Monday, September 5, 2011

Becker, Krugman, and spending other people's money

Nobel Prize winning economist Gary Becker has some more to say about Warren Buffett's assertion that Warren Buffett is undertaxed.... (Buffett is currently in a dispute with the IRS about how much he owes in back taxes, BTW.) 

Warren Buffett has persuaded 68 other billionaires to follow his example and promise to give at least half their wealth to charities. But why hasn’t Buffett proposed also that the very rich make large gifts to the federal government to offset what he considers ridiculously low taxes on their incomes and wealth? My guess is that he and the others who pledged to give away their wealth to charity would have little confidence in how the government would spend such gifts. Buffett, for example, is giving most of his wealth to the Gates Foundation, not to the federal government, and is relying on how this foundation will spend his vast gift. Given this reluctance to make large gifts to the federal government, why should anyone have confidence that the federal government will spend additional tax revenue in a sensible way?

Go here to read Nobel Prize winning economist Paul Krugman's assertion that we need to either print, borrow, or steal enough money to give the government so they can't crank out another stimulus package. 
Can anyone out there name a single instance of wisely spent stimulus money?  Anybody?  Anybody at all? 

Here's a highlight from Krugman's editorial:

Although you’d never know it listening to the ranters, the past year has actually been a pretty good test of the theory that slashing government spending actually creates jobs. The deficit obsession has blocked a much-needed second round of federal stimulus, and with stimulus spending, such as it was, fading out, we’re experiencing de facto fiscal austerity. State and local governments, in particular, faced with the loss of federal aid, have been sharply cutting many programs and have been laying off a lot of workers, mostly schoolteachers.

And somehow the private sector hasn’t responded to these layoffs by rejoicing at the sight of a shrinking government and embarking on a hiring spree.

O.K., I know what the usual suspects will say — namely, that fears of regulation and higher taxes are holding businesses back. But this is just a right-wing fantasy. Multiple surveys have shown that lack of demand — a lack that is being exacerbated by government cutbacks — is the overwhelming problem businesses face, with regulation and taxes barely even in the picture.

No, no, no, no, no.   The United States government is going to spend more this year than it did last year.  They're going to spend more in 2012 than in 2011.  They're going to print or borrow the money to do this. 
ObamaCare is not yet repealed. 
Card Check is not yet dead and buried. 
Our government has not yet taken the suggestions of The Libertarian Party, and gotten the hell out of the economy.  And our government is really, really crappy at intervening in the economy. 

That's enough to make the U.S. a crappy place to do business, or hire people. 
I'm betting that Paul Krugman has made some good investments in his day.  If Congress passes another stimulus package, someone should challenge Krugman to "invest" in the same companies that Pelosi/Boehner/Reid pick for stimulus spending. 

Seriously, can you imagine someone saying "My broker is Barack Obama...and when Barack Obama talks, people listen !"  (This is a 1980's reference.  Sorry for the obscurity.) 

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