Tuesday, May 25, 2010

Sorry, I got interupted...

To continue my post...

I have gone over my understanding of the very complicated theory that is Keynesian economic theory in the past, but I'll do it one more time here, for clarity's sake... so there are no misunderstandings.

When the economy is strong and clicking along like a machine, taxes should be high enough (or spending low enough) to ensure a balanced budget. When the economy reaches a recession-level slow down, then taxes should be reduced (or spending increased) to keep the money in the pockets of those most able to positively effect the recovery.

This does not mean spending for spending's sake in a down economy, however (I can't seem to get that through to you, Ryan). If the taxes are lowered, then more earned income remains with the consumers (corporate and private) and is cycled back into the economy without ever passing through the hands of the Fed. If taxes remain the same (static and unchanged, that is), then more government money (revenues already collected from the population, for example) should be used by the Fed through spending to put it back into the economy. If that means that infrastructure improvements can be made by contracting civilian companies to build or repair highways and bridges, then that is more money into the economy through the contracts to those companies. If that means more border patrol officers or greater military expenditures, then that is more people working for a solid wage via the Federal government. While not an "enumerated power" by any means, the Federal government has the opportunity, at any time, to be a HUGE piece of the market for corporate or commercial manufacturers and producers and the general work force as a whole. We know things need to be done, why not plan on doing them when the economy needs the boost, rather than when the economy is strong and State or local agencies can spend the money themselves.

I agree that the ideal would be to keep taxes low and keep the dollars where they are best spent, but I also recognize (in my opinion) the necessity of Federal spending when trouble arises... be it disaster, war, famine, or (if its bad enough) economic troubles. I don't buy the "too big to fail" theory at all, and I wasn't a fan of any of the Bush or Obama bail outs... but what Reagan did to make sure our military was ready-to-go WHILE AT THE SAME TIME guarantying billions of dollars that would be funnelled into the American defense industry via greater government spending was a CLASSIC example of Keynesian economic planning. He reduced wasted spending by cutting ED, Agriculture, welfare and Interior budgets, while increasing Defense and NASA funding across the board. All this while making sure that the American consumer kept as much cash as possible in his own pockets until such time as the budget could be balanced via the pre-planned end of his tax cuts OR reductions in deficit spending by the Fed itself in order to balance the books.

Reagan was a Keynesian, and he showed us how to do it RIGHT. FDR had Keynesians working under him, but didn't choose to listen to or apply what they were saying to his agendas. What he did do was to establish and promote a level of infrastructure that hasn't been paralleled since, and when we find that people need jobs due to a lagging economy, perhaps a good way to put people back to work would be to schedule and BUDGET for Interstate highway improvements NOW, when the spending is needed and can do some good. This to me makes FAR MORE sense than plugging one leak in a crumbling dam that is GM, or Bank of America, or Ford with money we will never get back and won't see any immediate return from anyway.

Finally, you need never justify your position, opinion or values to anyone, especially me. If you can back your opinions and views up with hard, reasonable facts then I trust that you aren't getting them second-hand from a pundit somewhere. As I have already said, if I gave offense, I apologize abjectly and without reservation. I won't make the same mistake again, and will simply wait to see your evidence presented in its own good time. Even when I don't agree with you, I value your views and opinions more than I can say, so you should never have to feel like you need to justify it at all... even when I am joking.

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