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Jan-23-2008 18:27printcomments

Op Ed: WHY Less Is More
Always Must Mean
MORE Is LESS For Us

“Supply-Side” Theory Manipulates Realities, Covers Greed


Image source: Arthur B. Laffer

(BEND, Ore.) - What goes up, against the force of gravity, must always then come down, too --usually with a devastating impact if carelessly contrived as irresponsible action primarily for show.

That’s universally true for any myth-making political pretensions put together primarily for their persuasive powers; especially when promoted relentlessly, if ridiculously, via potent “noise machine” and dollar-power provided by corporate forces for their own purposes.

Just as the laws of physics control any contrived demonstration about gravity - so do the laws of economics force the inevitable conclusion.

Supply-side economic theory, originally designed to offer possible cover for greedy manipulation of the entire U.S. economy for political purposes, has proven once again that its key principle of “less is more” must also always follow the overriding realities of economic laws: “There is never any free lunch!”

Today we face economic consequences that are being felt worldwide, as the destructive impacts on the U.S. economy bring on similar destruction in markets around the world.

History will show that we have only ourselves to blame for these truly historic consequences, for our own neglect in allowing elected leadership to foist off on us this truly destructive economic theory.

From possibly helpful economic guidance, via broad crony capitalism, distortion and outright perversion to protect and rationalize plain old greed, the Laffer Curve has now become a curse-word rather than the sensible pattern it could have been. Perhaps it may be helpful to seek out from our own history where “supply-side theory” came from and why it has been allowed to operate as the major U.S. economic principle for two closely-allied Presidential administrations.

The Curve was the start --and has long ago become the symbol--for this entire damaging era in American economic history.

Because of that reality, it has also forced still other Presidencies to take into full account its disturbing and damaging consequences, made entirely unavoidable since --by canny and contrived manipulation at many ongoing business and financial levels-- inbuilt consequences have been forced upon our U.S. economy ever since its initiation.

“Deregulation”, “privatization", and the resulting large stimulus for onrushing “globalization”, all came about and were installed deeply into our American economy as components of the U.S. domination of world markets and, for decades, of rapid technological and corporate management and remarkable worldwide growth and development.

“Supply-side economics” is the descriptive term first applied to the application of the Laffer Curve, purporting to prove that “Less can be more” by its portrayal of larger tax revenues flowing to government when a lower rate is set, making up in new volume for the obvious smaller-slice taken from each taxpayer’s funds.

This larger-production situation is possible only under special economic conditions and market-return situations, well reflected for decades prior to Dr. Arthur Laffer’s presentation to leaders in the Ford administration, at a 1974 luncheon attended by Donald Rumsfeld, President Ford’s chief of staff, Dick Cheney, his deputy; and others.

The image of the seductive Curve was laid out for this key group by Dr. Laffer’s now famous curve-sketched-on-napkin -- sometimes suggestively seen as “upside-down”.

BUT it proved a potent propagandizing tool for the following Reagan Presidency cabal, led by some of the same persons, seeking any and every way to attack the status quo resulting from an already-changing American political climate and worldwide economic trends then already highly evident.

The GOP immediately adopted as its major doctrine --already in place previously-- the assumption of “unfailing success for any and every tax-cut”, as further provenance for their entrenched other major component of a continuing militantly aggressive conservatism: “Smaller government is always better than an expanding one, no matter what the need.”

Grover Norquist, a highly-active/aggressive GOP leader, notoriously anointed the second component by declaring that the great need was to “drag government into the bathtub, where we can drown it.” He also declared that “Bankruptcy for any state will be an exemplary lesson for all the others.”

It was in that ineluctable political climate --with little room for rational and reasonable commonweal consideration for all Americans-- that the irrational and unreasonable demand for continuing tax-slash and program-funding decline at every level possible, began --fully exemplified in the “starve the beast” doctrine put into place then, continuing ever since.

Following the original Reagan administration, the Bush I regime continued the major impacts of “supply-side” further cementing its consequences on national funding policies across the board.

That approach to all things possible was later driven into full frenzy in the Bush II administration, continuing the great raid on federal funds for empire-building military expansions and the capture of oil reserves around the world --empowered by destructive attacks on our Constitutional rights and on the role and place of Congressional oversight and control at every possible level.

The “imperial Presidency”, already strongly under development in the Reagan and Bush I eras, was driven to new heights by the skills and determination of a Rove and a Cheney, aided and assisted by others in the ongoing political cabal.

The tax cuts somehow always protect and reward the already-rich, the large-contributing corporate entities indulging in crony capitalism, and the very small percentage of Americans living from capital gains in lieu of everyday demands at a job, contributing to our economy by personal/professional productivities.

The total tax cuts produced by Laffer Curve principles since the earliest ones now, without doubt, total into many billions and even trillions of revenues, irretrievably lost to the wasting actions directly attributable to the distortions and perversion set into place by some of the same perpetrators over these past decades.

In all truth, now it is finally, broadly, consequentially recognized that, indeed, “There ain’t any free lunch!” in U.S. economics.

Meanwhile we have seen the proliferation of economic bubbles -unwarranted and irresponsible speculation in asset accumulation in stocks, bonds and real estate-- now occurring in rapid sequence, where for 100 years these came only very intermittently, especially when rational regulation was still in place for protective purposes.

It is impossible to survey these overall developments within the larger picture without also viewing the damaging consequences of the Laffer Curve arrival early on in the sequence now firmly rooted in American history.

Despite these ongoing destructive consequences now highly evident from three decades of “supply-side” economic “management”, it is highly ironic to see the current rapid descent into recession --with strong threats of economic chaos even deeper into world damage-- being, first, slowed and then openly attacked for remediation by basic and obvious Keynesian principles.

Even President Nixon, caught in somewhat similar but nowhere nearly as drastic economic pressures, finally said it: “Now we are all Keynesians.”

Keynesian Theory is an economic theory based on the ideas of twentieth-century British economist John Maynard Keynes. Keynesian economics promotes a mixed economy where both the state and the private sector have important roles.

In Keynes' theory, macroeconomic trends can overwhelm the micro-level behavior of individuals. Instead of the economic process being based on continuous improvement in potential output, as most classical economists had believed from the late 1700s on, Keynes asserted the importance of aggregate demand for goods as the driving factor of the economy, especially in periods of downturn.

The most revealing and self-indicting of actions possible here is for Bush and his Laffer Curve buddies now to run rapidly for saving succor to the Keynesian Curve, embodied in the same Keynesian remedial actions undertaken so historically successfully by President Roosevelt and his New Deal.




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Henry Ruark January 26, 2008 6:25 am (Pacific time)

To all: Basic moralities involved here are so simple even these perpetrators should be fully aware of what they do. Want historical allusion ? Here's one strong one: "So let us regard this as settled: what is morally wrong can never be advantageous, even when it enables you to make some gain that you believe to be to your advantage. The mere act of believing that some wrongful course of action constitutes an advantage is pernicious." Marcus Tullius Cicero (106-43 B.C.) "A man who has in mind an apparent advantage and promptly proceeds to dissociate this from the question of what is right shows himself to be mistaken and immoral. Such a standpoint is the parent of assassinations, poisonings, forged wills, thefts, malversations of public money, and the ruinous exploitation of provincials and Roman citizens alike. Another result is passionate desire - desire for excessive wealth, for unendurable tyranny, and ultimately for the despotic seizure of free states. These desires are the most horrible and repulsive things imaginable. The perverted intelligences of men who are animated by such feelings are competent to understand the material rewards, but not the penalties. I do not mean penalties established by law, for these they often escape. I mean the most terrible of all punishments: their own degradation."Marcus Tullius Cicero (106-43 B.C.)


Henry Ruark January 26, 2008 6:13 am (Pacific time)

To all: "Republican Noise Machine" is one of at least four detailed books giving away facts re who did "dirty work" over last thirty years. By David Brock, with rest of title: "Right Wing Media and How It Corrups Democracy". This one published in 2004, so should be wellknown among the "elite", "aristocracy" et al among these so-determined "others" intent on continuing precisely what the book shows has been a cabalized attack over all those years. Publishers Weekly review then:"Brock's incisive, well supported analysis and his street cred as an apostate from the conservative press make this a spirited challenge to the contemporary mediascape." Brock still punditing, with "creds" thoroughly established by his responsibilities and accpuntability demonstrated om this basic book, written to ease conscience and clear the record of his own work. Sorry, no ISBN, but still available; basics on others mentioned will follow, when I can find the damned books here again, in midst of cullout covering 50 years of writer's files.


Henry Ruark January 25, 2008 7:34 am (Pacific time)

To all: Just to sharpen up the dialog here re Bush-cabal attack on proper role of both Congress and the states, here is another "piece of history" not to be overlooked while we wonder "what can they possibly do wrong NEXT !" Please note that SLATE can hardly be termed "socialist" source !: Slate Magazine (www.washingtonpost.com) "Crashing the Subprime Party: How the feds stopped the states from averting the lending mess." By Nicholas Bagley Posted Thursday, Jan. 24 "As the federal government scurries to prevent the subprime mortgage crisis from sending the economy into a deep recession, many of us are asking why it waited so long to intervene. As it turns out, the government wasn't exactly sitting on its hands. Instead, for reasons that now appear hopelessly shortsighted, an obscure federal agency torpedoed legislation from a handful of states that would have made institutional investors far charier of buying mortgage loans that were likely to go belly-up. If the legislation had been permitted to go into effect, the crisis we now face would probably look a lot less grim. The right question, then, is not why the feds did so little. It's why they did so much."


Henry Ruark January 25, 2008 6:50 am (Pacific time)

To all: Every sign emanating from D.C. shows the overwhelming dominance of “supply-side” thinking in the Bush/Cheney cabal. Why would it not be so ? They invented it first applied the commonsense-failing concept of “less is more”, resulting in billions upon billions of lost-revenue depredations and damage to the national commonweal ever since the mid-70s. Despite worldwide extreme symptoms --stronger than any time since “real” Depression days --they are defensively so committed to “trickle down” that it is impossible for them to comprehend that we DO have TWO ECONOMIES now operating simultaneously. Now, in this 8th year of the 21st Century, only the one built on outmoded theory and practice, serving their own fascistic“command-and-control” structure we now have seen installed as replacing our democracy, can possibly react to their panic-stricken remedial efforts --”bipartisan” or NOT ! Meanwhile “the real one” --engulfing most Americans-- rushes on with overwhelming consequences for most of us, fighting desperately to keep heads above the economic flood of rising costs on every level for everything; while our lives and our incomes and our children are all placed at deadly risk by malign corporate influences buying political assent and full cooperation via now thoroughly-demonstrated “corporate campaign contributions”. On our solid principle of “see with own eyes”, here are some current (and essentially countervailing) “informed opinion” sources, for your own evaluation in light of the overwhelming “current events” in which YOU are a participant --willing or not ! Hopefully, this return to reality via statements from truly informed and competent prime-sources will offset those cries of false alarm always heard from “the others” --those whose every utterance and action here and elsewhere destroys any semblance of their own responsibility, accountability and thus of their own credibility. Here are the references, as links for YOUR convenience, with titles-given for each one to inform you what you may expect to find: 1. Stimulus Gone Bad; Paul Krugman; www.nytimes.com. 2. Capitalism’s Enemies Within: Robert J.Samuelson; www.washingtonpost.com. 3. Is The Bush Stimulus Going to Help You?’; www.alternet.org. 4. It’s a Give-Away to the Wealthiest; Alternet staff; www.alternet.org. 5. Bush’s Skewed Stimulus Plan: MoveOn Team; www.alternet.org. 6. Stimulus Plan Misses Target: The Progress Report; www.alternet.org. 7. Priming the Markets For Next Big Crash; Eric Janszen; HARPER’S Magazine Feb. 2008, pp. 39-45. Yes...every one of these consulted and READ TWICE, with working notes, for further application as “informing sources” for our Op Eds in this channel. Every one listed here, too, for YOUR own “see with own eyes” examination AND YOUR OWN evaluation, to compare and possibly contrast with mine as demonstrated in Op Ed usage. That’s what open, honest, democratic dialog is intended to provide, and herein DOES provide --when not subjected to time-and-attention waste by off-content, off-story attacks and unwarranted comments, usually by UN-informed others.


Henry Ruark January 25, 2008 5:55 am (Pacific time)

To all: Slate Magazine, premier short-report source on the WPost website, states today: "All the papers lead with news that President Bush and House leaders agreed on a $150 billion economic stimulus package. The deal was reached only after multiple negotiations, and everyone notes it was a rare example of bipartisanship in Washington. "Most of the $150 billion would go to paying for tax rebates, but the measure would also include tax breaks for businesses as well as a one-year increase in the size of mortgages that could be backed by the government. Taxpayers will receive $600 ($1,200 for couples) and an additional $300 per child, but the money begins to decrease when gross income is more than $75,000. People who earned at least $3,000 and paid minimal to no taxes would receive $300. "To get this approved, Democrats had to give up hopes of extending unemployment and food stamp benefits, while Republicans agreed in exchange for the business benefits." Thus we now have a distorted and perverted application of the Keynesian principles, set into such a stony ground that any success will be delayed if not denied --while partisan political principles are at least partially preserved, on both sides. "Bipartisan"-appearance is achieved, while necessities for the real commonweal are thrown off the scale: NO extension of essential unemployment benefits for the millions now desperate as their last resort runs out. NO strengthening and broadening of food resources for those already despairing and destitute after loss of one of those millions of jobs offshored to very/low/wage areas via "globalization". NO repair and restoration in sight for any RE-regulation of the deregulated financial sector, where greed and the despoilation of real estate buyers from the lowest levels was allowed to occur. No sign, either, of any militant realignment of those few --in either party-- still sensitive, aware, committed to the clearly demanded steps to put this nation back on its feet, moving steadily if somewhat shakily into the 21st Century. Those next-steps are now becoming ever more clear, ever more compelling, ever more essential --and still possible since we the people can still exercise our wit, wisdom and will to take back our nation.


Glen January 24, 2008 5:50 pm (Pacific time)

Nice essay, Hank. The other side of the coin is NAFTA. Between trickle down economics and NAFTA, the next president has got a big job to do. The 21st century is going to have to operate a lot differently than the 20th if we're going to survive.

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