Moon of Alabama Brecht quote
April 20, 2005

Left vs Right and the Economy

Graphs speak louder than words:

Thatcher_incomes_1

Blair_incomes_1

(From the Financial Times - behind subscription wall)

Thatcher and Blair are pretty good proxies for Republicans and Democrats, as they examplify respectively the hard "laisser-faire" deregulated economy of Reagan and Bush Jr and the centrist left policies of focusing more on inequality while fully accepting market mechanisms.

A third graph also shows how moderate Republicans do:

Major_incomes

The conclusion: the left is much better for the economy overall. It provides increasing incomes to all, including the rich, but with a slight emphasis on the poor.

By contrast, Thatcherism is clearly class warfare: the richer get a lot richer, and the poor stay poor.

Moderate Republicans are actually the worst: they are not unfair, but they are pretty bad for eveybody.

Similar numbers for US presidents can be found in this article from Forbes. (with all the detailed statistics here):

050420_presidetns_and_prosperity

It should be very easy to prepare similar graphs for the US economy (they probably already exist) and distribute them as widely as possible, as they show exactly what the differences between the two parties are, in an easily understandable way.

Borrow and Squander Republicans:

The rich get richer while you take on more debt.

They try to distract you from that fact by focusing on Schiavo.

Responsible, Fair Democrats:

Everybody gets richer and the economy grows for all.

One more thing - Extreme Republican policies have consequences that remain with you for a LONG time:

Gini_thatcher_to_blair

The inequality created by Republicans does not go away.

As a post scriptum, here are a few choice words from Martin Wolf, the senior economics editorialist of the Financial Times, about the unbalances with China, but which relates closely to this issue of economic competence:

If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has." John Maynard Keynes

If Keynes was right, the world's creditor countries have a huge problem and the US none at all. Yet the assumption that the creditors should be more terrified than the debtor is wrong if the latter needs to continue borrowing. If creditors face an endless stream of additional borrowing and a good chance of default at the end of it, they should refuse to throw good money after bad. They will then impose huge costs on the debtor.

This balance of financial terror, as it has been called, characterises the current huge flows of finance to the US. Carefully thought through economic policy is needed if the world is to extricate itself from this predicament. Alas, we can rely on the administration of George W. Bush not to provide it.

(...)

100 per cent of the fiscal deficit has been financed from abroad and about 80 per cent of the current account deficit has been financed by foreign central banks.* Biting the hand that feeds one is folly.

According to the International Monetary Fund, the US general government fiscal deficit this year will be 4.4 per cent of gross domestic product, while the current account deficit is forecast to be 5.8 per cent of GDP. At present, therefore, the American people are able to consume and invest as if the fiscal deficits did not exist. The treasury secretary of what is arguably the most fiscally irresponsible US administration since the second world war should fall down on his knees in thanks rather than indulge in complaints.

Republicans are incompetents. Bush is the MOST incompetent of all Republicans. He is a threat to the well-being of a majority of Americans, and he actually is a national security risk.

Posted by Jérôme à Paris on April 20, 2005 at 10:22 UTC | Permalink

Comments

Posted by: Jérôme | Apr 20 2005 10:43 utc | 1

Jérôme - Incompetent at what? Isn't the rich get richer the agenda. Getting rich is a pretty serious business. He's no threat to his base. If you had a face-to-face meeting with Bush, and you told him that he was a threat to the well-being of a majority of Americans, would he snear, or merely smirk?

Posted by: DM | Apr 20 2005 10:44 utc | 2

Incompetent at running the economy. This will not lead to the rich getting richer in the long-run. This will destroy the US economy, leaving Bush and his base as kings of the dunghill, nothing more. They would probably get richer faster in a sensibly run economy, but that wouldn't be mean enough for them.

And if you asked Bush that question he'd mutter some nonsense about trickle down and invisible hands. And he'd believe it.

I actually think that what is that the right is getting their licks in before the science of economics turns completely against their conveniently simplistic social darwinist fantasies. Economic conventional wisdom in ten years will be very different from today I suspect.

Posted by: Colman | Apr 20 2005 11:03 utc | 3

Look at the US table if you can:

There was more prosperity during Democratic presidencies (Clinton, Johnson, Kennedy). Hard Republicans like Reagan come next, but at the cost at much higher inequality. Moderate Republicans come next, with Dubya in a category all of his own:

- worst on GDP
- worst on personal income
- worst on employment
- worst on deficits

Despite having benefitted from the most extravagantly easy access to cheap money thanks to "bubbles" Greenspan.

But, DM, yep, you're right, he is successful at channeling massive amounts of wealth to the very rich in the short term.

Posted by: Jérôme | Apr 20 2005 11:07 utc | 4

Jérôme / Colman. I agree. But I think some would rather be king of the dunghill.

Posted by: DM | Apr 20 2005 11:33 utc | 5

I don't think they see it. I think that they believe the nonsense of free-market economics, albeit because it's convenient for them to believe. They do not understand what will happen to the economy because they believe in hacks like Friedman and Rand and their ilk. They've never read the greats: they wouldn't mention Adam Smith quite so often if they'd read his bloody book. They don't have to listen to Marx, he's evil. Keynes was a librul, so they can discount him. And so on.

Free-market capitalism is bollox - they don't even practice it - but they can use it to salve their consciences, twisted and shrunken as they are.

Posted by: Colman | Apr 20 2005 11:44 utc | 6

The Gini coefficient graph shows exactly why Blair should not get any votes from poor people. He failed to redo the damage Thatcher has done to the society.

Posted by: b | Apr 20 2005 11:49 utc | 7

I presume you mean "undo the damage"? I don't think that's fair: it has started to drop, and it's very hard to reverse it quickly without appearing very unfair.

What do you think would happen if Howard got in? There are lot's of good reasons for not voting for Blair, but compared to the alternative ... silly first past the post systems. In Ireland we could protest vote for someone else, and if they didn't get in our vote would still count against the Tories.

Posted by: Colman | Apr 20 2005 11:57 utc | 8

I don't believe that Bushie believes in the free market. The bankruptsy bill isn't free market, the asbestos bill coming through isn't free market, class action law suit protection isn't free market and running deficits sure isn't free market.

Thiose are all bill and policies that protect the capital classes. If they believeed in the free market they would let the excesses play out.

The deficit is a way to distribute wealth to pet projects and friends. A balanced budget stops borrowing money out of the economy so it can find a place to invest. Every rethig admin has saw wealth accumulate to the top. Jerime is wrong on one instatnce. Wealth did work its way back down with inheritance tax. But that may be gone.

Also, Michigan has faired on average worse of any state during rethug admins.

Posted by: jdp | Apr 20 2005 12:08 utc | 9

Just a correction on what I wrote above:

It's Bush Senior who's the worst president in the US table, not Dubya. From all available data, I do think that Dubya would rank even worse (2 years of very low growth, stagnant employment, record breaking deficits...), but he is not in that table.

jdp - for the best research on the long term impact of the estate tax on social equality, google "Thomas Piketty", he wrote a masterful book on that topic pretty recently.

Posted by: Jérôme | Apr 20 2005 12:29 utc | 10

Colman: I don't doubt that the Tories coming back to power would be as bad for UK as Bush is for US. But UK has a potential 3rd party. In fact, at 20% or slightly more, it should already be considered a 3rd party and would be considered a major party in any serious democracy - that is, a country which has proportional representative elections. That more Brits seem to hesitate between Tories and New Tories, instead of picking Lib-Dems is quite astonishing to me; are they so brainwashed that they can't imagine a system where either the Tories or the Blairites have total control?

Posted by: CluelessJoe | Apr 20 2005 12:29 utc | 11

This will not lead to the rich getting richer in the long-run.

I'm with DM. It has nothing to do with the "long run". It's about getting billions in wealth and finishing on top. It's "whoever dies with the most wins" projected into the geopolitical, moral philosophy, and even plain old policy realms.

It is, at its base, a profoundly pessimistic, even apocalyptic, type of thinking, though not necessarily of the religious kind. "Everything is going to go to hell anyway, and the only way to protect myself is to have overwhelming wealth and power." Hmmm.... sounds kinda like Neocon foreign policy, don't it? That ain't a coincidence!

Posted by: mondo dentro | Apr 20 2005 13:40 utc | 12

The charts and tables are great but is the timing of who gets the credit/blame and why they get the credit/blame really that easy to do?

1. This posting tends to rate a President by the results of a (4 or 8)-year term. I think we should credit the economy of the first year of a new President to the prior President.

2. In the general boom n bust of economic cycles perhaps the time-offset factor of who gets the credit ought to be 2 or more years.

Anyway - I have felt the GHW Bush was burdened with correcting some of the excesses of RR. Certainly the economy was FINALLY picking up a month or two before the November election he (GHWB) lost. Also If you try to not raise taxes as he did (before relenting and raising) AND if your economy is declining (and thus tax receipts) your deficits grow. At least he took meaningful action unlike RR (except on Social Security) or W.

Clinton got the greatest gift - a double booster. The incipient return to economic growth at the end of the GHWB AND the economic boom/bubble that accompanied the rapid development and growth of the Internet. The bubble burst but the Internet remains.


It is a weaker case but...
I have also felt that RR got some benefit of the relative prudence of Carter.
Cater reined things in (55 MPH speed limit, CAFE fuel economy stds etc) and RR let folks loose.
But RR's greatest adrenaline rush was that experienced by anyone how is the FIRST to really start spending wildly with credit cards. Lots of new things happen and very few payments are made.

Posted by: Anony Moose | Apr 20 2005 13:54 utc | 13

Anony Moose - so I guess that means that "real growth" is always the result of innovation, technological, legal, financial, or otherwise. That doesn't seem surprising.

Posted by: aschweig | Apr 20 2005 15:00 utc | 14

I wonder what DARPAesque program they are envisioning as triggering the next economic boom?

Posted by: stumpy | Apr 20 2005 15:15 utc | 15

...more prosperity during Democratic presidencies
jonathan schwarz (@ATR) keeps it short & sweet w/ this observation:


REPUBLICANS: Let's kill everyone and take their money!
DEMOCRATS: I like the way you're thinking. I really do. But if we keep at least SOME of them alive and working for us, we can make even MORE money in the long run!
REPUBLICANS: You commie!

Posted by: b real | Apr 20 2005 15:25 utc | 16

b: what do you expect from mutant chimpanzees?

Posted by: citizen k | Apr 20 2005 16:10 utc | 17

Nice reference b. As I have been saying, elites make policy for elites. They are not worried about consequences because they rig the rules so they don't loose even when they loose.

To Jerome above, his reference on inheritance, I believe major trust are coming to the end of their life in the US. The tax relief for inheritance will give those large trust ability to role their monies over without taxation and continue using those trust such as the Rockefeller Trust to push their agenda. That agenda is not in the best interest of the average person.

Posted by: jdp | Apr 20 2005 20:35 utc | 18

Free-market capitalism is bollox - they don't even practice it - but they can use it to salve their consciences, twisted and shrunken as they are.

I agree.

I think rich people can be divided into two groups. Those who can stand the fact that their riches comes from everybody else´s pockets and try to do something about it (while mostly maintaining their priviliged position, because it is better if they are rich who do good stuff with their money) and those who can not face it and therefore must seek salvation in free-market theories or God´s grace (God gave us this money so we must deserve it). The latter group (yes, those would be the republicans) of course must call the other group names (bleeding heart libruls, girlie-girlie-men) and cultivate a general ignorance, lest their defences might shatter. And as stated above they can not face the fact of who made all their luxuries.

Though such a division is crude I think it is fair. This says little about those republicans and democrats who are not rich, but the meek does not rule the world now do they?

Posted by: A swedish kind of death | Apr 20 2005 22:24 utc | 19

In my post at 4:35, the Rockefeller trust don't pay taxes anyway. They play a shell game and hide their money. Other wealthy trust do and use trust to shelter. With the inheritance tax gone, money can be roled out of the trust and used as wanted.

Just a clarification.

Posted by: jdp | Apr 20 2005 23:22 utc | 20

Speaking of lags, where are Paul Volcker and Alan Greenspan accountable in all this?

Posted by: gylangirl | Apr 21 2005 2:20 utc | 21

Is it unreasonable to suggest that there are in fact a significant number of folks (ie. the ones that Thomas Frank chronicled in his book about Kansas) that, deep down, actually believe that they deserve to be buried in the dunghill?

Posted by: RossK | Apr 21 2005 4:52 utc | 22

was wondering if u knew a website that wasnt byass for democrats as this site obliviously is and why in this day and age is that people seem to forget that the people as a whole vote for the president and sometimes u have to deal with what u get

Posted by: clifford hamilton | Jan 26 2007 1:41 utc | 23

we're wondering too, cliffy. good luck on your quest. and godspeed. Here, have a cookie!

Posted by: Rowan | Jan 26 2007 2:04 utc | 24

Hey clifford, let's make a deal: you never write another post which uses words you don't know how to spell or whose meaning you don't know, and the next time a conservative says we need to make English the official language of the U.S., I won't laugh outright, okay? As it is, next time I hear that, I'll remember u and chuckle, so loudly that even the most byassed listener will find it oblivious that I have no respect for conservative harping over language.

Posted by: The Truth Gets Vicious When You Corner It | Jan 26 2007 6:43 utc | 25

i don't know, ttgvwyci - i kind of think that by-ass kinda makes sense in this case.

Posted by: conchita | Jan 26 2007 6:52 utc | 26

i'm amazed that in this day and age, people forget that they vote for the president and that he works for them

Posted by: jcairo | Jan 26 2007 10:36 utc | 27

That more Brits seem to hesitate between Tories and New Tories, instead of picking Lib-Dems is quite astonishing to me; are they so brainwashed that they can't imagine a system where either the Tories or the Blairites have total control?

Until last year, Charles Kennedy, then-leader of LibDems was clearly an alcoholic, so that put people off. His successor, altho' sober, is much less charismatic. But the LDs are building slowly from the grassroots, and are expected to challenge strongly at the next election for quite a few more parliamentary seats, including the one where I live, which has been a Labour seat forever.

Also, although the LDs have been consistently antiwar - the leader called this week for w/drawal of British troops from Iraq by October 2007 - they have weird vestiges of 19th century 'liberal' economic policy such as not supporting the minimum wage.

Basically, no major party in British politics currently has anything resembling a fully fleged left agenda. As Jerome notes in his piece, the damage wrought by Thatcher and her ilk - among whom, Bliar, lasts a long, long time.

The damage done by Bliar will be very difficult to rectify, especially on key areas such as housing.

Posted by: Dismal Science | Jan 26 2007 19:10 utc | 28

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