How America Would Handle Greece

July 14, 2015

What are the lessons from the Greek crisis? Their economy had major problems. People with plenty of money weren’t bothering to pay taxes. And the Greek government provided benefits beyond its means and beyond the pace of investment to maintain. So the EU was certainly correct that Greece had problems that Greece has to deal with. But that’s not the whole story. Greece needed multiple remedies, to cure its mistakes but also to stimulate its economy.

Think about what we do in America. Periodically states are bankrupt or depressed. We don’t offer secession or a sale to Mexico. We didn’t ignore problems in Appalachia, Arkansas and other struggling states. Within states, we don’t ignore depressed areas. Sometimes we put communities in receivership, but that’s not our only tool. Although Tea Party Republicans don’t want to recognize it, we do have another American strategy – we invest. The Cuomo Administration is investing in areas around colleges and universities, spread throughout the state. We’ve had business empowerment zones. Military bases have been used for economic purposes. And we build infrastructure or housing or convention centers. Some investments are unwise wishful thinking. But the instinct is shared, American, and, used intelligently, it works. Conservatives don’t like to admit the Keynesian economics behind it, but they use these techniques wherever they are in control. They just call it good business.

States are barred by the Constitution from printing money. If Greece exited the Eurozone, it could issue currency or pay its employees with i.o.u.s for use as currency. Either way a devalued currency could make Greek goods and services worth buying.

Greece’s finance minister accurately explained that austerity deepens recession. The EU has responded with the same economic strategies that had been discredited before the Great Depression of the ‘30s. If the economy shrinks in response to austerity, nothing is left to pay debts, much less to invest. For an economy in trouble austerity alone is the wrong prescription at the wrong time for the wrong disease. It works only if the desired outcome is to kill the patient. Unfortunately, the EU hasn’t used other tools needed to deal with the recession.

The lesson here is the contrast. Cutting expenses cannot be the only tool. Investment works. Infrastructure, science and educational investments work. Congressional conservatives are too skittish about investing in America. They need to do what their own state governors do – invest in economic development. There is plenty of room in the U.S. for investment that will contribute to the American economy. Intelligent public investment can yield multiple rewards: the immediate reward of assisting people get back on their feet, the return of some of that money as taxes, and the longer term rewards of facilitating business. That is the virtuous cycle that every good economy needs.

Neither taxes nor tax cuts automatically yield economic benefits. Cutting business taxes will probably not raise the chances of business investment if they are already sitting on money. Cutting personal taxes won’t put us on the road to recovery to the extent that consumers buy abroad. The devil is in the details. But the visceral objection to all investment by government because it is government needs to give way to a more intelligent discussion of the investment we need and the investment that will pay dividends for years.

— This commentary was broadcast on WAMC Northeast Report, July 14, 2015.


Putting people to work in cities and towns

January 21, 2014

Nationally, Republicans are still fighting unemployment relief and virtually every piece of a public safety net. Their solution to every problem is to blame the victim. Out of work? Must be because people didn’t look, or just like poverty. Never mind people spending their days looking for work. It must be their fault, because the only victims worth caring about, of what we politely call the business cycle, are businessmen. Everything would be fine if people would work for pennies a day like much of the world, so the companies they work for could pocket the difference while workers forego food, clothing, shelter and health.

Republicans just don’t get that people are looking, trying, wanting to hold jobs, their only prospect of living a decent life. Blaming the victims for the misbehavior of many captains of industry makes them feel better and helps fend off regulating or taxing their contributors. Let everyone else suffer. They turn the pain of unemployment into an argument for giving their contributors yet another tax break, claiming this, finally, will result in jobs – though business has the cash if it wants to invest. Republican economic policy, at least as they describe it to you and me, is all about the power of magical thinking.

There’s a better way to provide jobs and use taxpayer money more efficiently – just think about the things we could do that would make our neighborhoods more livable, from safety services to taking care of playgrounds and parks. Read the rest of this entry »


Taxes

July 2, 2013

I’m tired of hearing that lower taxes will bring new business. Politicians chant low taxes like a mantra that answers everything. Governor Cuomo offers to starve many New York communities of money for services by barring them from taxing new business.

Many places in the world have no taxes, and no business opportunities either. Many places in the US charge lower taxes than New York but do much worse. What’s missing in the low tax nonsense includes markets, transportation, supplies, employees, skills, resources and amenities, the things that make places interesting and fun to live in, the reasons company founders live here, why the bosses live here, and why their employees want to live here. Read the rest of this entry »


Medical research

June 25, 2013

The Supreme Court’s decision that no company can patent genes but can patent its tests for genetic information is the tip of a large iceberg. We have gotten used to believing that the patent process is the only way that new drugs and treatments are developed, and that private industry is the only source of that work. Nothing could be further from the truth but the attack on government activity may make it true. Read the rest of this entry »


Tax Rates and Business Investment

December 11, 2012

You and I have been hearing lots of rhetoric about the risk to small business if tax rates go up on people earning a quarter million or more. The expressed concern is that small businessmen won’t be able to invest and create more jobs. Of course in this world of sound bites it’s hard to get everything clear and correct. But this one is largely misleading. Tax rates and business investment in job producing enterprise are much less closely related than much of the commentary would make it appear. Read the rest of this entry »


The Eastern Storm

October 30, 2012

As I record this commentary, there is a powerful storm approaching the East coast. The last hurricane to hit this area affected a number of people in my office. One of the women who had worked for me lived in Schoharie. Her home and family were OK but she was devastated by what happened to her town. This time, my thoughts are in Brooklyn where my son and his family live – near the water but in the area that serves as a port so we hope more protected.

I’m no meteorologist. So how do you talk about a storm?  Read the rest of this entry »


Romney’s Choice: Paul Ryan for Vice President

August 14, 2012

Mitt Romney ended the suspense with the choice of Paul Ryan for Vice-President. And what did we get? Nothing! The Ryan budget for dealing with our problems is zero – no taxes, no expenses, no government. No regulation, no protection, no help, no investment. We’re in a recession and what do we get to pull out of it – nothing, zero, nada. Read the rest of this entry »


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