The Key Is What We Spend Our Money +On+ July 6, 2011March 24, 2017 20 QUESTIONS, 21st CENTURY STYLE Stephen Willey: “This genius knew everyone but you, so I updated his data base. Try it; it’s fun to stump.” ☞ I tried Attila the Hun. The most remarkable thing was not that it got it, but that I was the 2,321st to try Attila. When I tried me, after 20 questions the genius guessed . . . Anthony Weiner. Ten questions later . . . Larry Summers. Ten later still . . . David Brooks. Oh, well. TAX AND INVEST VERSUS BORROW AND SPEND What if we had less money in our pockets to buy new clothes (made in China) and to feed our $5/day Starbucks habit ($1,825 a year) – because our taxes were higher? It would crimp the Chinese apparel manufacturers, but the Chinese would still have lots of work to do just getting all their own citizens well clothed, fed, and housed (and a huge cash surplus to buy stuff from us they need to do it). Starbucks might need 20% fewer baristas to meet the reduced demand, but those baristas could find jobs – if they could find jobs – doing something more fundamental to the nation’s long-term success than brewing macchiatos. Like helping to caulk 100 million homes and commercial structures (on which work could start tomorrow) or helping to pave our roads with solar panels (which may or may not ever prove out as an effective way to go all-solar, but is thrilling to contemplate). THE KEY IS WHAT WE SPEND OUR MONEY +ON+ Tom Zimoski: “As you are a big booster of Obama, I think many of your readers would be interested in your reaction to these comments by Paul Krugman on Saturday’s radio address.” Barack Herbert Hoover Obama By Paul Krugman From today’s radio address: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.” Yep, the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy, all in just two sentences. Read this and this to see why he’s wrong. This is truly a tragedy: the great progressive hope (well, I did warn people) is falling all over himself to endorse right-wing economic fallacies. ☞ I think there are a lot of things operating here. Yes, we do need to get our long-term economic glide path stabilized . . . which in the case of Social Security simply means some pretty painless actuarial tweaks. (See this column from 2005 with my suggestions.) As a nation – I repeat – we need to be spending less on Starbucks (God love them) and more on infrastructure. So we need to raise taxes. Higher taxes mean less money for shopping malls but more for reducing our energy imports. We’ve neglected infrastructure for decades now and weren’t nearly ambitious enough in the first stimulus package. (Guess which party stood in the way.) Making long-term plans to modernize our physical plant will, over time, put millions of people to work doing things that crucially need doing (work done primarily by the private sector). If we do this . . . even as, yes, we make long-term actuarial tweaks to Social Security (and, less easily, bend the health care cost curve, on which we’ve finally at least made a start), then it needn’t be a Herbert Hoover scenario at all. And once we do get back on track – and if the pace of technological progress makes possible the undreamed of prosperity that it well may – then in a decade or two we might be able to cancel those Social Security tweaks and perhaps even make the benefits richer. But for now, we need to signal to the markets that we WILL get our house in order in the years to come . . . even as we emphasize education, innovation, and infrastructure, which are the seed corn of our future economic harvest. I think the President and Professor Krugman – both heroes – might agree on that.