Saturday, September 20, 2008

Paying for the bailout.

I know I've got maybe 3 readers but I want to be on the record with this one.

All the wailing and gnashing of teeth over the general public having to pay for the bailout seems to be missing three little words.

Capital. Gains. Tax.

Nice populist ring to them: but you won't hear them from somebody like McCain.

Now, I don't know if that makes any economic sense as an idea, and I'm not proposing it as a serious solution because I'm not knowledgeable enough to think it through. But I'm shocked that nobody's using the words yet. Populists could use the bailout as a justification for continuing or increasing the CGT. Plutocrats could use the CGT as justification for the bailout -- what have they been paying for all this time? Spin could go either way.

A further source of joy for me is to hear all the howls of "communism" coming from the usual capitalism-uber-alles lunatics. Here they have the most compliant right-wing presidential lapdog they could ever have asked for. But when faced with the possibility of being branded the second Herbert Hoover for bringing on a second world-wide great depression, he scurries to nationalize. Maybe that sounds as if he's working against his patron capitalists, but chances are it will boil down to government handouts to the corporations and the rich.

18 comments:

hendrix08 said...

Libertarians still complain that the financial crisis was caused by government. What about all of the financial deregulation,privatization ,and cuts in poor support that have been going on for the past 30 years?

It is pretty arrogant for Libertarians to suggest that we need to stay the course and continue the march towards free market fascism.

hendrix08 said...

http://krugman.blogs.nytimes.com/2008/09/20/follow-the-money/

This Blog talks about how the process would work. Taxes are not the fundamental question right now,and it seems that more people are more concerned if such a plan will actually work.

hendrix08 said...

By the way this blog highly educational,or at least that is how i value it.

If you want to get more readers you should probably start battling paultards on face book.
http://www.facebook.com/group.php?gid=2229718737&ref=ts#/board.php?uid=2229718737

I have been doing this for about a year now and have made numerous fake accounts.

Mike Huben said...

The Krugman cash flow diagram makes a nice circle, but the fact is that there will be losses (due to "toxic waste") paid for by taxes. My idea is that higher Capital Gains taxes should be paying for these losses.

I have little time to spend in the endless battles with paultards and other ideological morons. And while it is satisfying and fun to hoodwink them (the original Rich Rosen is a friend of mine), life is much simpler for me if I simply play it straight.

Anonymous said...

Hendrix. There has not be ANY deregulation since at least 1913. You can go back even farther than that though. Free markets cannot be Fascist. They don't force you to subscribe to my ideology. Democracy will lead to Fascism through mob rule (go ahead say it).

I think Socialism is the word you are looking for. It is where we are now, and not because of the free markets....which we didn't have.

Libertarians in no way agree with staying the course, since it IS socialist, and has been on the socialist path since FDR. we want to return to nonintervention policies, and free markets.

Mike Huben said...

Dear anonymous ranter. Take a look at:
this chart
before you whine about "the socialist path".

Mark Plus said...

Mike, the chart you reference pretty much blows up the claim that fiat money has given us nonstop inflation since the founding of the Federal Reserve system. During the Great Depression, 20-some years after the Federal Reserve went into business, people who held onto U.S. currency found that their purchasing power increased dramatically.

The claim that the U.S. dollar has "lost 95 percent of its value" or whatever since 1913 really doesn't mean much, unless you compare the prices of goods you could buy in 1913 with the prices for comparable goods today. But who lives that way now, except for Amish people? We've gotten vastly wealthier in real terms in the past century, regardless of the means we use to keep score. After all, even today's Amish people have access to healthcare and dentistry that the richest people in the world a century ago, with chests overflowing with gold coins like Scrooge McDuck, could not have bought for any amount of "real money" based on gold.

Michael S said...

Mike Huben, You sound like a cheerleader for the socialist and Neocon United socialist state of america! What's your Agenda?

If you Actually believe what you believe for the so called "common good" come back to reality and take a look at whats happening in the world and in this country! Thanks to your "common good" by the government trying to control the economy we will have a economic crissis.

The bailots is what you call corporate welfare

If you don't have an Agenda then you must be very gullible to believe the media and government!

Socialism and Interventionism doesn't work, which is the System we have now, Debt is not helping, debt is actually making things worse. Fascism will never work.

The financial Institutions that your socialist and neocon government is bailing out would have vanished along time ago.

Michael S said...

The financial Institutions that your socialist and neocon government is bailing out would have vanished along time ago in a real free economy

Glen said...

There has not be ANY deregulation since at least 1913

What about airline deregulation under Carter? Or, heck, welfare reform under Clinton?

Presidents are constrained by the climate of their time, so you often see the Only a Nixon could go to China phenomenon. The Executive has the most leeway to make *big* changes that go against the rhetoric of his own party. When it seems like a compromise with the interests of the opposition rather than a huge advance of their own agenda.

The Bush administration was "conservative" in a hundred little ways, but few big ones.

Glen said...

Or in the area of finance, the repeal of glass-steagal should count as a deregulation...

Anonymous said...

Just attempting to engaging in rational discussion. No need to get defensive because my opinion differs.

Financial Deregs in '82, and '99 were never a complete dereg. Even If no other regs existed, the Fed existed, and regulates interest rates.

You mean the chart that shows virtually constant inflationary conditions since the Fed was created? All fiats eventually become worthless. To try to deny this is fantasy.

Mr. Huben's comments September 21, 2008 9:39 AM 2nd paragraph, is a fine example of fascist mindset...You are not like me therefore you don't count.

This suggests that Mr. Huben's is not open to differing opinions, and not worth debating.

If socialism is as great as you seem to think, where are the USSR, other former eastern block nations now? Or shall we wait till the $ is worth less than the paper it's printed on to find out?

Mark Plus said...
This comment has been removed by the author.
Mark Plus said...

Anonymous writes

"the chart that shows virtually constant inflationary conditions since the Fed was created?"

Anonymous suffers from confirmation bias. Fiat money in the U.S. gained purchasing power during the deflation of the Great Depression.

Specie-based money systems, by contrast, have occasionally experienced massive inflation. Ponder the implications of the Price Revolution, when gold lost about five-sixths of its purchasing power in an era long before we had central banks and fiat money.

Michael S said...

Mark Plus said...

"Fiat money in the U.S. gained purchasing power during the deflation of the Great Depression."

That's Funny! Or is it? (Being Sarcastic) What else is Money going to do after the economy rebounds from a depression? It's going to go up of course!

Anonymous said...

The bailout will act as a serious fiscal constraint on the next occupant of the white house. Naturally, most Americans will oppose tax increases on the wealthy to offset the problem. Thanks to Libertarians, the word "tax" has become the financial equivalent of leprosy. This is horrible, as both Peak Oil and Global Warming will require massive amounts of money to combat.

Anonymous said...

This is horrible, as both Peak Oil and Global Warming will require massive amounts of money to combat.


Hey I got the Libertarian answer to this one, decrim hemp. Hemp is capable of producing a large enough amount of energy to replace a lot of our fossil fuel requirements, thus leaving all that carbon safely under ground. While it grew it would be soaking up a lot of carbon, we could conceivably end up reusing the same carbon over and over again, not introducing new carbon from fossils. The Government would not have to spend a dime, just remove a law, in fact the government would save huge amounts of money.
We humans are pretty smart, given the chance, and this nation could go wind, solar and hemp, maybe a nuke or two, eliminating our dependence on unstable or harmful sources of energy. We can solve these problems with out taxes, maybe even make a buck or two, the average family could feasibly produce all their own energy. Just a thought.

Jeremy said...

Populists could use the bailout as a justification for continuing or increasing the CGT. Plutocrats could use the CGT as justification for the bailout -- what have they been paying for all this time?

As a left libertarian (my standard introduction on this site) I don't necessarily have a problem with this.

As Dean Baker argues in Conservative Nanny State (drop everything and read that free book online if you haven't yet) you have to pay to play in corporate America. In other words, nobody's forced to do business in the corporate, joint-stock framework. Sole proprietorships are viable business models (not to mention coops, partnerships, etc. that don't have the corporation's legal personality). So given all the privileges corporations get, I can't say that I have any principled objection to them paying for their privileges in the form of a variety of possible taxes, capital gains certainly being among the least objectionable. And, yes, it could be used to fund a sort of state-provisioned bailout program.

However, I must say that I don't think there's a capital gains tax - or any other kind of tax - that would cover the costs to the public of the corporate model. According to some calculations, total corporate welfare dwarfs total corporate profits by a factor of as much as five. The solution as I see it is stop subsidizing artificially centralized and bureaucratic business models that concentrate economic power, instead of promoting policies that enable them and then falling over ourselves to regulate them (which, as Gabriel Kolko demonstrates in The Triumph of Conservatism, is all too often exactly what the big boys want).