Attention Republicans/Blue Dog Democrates: Tax cuts as stimulus work against your goal

by Divorced one like Bush

I think it’s time to reread the World Bank report on what creates wealth because it seems that the arguments against the stimulus are from a mind-set of very narrow thinking about what creates wealth. They all seem focused on what the World Bank report calls “Produced Capital”. Unfortunately, focusing on just that aspect of capital reduces our nation to growth based on 18% of our economic power. And, as far as I have understood the arguments for tax cuts, they are based on effecting this small aspect of what produces wealth in a developed economy like ours.

“The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population’s knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, “natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent.”

You know what that is? Democratic traditional spending priorities.

“Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity,” the study concludes. According to Hamilton’s figures, the rule of law explains 57 percent of countries’ intangible capital. Education accounts for 36 percent.”

Get that? It means tax cuts are just stupid policy if the goal is to stimulate a developed economy as strongly as possible such that the stimulus creates lasting wealth. Is that not the complaint by the republicans and blue dogs, the lack of lasting wealth which means jobs as the stimulus is written? What the World Bank report means is, if you want the biggest bang for your greenback, you have to weigh the heavy side of the stimulus to invest in “human capital, which includes the sum of a population’s knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions.”

You have to load the stimulus to the 77% side and not the 23% side (natural 5% and produced capital 18%). That is 3.4 human capital to 1 natural/produced capital. That means education (all forms and subjects), support for the economically disadvantaged (welfare, medicaid), health care (medicare, national health payment reform, system IT), risk prevention and recovery (law, fire/rescue, FEMA), science (greening energy, environment) and the arts (art districts, museums) to suggest a few.

Beyond that, the intentional campaign to sway public opinion by purposefully lying about the way a stimulus such as is being proposed will function, is to actually predestine our efforts to failure. The reason is because the campaign is producing a lack of trust.

“An economy with a very efficient judicial system, clear and enforceable property rights, and an effective and uncorrupt government will produce higher total wealth.”

As noted above, the level of trust in a society of its institutions is of issue regarding the level of capital available to produce wealth. The greatest harm that is coming from the republican’s drive to instill their minority will on the many out of selfish want, is to further the demise of the people’s trust. For the blue dogs it is their ignorance of their economic ideology that creates the mistrust. The republicans/blue dogs, and those helping them by lending their “professionalism”, think they are only effecting a political strategy. In truth, they are destroying the very basis for the wealth they desire. Their entire campaign for decades to discredit, to instill mistrust in the primary institution we have, the US (We the People) government, has been the primary cause to our economic decline. To increase the level of distrust is to decrease the available “intangible capital” which is 77% of our wealth generating power.

Pushing tax cuts, dear republicans and blue dogs, is actually working against the economic goal you profess to desire for the American people because enacting tax cuts promotes the weakest power of our economy while the promoting of tax cuts is destroying the strongest power of our economy.

Tags: , , , , Comments (0) | |