolidating wealth into fewer and fewer hands, steepening the wealth disparity with every turn of the business cycle. It is not an accident, although it can always be hand-waved away by Chicago School economists as the "natural workings of the market".

This is the real reason that actual Keynesian policies are so out of vogue. Although Keynesian policies greatly benefit the national economy as a whole, the family-business oligarchs and leaders of corporate monopolies are more interested in their relative position in the economy, and most importantly, their hold on political power. Macroeconomic decisions pretty much always come down to power ... who has it, and who intends to keep it.
RE Chicago bank that gave Paulie Walnuts his mortgages: Fun fact, not only mortgages more than the value of the property, but loaning to one guy almost a quarter of their total capital. Very hard to explain this to banking regulators.
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