Think before gloating over Bush's spectacular fiscal incompetence

Agathon · September 17, 2003, 06:31

Is the title of this piece by Joseph Stiglitz in the Grauniad.

Worth a read although I have to admit I was going to post this as soon as I'd read the title.

Quote:

Joseph Stiglitz
Wednesday September 17, 2003
The Guardian

In 2001, President Bush misled the American people. He said that a tax cut that was not designed to stimulate the economy would stimulate it. But it did not. He told Americans that the large surpluses that were part of President Clinton's legacy meant the US could afford to cut taxes massively. Wrong again. He did not warn Americans how dubious such estimates can be.

This year President Bush again misled the American people about the economy. Weeks after persuading Congress to pass another tax cut - in some ways even more inequitable than the first - his administration revealed how bad the fiscal position had become. The $230bn surplus inherited from Clinton had turned into a $450bn deficit.

Now, after handing billions to rich Americans through tax cuts, the Bush administration is passing the hat around, asking for contributions from other countries to help to pay for the Iraq war. Even setting aside other dubious aspects of Bush's Iraq policy, the conjunction of misguided giveaways to America's richest people with an international US begging bowl is hardly likely to evoke an outpouring of sympathy.

Meanwhile, the US trade deficit is mounting. America, the world's richest country, evidently can't live within its means, borrowing more than a billion dollars a day. As the US thrashes around for someone to blame, it is inevitable that it will focus on China, with its large trade surplus, just as the deficits of the Reagan era led to a focus on Japan two decades ago.

But this is blame shifting, nothing more. America's fiscal and trade deficits are intimately linked. If a country saves less than it invests, it must borrow the difference from abroad, and foreign borrowing and trade deficits are two sides of the same coin.

National saving has two components - private and public. Reagan's irresponsible tax cuts, combined with America's paltry savings, meant the US had no choice but to borrow abroad. Now America is repeating that folly. Matters may get even worse once investment is rekindled, unless private savings increase in a way the US has not seen.

Some people abroad now tend to gloat at America's problems. For many, it is another reason to question America's ability to provide effective leadership. It took America a dozen years to work its way out of Reagan's fiscal mess. It may take just as long to clean up the mess Bush has created.

But the schadenfreude of non-Americans is misguided. Globalisation means that mistakes in one country - especially the world's largest economy - have powerful repercussions elsewhere.

Three things are worth noting here. First, America's deficits are certain to sop up vast amounts of the world's pool of savings. But the world will eventually recover from the current slowdown, and that shortage of savings will become important. It will mean higher real interest rates, lower investment and lower growth, all of which will be particularly costly for developing countries.

Second, America's huge trade deficit may be a source of global instability. Will the world continue to finance this deficit willingly, to put its money into a country with a demonstrable lack of competence in macroeconomic management (to say nothing of the corporate, banking and accounting scandals)?

What happens if global investors decide to change their portfolio mix, shifting slightly from US assets? A weak Europe and skittishness about emerging markets have been American strengths, but how long can the US rely on the weakness of others?

Third, in searching for others to blame, America may again enter an era of protectionism, as it did under Reagan. Bush may trumpet free markets, just as Reagan did, but just as he may exceed Reagan in fiscal irresponsibility, so he may outflank Reagan in trade hypocrisy.

By one reckoning, close to a quarter of American imports were covered by some form of trade restriction at the peak of Reagan protectionism. Expect no less from Bush. Last year he showed little reluctance in imposing steel tariffs, in clear violation of WTO rules. The good news is that the world is beginning to see a rule of law in trade - a legal framework that, although not totally fair to developing countries with economic power still counting for a great deal, may circumscribe America's ability to revert to the protectionism of the past.

Europe has committed itself to fiscal responsibility - with almost too much zeal, failing to recognise that a well-designed deficit in times of recession may yield high returns. The Bush administration has pushed forward tax cuts that lead to deficits while providing only a modest amount of stimulus.

Equally worrying - for America and the world - is the path on which it has embarked: deficits as far as the eye can see. In the long run, this policy bodes ill for the US - and hence for the world.

· Joseph Stiglitz, professor of economics at Columbia University, is a Nobel Prize winner and author of Globalisation and Its Discontents

http://www.guardian.co.uk/comment/st...043494,00.html

Agathon · September 17, 2003, 06:35

For the record you can put me down as a gloater.

You're a naughty boy Agathon!!!!

On a more serious note:

the last Republican administration was no better than Bush II (I count Raygun and Bush I as one) and the one before that was run for the most part by an insane criminal who got impeached, and you have to go all the way back to the one before that, namely Eisenhower's to find a Republican presidency with any sort of credibility at all.

Given these hard facts, should all reasonable people assume that the Republicans have proved themselves a pack of witless cretins when it comes to economic matters?

If so, should the party be banned? Since it's clear that the plain evidence of its incompetence seems to have been completely missed by the assorted Klansmen, Thieves, Fez, Scoundrels and Gold-digging whores who make up the traditional Republican base.

Granted, these people are generally a bunch of Neanderthal throwbacks with a hefty dose of incest in their family tree, but really - only a pack of chimps could be that dumb - they're wrecking America - turning it into a society of poor, ignorant and violent people, like themselves.

MikeH · September 17, 2003, 06:46

It's a shame people will just label you as anti-American for posting this and not actually debate the points.

Agathon · September 17, 2003, 06:52

Quote:

Originally posted by MikeH
It's a shame people will just label you as anti-American for posting this and not actually debate the points.

If being anti-slobbering-idiots-who-****-up the world means being anti-American then sign me up!!!!!!

Fortunately, life on Apolyton shows us that there are a reasonable number of sensible Americans who have actually noticed what's going on. It's just that no-one else seems to listen to them.

Evil Knevil · September 17, 2003, 06:58

Obviously biased, but some very good points. Bush can't be to blame for everything, thankfully he's not some satanic overlord with omniscent powers that fuck up everything. NOT EVERYTHING IS HIS MISTAKE!

Solly · September 17, 2003, 07:05

Quote:

It's a shame people will just label you as anti-American for posting this and not actually debate the points.

I'll do both.

Let's see..the article starts with

"President Bush misled the American people"

No anti-American bias there then (or anti-Bush bias, which is the American version of this).

"Now, after handing billions to rich Americans through tax cuts"

If the rich pay vastly more tax, then a tax reduction will of course give more back to them. This isn't "income re-distribution" (ie, stealing) but fairness.

"As the US thrashes around for someone to blame, it is inevitable that it will focus on China, with its large trade surplus, just as the deficits of the Reagan era led to a focus on Japan two decades ago."

Of course, Chinese policies could never be criticised like American policies are here.

"a country with a demonstrable lack of competence in macroeconomic management"

Let's ignore growth, inflation and unemployment stats for a while now shall we...

"Bush may trumpet free markets, just as Reagan did, but just as he may exceed Reagan in fiscal irresponsibility, so he may outflank Reagan in trade hypocrisy."

A fair point that Bush should be more committed to free trade (which after all, is fair in itself).

Agathon · September 17, 2003, 07:05

Quote:

Originally posted by Evil Knevil
Obviously biased, but some very good points. Bush can't be to blame for everything, thankfully he's not some satanic overlord with omniscent powers that fuck up everything. NOT EVERYTHING IS HIS MISTAKE!

Let's divide up the bad things then...

Bush to blame for:

The idiotic War
Failing in the War on Terror
When good economies go bad
Making the US the most hated country in the world.
Alienating allies like Canada.
Goading states into going nuclear.

Bush not to blame for:

American Idol
Gigli
Madonna's accent
The Detroit Tigers

Apart from the Tigers all the catastrophic **** is down to him.

Solly · September 17, 2003, 07:08

"Bush to blame for: When good economies go bad."

There are valid points to criticise Bush on (like nearly every other politician) but this just makes your outburst look petty, weak and ill-informed.

Agathon · September 17, 2003, 07:10

Do you find that people call you names and laugh at you PA?

What's the point of having a "fair" taxation policy as you describe it, if the economy tanks.

Agathon · September 17, 2003, 07:11

Quote:

Originally posted by Park Avenue
"Bush to blame for: When good economies go bad."

There are valid points to criticise Bush on (like nearly every other politician) but this just makes your outburst look petty, weak and ill-informed.

This from the melon head who thinks Free Trade=Fair Trade.

People like you should be shot.

Solly · September 17, 2003, 07:14

Harovan · September 17, 2003, 07:14

Quote:

Originally posted by Agathon
People like you should be shot.

I wouldn't wonder to find this in Bodd's sig soon.

Ming · September 17, 2003, 07:17

Quote:

Originally posted by Agathon
This from the melon head who thinks Free Trade=Fair Trade.

People like you should be shot.

And people like you should be resticted...

One more personal insult against anybody on this site, and you will be.

Evil Knevil · September 17, 2003, 07:19

While the Daily Mail seems to have infected Bodds, the Guardian seems to have destroyed Agathons'. Can another side have him?

Agathon · September 17, 2003, 07:25

Quote:

Originally posted by Ming

And people like you should be resticted...

One more personal insult against anybody on this site, and you will be.

Oh come on..... ...as if you couldn't tell I was being purposely over the top.

You should ban yourself, for not reading closely enough.

Agathon · September 17, 2003, 07:25

Quote:

Originally posted by Sir Ralph

I wouldn't wonder to find this in Bodd's sig soon.

I certainly hope so...

Ming · September 17, 2003, 07:27

Quote:

Originally posted by Agathon
Oh come on..... ...as if you couldn't tell I was being purposely over the top.

I don't give a damn... I would recommend you don't make such "jokes" again in the future.. because you will be restricted without warning if you do. Wishing death on another poster is NOT A JOKING MATTER... PERIOD!

Kropotkin · September 17, 2003, 07:48

Quote:

"Europe has committed itself to fiscal responsibility - with almost too much zeal, failing to recognise that a well-designed deficit in times of recession may yield high returns."

Possibly so, if you don't count those "minor" european countries, that's running a deficit larger than the one their supposed to do in accordance with the stability pact. The Netherlands for example is though. Also Sweden seems to be taking it seriously. Germany, as I've heard it, is also going for tax cuts despite fiscal state the country is in in order to get out of their recession. I'd say that Europe as a whole is not exacly taking it too serious.

Solly · September 17, 2003, 08:25

Thanks Ming..I knew you would respond.

Paul Hanson · September 17, 2003, 08:29

And all that after what you said about him the other day.

Verto · September 17, 2003, 08:36

Is 9/11 not at ALL responsible for at least SOME of this mess?

rah · September 17, 2003, 08:57

Quote:

Originally posted by Verto
Is 9/11 not at ALL responsible for at least SOME of this mess?

Yes, a considerable amount. But don't worry, they'll just blame that on Bush too.

MikeH · September 17, 2003, 09:03

What was Reagan's excuse then?

JohnT · September 17, 2003, 09:08

Quote:

Originally posted by rah

Yes, a considerable amount. But don't worry, they'll just blame that on Bush too.

"They'll" implies future tense. Haven't they already?

Q Classic · September 17, 2003, 09:13

americans have destroyed their democracy by falling into partisan politics.

the conservatives believe everything was clinton's fault.
the liberals believe everything is bush's fault.

and they keep pointing the finger back at each other instead of at themselves, for besmirching the very principles that this country was founded on.

Ari Rahikkala · September 17, 2003, 09:14

USA #1!

MikeH · September 17, 2003, 09:16

Giving back billions in tax cuts was an election promise wasn't it, how has that got anything to do with 9/11?

MikeH · September 17, 2003, 09:18

Quote:

Originally posted by Q Cubed
americans have destroyed their democracy by falling into partisan politics.

the conservatives believe everything was clinton's fault.
the liberals believe everything is bush's fault.

and they keep pointing the finger back at each other instead of at themselves, for besmirching the very principles that this country was founded on.

I've noticed that. It's weird.

JohnT · September 17, 2003, 09:25

Speaking of death threats. Che.

DaShi · September 17, 2003, 09:27

It's sad.