Supply SIde Economics is SO Last Century - And Why That's Bad for America's Economy

Milton Friedman and his Supply Side followers got precisely one thing right in their economic theory - money taken out of the economy in taxes is not readily available for private capitol uses.  Sure, that money then reenters the economy down stream as labor wages for government workers, and as purchasing by government agencies (which then creates other labor wages in other sectors).  But tax expenditures do, in fact, remove money from first order private economic activity.

And in Friedman's day, altering that balance MAY well have led to more capital investment, since the economy of his time was dominated by newly rising industrial manufacturing and more industrialization of farming and food production.  So he was potentially right - way back then - that a key to economic growth in recessions might have once been diverting tax revenue back to the private sector where there were incentives (increased private profits) to grow manufacturing capacity and hire more and better paid workers.

The problem for modern Republicans - who cling to his Supply Side theories as if they were inviolate Gospel - is that those theories fall apart in service oriented, demand driven economies that are founded on consumption and provision for services, and less so on manufacturing (even if manufacturing is needed somewhere to feed the consumption demand).  The theories aren't even applicable to rent seeking economies (and the ultra rich who participate in such economies), because as rents increase (i.e. as more profits are made on financial transactions in Wall Street, Derivatives markets and the like), economy can "grow" with fewer people actually doing work.

Thus, as we have seen since the Great Recession began, historically low rates of income taxation on top economic earners and corporations do NOT trickle down to increased labor wages for the rest of the economy, nor do they lead to more hiring even as the economy appears to "grow."  The reason is really very simple - there is a perverse or negative incentive structure in returning more tax revenue to private hands in this kind of economy because the more funds a rent seeking 1%'er has, the more rents he or she will seek, and the more he or she will seek to dampen competition for those rents.  In an economy that grows because labor wages grow, an increasing number of people will move up the ladder to a point where more of their income can also be rent seeking, driving DOWN the amount of money to be made in that sector of the economy by any one person or corporation.

So if you support Republican "slash and burn" tax policy, you're not only deflating government's size and ability to control markets (which are historically bad at self-regulation), but you are destroying middle and lower class economic opportunity in order to destroy competition for rents.  That's, by definition, the OPPOSITE of " a rising Tide lifts all boats."  And I wish Republicans would just come clean about it.

Recently in Nature: America's oceanographic fleet is just as bad off as our bridges.

 “I foresee a continued demand for ships, consistent with what it’s been in the past several decades,” says David Checkley, a marine scientist at Scripps. “The decline in fleets that’s projected is worrisome. We need an investment that is congruent with very large projects that governments undertake if we’re to continue to study the oceans.”

Ocean scientists are a hardy lot - we often take extreme risks in extreme environments to try and understand the 70% of our earth's surface covered by water.  But to do it successfully we need resources - most notably ships that are seaworthy and have the latest updated lab equipment to study the ocean while we'r eon the ocean.

So when that fleet's health and sea worthiness is threatened by budget cuts, I get concerned.  You should too.  Because funding for ocean science infrastructure is really a subset of the problem of lack of infrastructure spending in America writ large.

Read more:
http://www.nature.com/news/us-science-fleet-s-future-is-far-from-ship-shape-1.13164

REBLOG: The Heart of the Matter: Memo To Authoritarians: The "Oath" is to the Constitution, Not to Secrecy

Barry Eisler (like me) was a federal employee.  Unlike me he was in the intel community as a CIA operative.  He took the same oath I did, and the oath he describes in his recent post The Heart of the Matter: Memo To Authoritarians: The "Oath" is to the Constitution, Not to Secrecy.  He makes the really important point that the Oath in question is about protecting the Constitution - and given what we know about PRISM and Edward Snowden's other leaked programs I would argue that Mr. Snowden was, in fact, trying to defend the Constitution (since this kind of vast undirected data gathering for purposes of "finding" terrorists violates the 4th Amendment).  Funny, how every one but the President takes this oath, and now they are all using it to hide from the public consequences of that Oath lived out.

Since CBO says immigration reform grows the ecomony, will pro-business & proPmarket Republicans overcome their internal racisim & passs it?

The U.S. Supreme Court flips off the American people

Because Supreme Court Justices are appointed for life, and because the Constitution says they are the final arbitors of federal legislative activity, the Court has long labored to APPEAR non-political or partisan.  I say appear, because the court’s decision regularly illustrate it’s particular political leaning, which has vascillated all over the American political landscape.

So now comes word that the Supremes don’t want to be bothered with protestors on their door step.  Specifically:

Regulation Seven

This regulation is issued under the authority of 40 U.S.C. § 6102 to protect the Supreme Court building and grounds, and persons and property thereon, and to maintain suitable order and decorum within the Supreme Court building and grounds.  Any person who fails to comply with this regulation may be subject to a fine and/or imprisonment pursuant to 40 U.S.C. § 6137.  This regulation does not apply on the perimeter sidewalks on the Supreme Court grounds.  The Supreme Court may also make exceptions to this regulation for activities related to its official functions.

No person shall engage in a demonstration within the Supreme Court building and grounds.  The term “demonstration” includes demonstrations, picketing, speechmaking, marching, holding vigils or religious services and all other like forms of conduct that involve the communication or expression of views or grievances, engaged in by one or more persons, the conduct of which is reasonably likely to draw a crowd or onlookers.  The term does not include casual use by visitors or tourists that is not reasonably likely to attract a crowd or onlookers. 

Approved and Effective June 13, 2013

Interestingly, this regulation appears to be wholely unnecessary – Regulation 5 clearly states that noisey disturbances are prohibited, and Regulation 6 gives a very good – if overly broad – outline of what is or isn’t a sign and where “signs” may and may not be used on the grounds.  So why bother?

My hunch is that the Supremes (and their staff) hate to be reminded that their decisions have real world implications, and that not every one agrees with them or what they do.  It’s got to be tough being Justice Scalia, for instance, and seeing people daily who marriages are in shambles, or whose economic fortunes are upended by a decision you make, not matter how well reasoned or “Originalist.”

But that doesn’t give the Chief Justice the right to throw the bird at American citizens, who come to America’s highest court to fulfill both their civic duties, and to receive the Rights promised under the First Amendment (Emphasis mine):

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Given that this is an administrative action, and not congressionally passed legislation, I can’t tell how this gets overturned.  But I do know that when the NSA is getting millions of records of cell phone and email metadata, when the CIA is running off book prisons and manning drones used to conduct overseas assassinations of American Citizens without trial, and when the man who disclosed the NSA spying is called a traitor even though he’s actually upholding a long ago taken oath to protect and defend the Constitution against all enemies foreign and domestic – I know that when all this is occurring, the Supreme Court would be well advised to keep appearing apolitical.  Afterall, telling protesters they are not welcome on the Courthouse steps is one of the many things the British essentially did, and look where that ended up.