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$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious - the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.
To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is "only" $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is "only" $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.
PLEASE GO TO http://www.silverbearcafe.com/private/10.11/gaoaudit.html and read the rest of the audit.$16,000,000,000,000.00 had been secretly given out to US banks and corporations and... more
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... there are other options than the usual clap trap economic speak, other ways of assessing what the economic present day designs we are chained to are looked at. It's time to re-think the whole damn mess - and get on with it.... there are other options than the usual clap trap economic speak, other ways of... more
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"Funding for family planning services will be increased as the government comes to terms with the threat posed by the high population growth rate to realisation of the country’s economic goals.""Funding for family planning services will be increased as the government comes... more
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Is in just one way or the highway? Is Growth and the GDP forever the future or are there other ways - like a sustainable economic system? In the end the growth model can not continue, because it's a dead end. It just can't continue because it's a no win process and all of us and the future uses will end up staring at the image in the reflection and watch it vanish.Is in just one way or the highway? Is Growth and the GDP forever the future or are... more
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REDUCING MILITARY SPENDING ALONE WILL ELIMINATE THE LONG TERM DEFICIT.
Per the MilitaryIndustrialComplex.com, you contributed to $246,876,+ billion dollars of military contracts for the year of 2010, ALONE!. You contributed to $70,601, billion dollars of military contracts in the first three months of 2011, ALONE! And this only represents contracts reported, not all of the other military spending not related to corporate contracts! Is it any wonder we're broke now?
( A great tool for counting the money being made by corporations off of your military budget money. ): http://www.militaryindustrialcomplex.com/2011-totals.asp
"if all we were to do was to bring the military budget back down to the Clinton-era level, that alone would essentially solve the long-term deficit problem. That alone.", states U. of Mass., at Amherst, professor Robert Pollin, in an interview with Paul Jay of theREALnews network.
"In the year 2000, it ( the military budget ) was 3 percent of GDP. And now it's 4.8 percent." " If we say the problem, again, the long-term problem, is that we project out a deficit at 5 percent of GDP, and we need to get it in the range of 2 to 3 percent, at least you could pull half of that out of the military budget, and you'd still be way beyond where the military budget was at the end of the Clinton administration.
JAY: And still be the country that spends more on weapons [crosstalk]
POLLIN: Than all the other countries of the world, yes.
JAY: --rest of the world put together, yeah."
Once we recognize that our military currently functions as a money making business for already rich corporations, creating foreign threats to our nation in order to justify military action and supporting budgets; which in turn feed the industrial war machine, we can intelligently pare it down to a level only necessary to TRULY insure our national security.
"people say, well, you can't do that, because we'd lose jobs if we cut the military. But that's also false, because the military per dollar of expenditure creates far fewer jobs than, for example, putting the money in education or putting the money in clean energy. We create more jobs. If we moved it out of the public military and just incentivized private green investors, we would create about 50 percent more jobs."
CONCLUSION? Reduce military spending and create more jobs! Just the facts, if you please!
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6649
And here is a terrific tool for keeping track of it yourself:
2010 Military-Industrial Complex Totals
Total Contracts Recorded: 3,834
Total Contracts Dollar Value: $246,876,980,742
A visual representation of Defense Spending growth and decrease by month throughout 2010.
Total Contracts Recorded by Month:
January: 168
February: 171
March: 330
April: 374
May: 272
June: 330
July: 306
August: 327
September: 704
October: 273
November: 224
December: 355
Total Contracts Dollar Value by Month:
January: $8,107,922,646
February: $11,540,170,777
March: $13,677,787,653
April: $20,284,801,491
May: $25,567,713,470
June: $22,596,147,257
July: $19,415,424,453
August: $16,792,242,962
September: $46,498,184,935
October: $9,565,043,473
November: $28,206,122,771
December: $24,625,418,854
http://www.militaryindustrialcomplex.com/2011-totals.aspREDUCING MILITARY SPENDING ALONE WILL ELIMINATE THE LONG TERM DEFICIT.
Per the... more
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Robert Pollard
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Rio+20 - Interactive Dialogue of the General Assembly on Harmony With Nature
Interactive Dialogue of the General Assembly on Harmony With Nature
20 Apr 2011 - 20 Apr 2011
10:00 AM - 6:00 PM
Conference Room 3, North Lawn Building, New York
To commemorate International Mother Earth Day, the UN General Assembly will host an interactive dialogue on harmony with nature.
The dialogue aims to examine how humans can better reconnect with the world around them and is expected to yield
the following outcomes: proposals on ways to promote a holistic approach to sustainable development in harmony with nature; and an overview of different national experiences on the measurement of sustainable development in harmony with nature.
The dialogue will consist of two moderated panel discussions with experts in sustainable development. In the morning session, the panel will address a wide array of perspectives, including sociological and anthropological ones, on how humankind can effectively reconnect with nature to achieve economic and social development that is more harmonious and balanced in relationship to the Earth’s carrying capacity. In the afternoon session, the panel will debate on the increasing recognition that gross domestic product (GDP) needs to be supplemented by other measurement tools for measuring progress in terms of social well-being and environmental sustainability.
The interactive dialogue is intended to inform the on-going preparations for the UN Conference on Sustainable Development to be held in Rio de Janeiro, Brazil in 4-6 June 2012 (Rio+20)
Stiglitz Commission: http://www.stiglitz-sen-fitoussi.fr/en/index.htm
Interactive Dialogue of the General Assembly on Harmony with Nature
Wednesday, 20 April 2011 · NLB Conference Room 3
Time Programme
10 –10:20 am Opening Remarks
• H.E. Mr. Charles Thembani Ntwaagae, Acting President of the General Assembly and Permanent Representative of Botswana to the UN
• H.E. Mrs. Asha-Rose Migiro, United Nations Deputy Secretary-General
• H.E. Mr. Pablo Solon, Permanent Representative of Bolivia to the UN
10:20 – 1:00 pm Interactive Panel Debate 1: Ways to promoting a holistic approach to sustainable development in harmony with nature
Moderator
• Mr. Martin Khor, Executive Director of the South Center
Panelists
1. Ms. Vandana Shiva, Founder of Navdanya, India
2. Mr. Peter Brown, Professor, McGill University, Canada
3. Mr. Cormac Cullinan, Environmental Attorney, South Africa
4. Ms. Riane Eisler, Author of “The Real Wealth of Nations: Creating a Caring Economics” (2007)
3 – 5:45 pm Interactive Panel Debate 2: Sharing national experiences on criteria and indicators for measuring sustainable development in harmony with nature
Moderator
Mr. Martin Khor, Executive Director of the South Center
Panelists
* Mr. Paul-Bertrand Barets, Head of International Economic Division, Ministry of Foreign Affairs, France
* Mr. Mathis Wackernagel, Executive Director, Global Footprint Network
* Mr. Gilberto Gallopin, Regional Adviser on Environmental Policies, Economic and Social Commission for Latin America and the Caribbean
* Mr. Ivo Havinga, Chief, Economic Statistics Branch, UN DESA Statistics Division
5:45 – 6 pm Closing Remarks
* Mr. Sha Zukang, Secretary-General for Rio+20
* H.E. Mr. Charles Thembani Ntwaagae, Acting President of the General Assembly and Permanent Representative of Botswana to the UN
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For more options, visit this group at http://groups.google.com/group/ngo-education?hl=en.Robert Pollard
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Rio+20 -... more
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By Lindsay Beyerstein, Media Consortium blogger
The Republicans won control of the House and picked up seats in the Senate in the midterm election on nebulous promises to slash spending and reduce the size of the federal government. House Speaker John Boehner has pledged to reduce spending to 2008 levels, as per the GOP’s campaign manifesto, known as the “Pledge to America.”
But as Andy Kroll reports in Mother Jones, while the Pledge calls for a 21.7% reduction in spending on non-security discretionary programs, it doesn’t commit to any specific cuts. Medicare and Social Security are safe from this round of cuts because they are not discretionary.
The Center for Budget and Policy Priorities tried to give a glimpse of what the federal government might look like if all eligible agencies took a 21.7% budget cut across the board. As Kroll notes, it’s more likely that some programs will be spared, some trimmed, and some eliminated entirely.
However, the CBPP’s analysis gives a stark picture of the magnitude of the proposed cuts, Kroll writes:
What it found was grim, with middle class Americans set to lose the most.
K-12 education funding, the CBPP found, would drop by $8.7 billion, and food stamps for at-risk pregnant women, infants, and young children would lose $1.6 billion in funding. State- and local-run housing programs would lose $6.9 billion, and children and family social services would lose nearly $2.2 billion.
Already pinched state budgets would take massive hits as well, losing out on $31.6 billion in federal funding.
Cuts to state budgets mean even deeper cuts to education and social services that benefit working families. Starving the states is also a strategy to force state governments to default on their pension obligations to unionized public sector workers.
But the magnitude of these cuts might be giving the GOP cold feet. In January, Speaker Boehner told Brian Williams at NBC that he couldn’t name a single program that he planned to cut.
Inequality is personal
Paul Buchheit points out on AlterNet that if middle- and upper middle-class families had the same share of the economic pie that they did in the 1980s, they would be making $12,500 more per year. In other words, the economy has become vastly more productive over the last 30 years, but the extra wealth has become overwhelmingly concentrated in the hands of the very richest Americans at the expense of working families.
U.S. GDP quintupled since the 1980s, but most of the extra wealth has gone to the top 1% of earners. Nobody begrudges entrepreneurs a healthy return on their capital, but what about the 99% of earners who provided the labor. Where’s the return on their investment?
With looming government spending cuts to domestic programs, the middle- and upper-middle classes will face an even bigger hit to their real standard of living. Local and state governments are cutting back on services while hiking taxes and fees.
The richest 1% won’t feel these cuts as acutely as middle class families. If you have your own private swimming pool, you may not notice that the public pool is closed because the city can’t afford lifeguards. If you send your kids to private universities, you won’t be biting your nails over potential tuition hikes at public universities.
MLK’s legacy
The nation honored the legacy of Dr. Martin Luther King, Jr. on Monday. Roger Bybee of Working In These Times points out that, while King is remembered as a civil rights leader, he was also deeply committed to economic justice for all Americans. The politicians who praised King’s legacy on Monday should remember that Dr. King’s last great crusade was on behalf of sanitation workers in Memphis, public employees struggling for a decent standard of living.
Beck sets sights on 78-year-old CUNY prof
Amy Goodman of Democracy Now! interviews Frances Fox Piven, a 78-year-old distinguished professor of political science at the City University of New York, who may be the first person to inadvertently spark prime time conspiracy theory in the pages of a Media Consortium outlet. Right wing talk host Glenn Beck has identified Piven as the co-author of a violent blueprint to crash capitalism itself.
As Piven explains to Goodman, the bile stems from the suggestion made by her and her co-author Richard Cloward in a 1966 article in The Nation that social activists should help poor people access the benefits they were already legally entitled to. At that time, Piven recalls, the welfare system denied benefits to more than half of its eligible recipients. She and Cloward believed that the poor would become a more politically powerful and visible part of society if society suddenly had to make good on its promises of aid.
In July, Richard Kim of The Nation explained how an obscure 40-year-old article was recast as the “Rosetta Stone” of lefty politics, the blueprint to usher in an economic crisis which the left could exploit to bring about socialism.
Since Beck seized on Piven’s work and labeled her a violent revolutionary, she has been the target of death threats by commenters on Beck’s website. Political operatives posing as students came to her home to interview her. The interview later showed up on Andrew Breitbart’s conservative website.
Piven seems both concerned and bemused that her brief for reforming the welfare system of the 1960s has been labeled as a blueprint for destroying the capitalist system.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.By Lindsay Beyerstein, Media Consortium blogger
The Republicans won control of the... more
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IT HAS long been true that California on its own would rank as one of the biggest economies of the world. These days, it would rank eighth, falling between Italy and Brazil on a nominal exchange-rate basis. But how do other American states compare with other countries? Taking the nearest equivalent country from 2009 data reveals some surprises. Who would have thought that, despite years of auto-industry hardship, the economy of Michigan is still the same size as Taiwan's?
http://www.economist.com/blogs/dailychart/2011/01/comparing_us_states_countriesIT HAS long been true that California on its own would rank as one of the biggest... more
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So after my last video on how to fix the USA’s economy, I saw a lot of ignorant comments in the comments section about WELFARE.
They weren’t NEW ignorant comments, they were the SAME ignorant comments that you hear over and over. Apparently nobody out there is challenging people on their declarations, and allowing the virus of ignorance to spread.
So I wanted to make a list of facts and talking points for progressives when confronted with these conservative... well, let’s call them what they are-- they’re LIES, and stop the spread of ignorance in it’s tracks.
So let’s go down the list, and tackle them one by one, shall we?
1) Welfare spending is the reason our government is in debt.
FALSE.
If you had the choice between giving somebody a dollar and getting back either $1.50 or $0.80, which would you choose? Hold that thought.
According to USGovernmentspending.com The Federal Government is committed by law to spending 557 billion on welfare in the year 2010. Which seems like “Oh my! That’s a lot of money!” Which, for one person, yeah it is. But for our federal government, not so much.
Especially when you compare that to the $895 billion we’re committed to spend, by law on Defense spending. Which doesn’t account for the $711 billion in our discretionary spending on stuff like the War in Iraq and Afghanistan, and useless cold war-era weapons that we don’t even use, and never will.
Next you have to take into account what we get for those dollars spent.
Most economists agree on the following figures, including conservative ones:
Welfare spending has a fiscal multiplier of about 1.5-- while military spending has a fiscal multiplier of 0.8.
To which you might say, “wow, you just said some numbers, but what the hell does that mean? It means that for every dollar our gov’t spends on welfare, we get one dollar and fifty cents back in the form of GDP. With military spending, for every dollar we spend, we get back $0.80.
That seems really stupid. And that’s because it is. Which is why politicians frame their arguments about or disgustingly wasteful military spending as being “patriotic” or “supporting the troops.”
How much support actually goes to our troops? You, know, like after they come back from getting shot at and having their legs blown off?
According to the White House’s own figures, we’re slated to spend $125 billion on veterans affairs. And we all know about staffing shortages and underfunding that goes on in our VA system. So clearly this isn’t about supporting our troops.
For those who don’t care about human lives, and only the hard economics, I want to ask you again: If you had the choice between giving somebody a dollar and getting back either $1.50 or $0.80, which would you choose?
Now for the humanitarians out there, if you had to choose between giving somebody a dollar to feed their family, knowing you’d get back $1.50, or give somebody $1 knowing that your next door neighbor would have his legs blown off and you’ll only get back $0.80, which would you choose?So after my last video on how to fix the USA’s economy, I saw a lot of ignorant... more
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To enter this dialogue with respect, we need an introduction to this movement, which some call the “Pachakuti”, a term taken from the Quechua “pacha”, meaning time and space or the world, and “kuti”, meaning upheaval or revolution.
In its efforts to exert some political influence on solutions to the current world financial and climate crises the nascent international ecosocialist movement should direct some attention to a synthesis of the western ecosocialist discourse with the growing Latin American indigenous discourse that is making exciting progress, albeit in fits and starts, toward an international charter for the protection of the planet, Mother Earth, and all forms of life on it.To enter this dialogue with respect, we need an introduction to this movement, which... more
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Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none. But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
Read More: http://globalpoliticalawakening.blogspot.com/2010/11/living-beyond-our-means-3-charts-that.htmlDo you want to see something truly frightening? Just check out the 3 charts posted... more
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GDP report publication for the second quarter has raised concerns in the stock market, The GDP growth figure seems quite discouraging after the government revised first-quarter growth from 2.7 to 3.7 percentGDP report publication for the second quarter has raised concerns in the stock market,... more
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Every three months, the U.S. government adds up all the spending and buying and investing in the nation. The Bureau of Economic Analysis totes up those figures as the gross domestic product or GDP, and uses that result to estimate how fast we're growing -- too fast and we're at risk of overheating, too slowly and we're at risk of recession.
Today, we learned that the economy slowed down in the last quarter. It had been growing at an annual rate of 3.7 percent. In the last three months, the economy grew at a rate of 2.4 percent. If you're wondering what that means, really, it means way, way not fast enough to get us out of this mess.
But here's the other thing. The Bureau of Economic Analysis also revises its numbers over time. Along with the most recent GDP figure, the BEA released new numbers for 2007 through the first part of 2010. The blue line in the chart above, from the essential Calculated Risk, shows how bad we thought things were, at first. The red line shows that the recession was actually worse than we thought.
But then you knew that, right? As Ezra Klein writes, "[t]he normal cycle of recovery has broken." This can't be good news for President Obama and the Democrats, and makes it that much more irresponsible for Republicans to block efforts at helping businesses and human beings.Every three months, the U.S. government adds up all the spending and buying and... more
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Happy? Or scared?
Today’s big economic news is a report showing the US Gross Domestic Product grew 3.5 percent from July through September, the first GDP growth in over a year. Wall Street was happy. Stocks on the Dow Jones average rose nearly 200 points. The Obama Administration’s $787 billion stimulus program, combining tax cuts and government spending got some of the credit. At the same time, another report this week showed that American consumer confidence is down, partly due to unemployment continuing to climb. It’s almost at 10 percent now, while wages are mostly flat and home prices remain low, 401Ks are not recovered, blah, blah, blah…
If you’ve looked at a newspaper, or TV screen, or the Internet in the past 18 months, you’ve seen all the dismal stats.
So now that the GDP is growing again, which way are things going for you? Not in the next six months, but in the next six years. What kind of economy is going to emerge from the greatest economic decline since the 1930s? That’s the big question, and it points out one of the big dilemmas of journalism. You would think that the really important stuff would be stuff that you would want to pay closest attention to but the important stuff — the average American’s position in the economy — often builds over a lot of time, sometimes over many years, in the way that you’re supposed to boil a lobster, starting with the water at room temperature, so that by the time he or she is cooked, he or she doesn’t notice (so they say). So although this present recession seemed to start abruptly, the factors behind it kind of crept up on us. And that’s what’s tough to cover, and tough to follow.
As I've said before, at Vanguard we try to look forward. In May, we did a documentary mini-series in which we tried to look at the economy that we’ve had in the US since the 1980s, against the backdrop of its collapse. Laura Ling went to Las Vegas, formerly the fastest growing place in the US, for "Lost Vegas."
Adam Yamaguchi went to China’s manufacturing center for "Outsourcing Unemployment."
And Lauren Cerre and Tracey Chang went to Argentina for "Thank You, Recession."
Basically, we were looking at what kind of economy will emerge from this present downturn. Will we manage to go back to the system we’ve had since the 1980s? There we had tremendously high levels of consumer spending on cheap stuff — cheap because we’ve outsourced many of our manufacturing jobs to places where wages are lower. And our wealth creation came from real estate, stock, and equity inflation — essentially a series of bubbles. Or we could go back to the system we had in the ‘50s through the ‘70s, where there wasn’t so much economic separation in the US — we were essentially middle class — and wage growth was the key to economic improvement.
As we travel around the world, there is also another model that we see in globalized economies: Those economic engines of the developing world, like China and India, where the “developed” portion of the economy, the economy that we see and which looks like ours, doesn’t include all the population, or even most of it. Many, or most citizens, in these countries are invisible in economic terms. In fact, when Tracey Chang interviewed the COO of Infosys, the poster child of India’s high-tech development, in Bangalore India, he pointed out to her that India’s growth was not including most people.
So where are you going to emerge? Right now there seem to be three directions.Happy? Or scared?
Today’s big economic news is a report showing the US Gross... more
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The Commerce Department said today that the country's gross domestic product grew in the third quarter for the first time this year, which signal the end of the recession. Fireworks! Celebration! Champagne! Not so fast. Largely this is thanks to government programs like cash for clunkers and the first-time homebuyers' tax credit. Once those programs start to wane, the economy is going to have to still keep growing on its own. Our friends at Goldman Sachs explain:
“The big picture perspective is that things have improved,” said Jan Hatzius, chief United States economist at Goldman Sachs. “The question is, how sustainable is this growth going forward?” Job-seekers, he says, probably will not see the benefits of a recovery for months to come.
What's your recession story? Your community's? I wonder if anyone sees signs of this change around them or if this number is just a number.
Leave your comment on Current News.
Recently on the Current News Blog: - The Tamil Tigers and innovations in IEDs - The UN Cuba vote and Sean Penn's scoop - 86 dead in Pakistan attack; Views from Peshawar - Seattle crackdown: Child prostitution in the United States - Should Oakland legalize the sideshow?The Commerce Department said today that the country's gross domestic product grew... more
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Britain emerged from recession with stronger growth than previously recorded, in what will be seen as a boost to Labour ahead of the general election.
The Office for National Statistics (ONS) said that British GDP grew by 0.3 per cent in the final three months of 2009, revised up from the initial estimate of 0.1 per cent.
The revised figure still fall just short of the original expectations of a 0.4 per cent climb, but are stronger than analysts’ forecasts of an upward revision to 0.2 per cent. However, they still leave GDP at an annualised decline of 3.3 per cent.
Today’s figure is the second of three readings of GDP for the fourth quarter issued by the ONS. The third will be given next month.
Link: http://business.timesonline.co.uk/tol/business/economics/article7042243.eceBritain emerged from recession with stronger growth than previously recorded, in what... more
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The American debate over taxes is ferocious and highly partisan. Some, mostly Republicans, reflexively oppose all taxes. Others, mostly Democrats, decry the lack of progressivity and fairness in the tax system and favor higher tax rates for the wealthy.
This debate isn't new. The same arguments have been repeated, with the same passion, since our income tax system was created—first during the Civil War and then—after its initial rejection by the Supreme Court—following the ratification of the 16th Amendment in 1913. A wonderful book by Steven Weisman, The Great Tax Wars, brings this history to life.
But as Weisman makes clear, one thing has changed in a spectacular manner, and that is the American public's—and American politicians'—willingness to defend high marginal income-tax rates as an essential and proper way to pay for the cost of government. Until a generation ago, many Americans and their representatives argued vehemently that the wealthy ought to pay more in taxes, but that position has drastically declined in popularity. Weisman sets the debate in the context of the battle between those who invoke justice—progressive taxes create equity and hence justice—and those who invoke virtue—the belief that hard work should be rewarded and taxing higher income at an elevated level creates a disincentive to the hard work we should promote.
Leaders of a century ago invoked justice in remarkable language that is unimaginable today. President Woodrow Wilson called paying taxes "a glorious privilege." Supreme Court Justice Oliver Wendell Holmes Jr. observed that "taxes are what we pay for civilized society." In 1942, President Franklin Roosevelt said, "In this time of grave national danger, when all excess income should go to win the war; no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000." That $25,000 is the equivalent of $323,208 in today's dollars. Can you conceive of a modern president suggesting that no American should earn more than $323,000 after taxes? (President George W. Bush went to war twice without once calling for such a common sacrifice to pay for it.) And President Harry Truman in 1948 vetoed a broad-based tax cut, even in the face of an expected and eventual congressional override, and then asked for a tax increase following his upset victory.
But President Ronald Reagan transformed our conversation about government and turned taxes into the enemy of progress. It is commonly thought that President George H.W. Bush's violation of his "read my lips" pledge cost him re-election and President Bill Clinton's 1993 tax increases cost him control of Congress.
Central to the intellectual debate about marginal tax rates has been the question of whether higher rates discourage people from working. President Reagan is famously reported to have observed that, as an actor, once he hit the top marginal rate—then 91 percent—he stopped making movies for the rest of the year. The result of sky-high marginal rates, this anecdote was supposed to prove, was declining productivity and economic growth.
Is this true? Let's look at a graph of the nominal top marginal tax rate in any given year and GDP growth in that year.
A caveat—obvious but critical—is in order. Simultaneity does not equal causation. Annual growth rates are a consequence of many factors, macro and micro, and the isolated impact of marginal tax rates on growth is hard, if not impossible, to discern from these numbers alone.
That said, it's obvious that there is no correlation between higher marginal tax rates and slowing economic activity. During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent. The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm—just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.
More sophisticated efforts to analyze this relationship also produce decidedly murky results. An excellent review of this in the Yale Law Journal, "Why Tax the Rich? Efficiency, Equity, and Progressive Taxation," concludes that there is scant, if any, legitimate academic support for the proposition that moderate, as opposed to dramatic, increases in marginal rates have any impact on the willingness of the wealthy to participate in the economy.
So where does this leave us? Probably with Weisman's conclusion—that the debate between justice and virtue will continue for years to come. But this debate may be little more than a Rorschach test—an inkblot into which we read our underlying values about income distribution and social welfare. Those who see taxes as the bane of progress will still claim that higher marginal rates are the enemy of economic growth. Those who favor greater progressivity will say there is no evidence of such a claim. They will conclude—and they will be right—that the wealthier can afford to pay more, with no harm to the nation's economic growth.The American debate over taxes is ferocious and highly partisan. Some, mostly... more
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BY APRIL RABKIN | FEBRUARY 17, 2010
In the gritty Inner Mongolian wind, I stood at the pinnacle of the global economy, at least in terms of GDP growth: the main drag of one of the fastest growing cities in the fastest-growing region in all of China, the world's supposed new economic powerhouse.
Built in a breakneck five years, Kangbashi is a state-of-the-art city full of architectural marvels and sculpture gardens. There's just one thing missing: people. The city, built by the government and funded with coal money, its chief industries energy and carmaking, has been mostly vacant for as long as it has been complete, except for the massive municipal headquarters. It's a grand canyon of empty monoliths. In a paradox only possible in today's economic system, Kangbashi manages to be both a boom town and a ghost town at the same time.
Kangbashi represents a particularly destructive economic force at work in China today: an obsession with GDP that ignores all other metrics of progress or human capital. GDP as calculated in China -- or the rest of the world, for that matter -- doesn't make any distinction between quantity and quality, or between creative and destructive expenditures.
Due to the industrial pollution billowing out of the country's GDP-enhancing factories and mines, cancer is the leading cause of death in China. A recent government survey showed that 30 percent of children in Yunnan province suffer from lead poisoning. Perhaps the biggest and most destructive GDP boost came from construction of the Three Gorges Dam, for which 1.24 million people were evicted. Even some of the newly rich, however, shower in tainted brown tap water.
Meanwhile, in places like Kangbashi, an accelerated development in the real estate market has not been matched by long-term sustainability, and in recent months, predictions have grown louder that China's real estate bubble is about to burst. This debate has been batted back and forth by columnists and TV talking heads lately. For now, income growth is still outpacing housing price growth, meaning that the real estate market is not technically a bubble.
Still, China's emphasis on growth at all costs is creating some bizarre monsters, and Kangbashi is one of them. Six years ago, Ordos county officials decided to move their headquarters out of old, cramped Dongsheng and into land that was then occupied by two small villages inhabited by about 1,400 people. By the end of 2008, the new district of Kangbashi was crisscrossed with 2.4 billion yuan ($352 million) worth of roads. Officials initially said they expected the population to reach 100,000 this year and 300,000 by 2020. They also say the population reached 50,000 last year, which seems improbable given that pedestrians on the street were outnumbered by street sweepers. A local real estate agent, Cao Ting, told me it had actually been easy to sell apartments. She said 80 percent of the apartments had been sold. I believed her even though 80 percent of them looked empty, with no curtains or furniture visible during the day and no lights on at night. The buyers were mostly investors or future residents waiting for schools and hospitals to open before moving in.
The new buildings look great from the outside, and they're economically fine on paper, if you believe the local government. And they may continue in this state, since the government will prop up the property market because it holds up so much else as well. Local governments' revenues are completely dependent on land sales. Eventually, perhaps, the population will catch up with this accelerated development.
When I went to visit last October, however, the lonely residents of Kangbashi didn't seem likely to be welcoming new neighbors anytime soon. Over glazed pork one night, I struck up a conversation with a middle-aged Chinese interpreter for German engineers employed at the state-owned coal mines nearby. Later that night, he showed me how he staves off the loneliness: sitting alone in his hotel room with a microphone in his hand, crooning along in online karaoke rooms.
Kangbashi's eight-story library has a computer lab with about 100 brand-new computers, but I saw only an attendant and two teenage boys playing games. Near the town's reservoir, two large screens were showing footage from the National Day parade celebrating the 60th anniversary of the People's Republic. I looked up to see a sea of people in a clenched-fist salute in Tiananmen Square. But I was the only one watching. The only other people in sight were a dozen laborers landscaping the center dividers, their faces shrouded against the cold wind.
Across the reservoir, cranes were parked around construction sites. A trade and commerce district is in the works, according to blueprints decorated with cartoon animals and wispy shooting stars in the style of Disney's Fantasia. The image of spindly glass skyscrapers reflected on the water bears a striking resemblance to Dubai, funded by government revenue from fossil fuel extraction. But whereas Dubai is already bankrupt, here construction continues. At least, for now.
April Rabkin is a freelance journalist based in Beijing.BY APRIL RABKIN | FEBRUARY 17, 2010
In the gritty Inner Mongolian wind, I stood at... more
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