Friday, June 24, 2011

Not my style


If you look at my recent series (three posts) beginning with The world in red and blue, you'll see several graphs but few conclusions.

Hope that doesn't bother you. I'd rather understate things than overstate them. The economy is what it is. I can't change that by BS-ing you.


In a recent post Stephanie Kelton discusses Obama's Implausible Dream. I will skip the donut part and get to the meat:

As far as Washington is concerned, there are only two ways to bring down the deficit: cut spending or increase taxes. Both reduce private sector incomes. This means that the president is looking for a way to reduce private sector incomes without hampering sales or job creation.

"Obama's dream" is to "[find] a way to reduce private sector incomes without hampering sales or job creation."

"Can it be done?" Kelton asks. After careful analysis, her answer is No.

The careful analysis is done in words, accompanied by little formulas that leave me wondering, mostly, Why are some of the zeroes smaller, and bold??


So much for the algebra. Here is Kelton's summary of her analysis:

The bottom line is this: As long as unemployment remains high, the deficit will remain high. So instead of continuing to put the deficit first, it’s time get to work on a plan to increase employment.

But that's not what her analysis showed. The analysis does not consider whether it is possible to reduce the deficit while unemployment remains high. The analysis considers whether it is possible "to reduce private sector incomes without hampering sales or job creation."

Look: I do not disagree with Kelton's analysis. And I agree with her goal, which evidently is to reduce unemployment. But after doing the careful analysis, she changes horses just in time for her conclusion. To me, either the conclusion is irrelevant, or the analysis is. They're not both part of the same argument.

I think I've seen Kelton do this before, actually.

3 comments:

Jazzbumpa said...

"Obama's dream" is to "[find] a way to reduce private sector incomes without hampering sales or job creation."

"Can it be done?" Kelton asks. After careful analysis, her answer is No.


I disagree, and for exactly the reasons I rambled on about in your "evolution" Post.

Increasing taxes has never been (honestly) shown to hurt the economy in any way. Mike Kimel at Angry Bear has dozens of posts over the years demonstrating thoroughly and with statistical precision that tax cuts do not help the economy, except, perhaps, in trivial and ephemeral ways.

Take money from the rich and DO SOMETHING with it (other than fighting wars.) That is how you enhance sales and job creation.

Cheers!
JzB

Calgacus said...

Jazzbumpa: The completely unnecessary and destructive Greenspan increase in the SS tax seriously hurt the US economy - and played a major role in destroying the middle class. If you're talking about income taxes, yes, you have a good argument.

Jazzbumpa said...

Cal -

I am indeed talking about income taxes. You make a good point.

Rate and ceiling in 1980:
6.13% (OAISDI + HI)on $25,900. Max =$1587.67.

In 1990: 7.65% on $51,300.
Max = $3824.45
Amt on $25,900 = $1981.35

Source.

This is part of Reagan's transfer of tax burden from the rich to the middle and below.

Alas,
JzB