We have seen in the recent weeks the chickens of the conservative side of economics come to roast. President Bush 41, when he was running for president in 1980, called economic policies of Reagan “vodoo economics’. Reagan heavily favored the supply side economics, promoted by Milton Friedman and Martin Fieldstien.
It was also promoted and argued by Prof Fieldstien that deficits don’t matter much and also if deficits increase they will not affect the economy. But it was contradicting the to the Friedman’s statement -there is no free lunch- was never argued.
When Bush junior occupied the white house wanted to push with the neo-conservative ideals, a charge led by Cheney and company from the ‘think tanks’ ,e.g AEI,Cato Institute etc. Sept 9/11 did give him an opportunity to push some radical changes and all were argued in the name of national security. People never argued or were scared of being portrayed as unpatriotic.
Now Joe Biden claimed that it can be constituted as patriotic to pay higher taxes and neo-cons responded very negatively. I wonder how can you give a tax break when all business ,including conducting wars , are being conducted on borrowed money. Would you give a discount on the interest if you lend your friend some money. I am sure you wouldn’t do that kind of transaction with your enemy.
We have not yet heard any good economic policies yet. Only thing I hear, Obama will give middle class tax cut and invest more in energy and pull troops from Iraq and the whole stuff. What if Iraq situation deteriorates. You will have to put more money in there. Bill Clinton could not deliver middle class tax when economy was good. Hell, there were budget surplus were recorded . Yet, now we have tax cuts for rich. Where will the money come from, to pay for green energy plans or health care. McCain is promising no better. All he says control spending, but buy up all mortgages and more tax cuts. All the republicans want to offer are tax cuts. How will we pay for the wars and for any social program like medicare, social security etc. Even if you dissolve all the social programs , how will you pay for the wars. No leader in the economy in this election. One wants socialized health care and one wants to socialize mortgage assets , for a country that is broke , what an audacious dream!
Firedman was right- No Free Lunch. But can a person change easily if he has been getting free lunches for a long time. Will he break a sweat when it is needed, as in now. Waking up to cold reality sooner is better than later.
Now we are having one of the worst economic crisis since the great depression. Now we are bailing out wall street and today moved towards partial nationalization of banks. So Bush 41 was right vodoo economics – socialization and protection for the rich and sticking the bill to the poor.
A new plan of financially responsible government is needed with some leader ship , to tell the truth. Hope it doesn’t turn into Jimmy carter government. Like when he asked for energy conservation and installed solar panels in the white house, people booted him out. I am not defending Bush 41 or Carter, as they also failed to show effective leadership. But at least Bush 41 payed up some of the war cost by raising some taxes. Someone should shoulder the burden of explaining the financial crisis and make sure it is communicated effectively. Other wise we will go down the road of bankruptcy. Only time will tell if America can come out on top of this again.
Supradeep Narayana's Blog 