Group items tagged

AS Election Day approaches, serious discussion about economic policies is hamstrung by the devotion of both parties to reducing taxes. The big reason, of course, is that President Bush emphasizes tax cuts, including elimination of the estate tax, to the exclusion of almost everything else. The Democrats, in turn, hesitate to propose an economic plan that does not include long-term reductions for middle-income workers, and most refuse to talk about rescinding the Bush tax cuts for the wealthy. But the degree of misleading information emanating from both Washington and the media about how taxes affect the economy is disturbing. As I listen to the radio, watch TV news and read a variety of newspapers, it seems that quite a few Americans, including economics writers and media hosts, think that low-tax countries unquestionably grow faster than high-tax economies. Right and left, they seem to attribute more rapid growth in America to lower taxes. What may surprise them is that there is no evidence for that. ''You can make a theoretical case that high taxes impede economic growth, but it is just not supported by the evidence in the U.S. or across countries,'' said William Easterly, a former World Bank economist soon to join the faculty of New York University.

Businesses have had at least 25 to 30 years near complete certainty -- certainty that they will pay lower and lower taxes, that they' will face less and less regulation, that they can outsource to their hearts' content (which when it does produce savings, comes at a loss of control, increased business system rigidity, and loss of critical know how). They have also been certain that unions will be weak to powerless, that states and municipalities will give them huge subsidies to relocate, that boards of directors will put top executives on the up escalator for more and more compensation because director pay benefits from this cozy collusion, that the financial markets will always look to short term earnings no matter how dodgy the accounting, that the accounting firms will provide plenty of cover, that the SEC will never investigate anything more serious than insider trading (Enron being the exception that proved the rule). So this haranguing about certainty simply reveals how warped big commerce has become in the US. Top management of supposedly capitalist enterprises want a high degree of certainty in their own profits and pay. Rather than earn their returns the old fashioned way, by serving customers well, by innovating, by expanding into new markets, their 'certainty' amounts to being paid handsomely for doing things that carry no risk. But since risk and uncertainty are inherent to the human condition, what they instead have engaged in is a massive scheme of risk transfer, of increasing rewards to themselves to the long term detriment of their enterprises and ultimately society as a whole.

The Great Recession could have spawned another era of fundamental reform, just as the Great Depression did. But the financial rescue reduced immediate demands for broader reform. Obama might still have succeeded had he framed the challenge accurately. Yet in reassuring the public that the economy would return to normal, he missed a key opportunity to expose the longer-term scourge of widening inequality and its dangers. Containing the immediate financial crisis and then claiming the economy was on the mend left the public with a diffuse set of economic problems that seemed unrelated and inexplicable, as if a town's fire chief dealt with a conflagration by protecting the biggest office buildings but leaving smaller fires simmering all over town: housing foreclosures, job losses, lower earnings, less economic security, soaring pay on Wall Street and in executive suites.

Concerns €110bn bailout will not be enough. NYSE 200 points lower; FTSE 100 down 2.5%. Spain's stock market falls 5%; Germany 2%.

China is busy turning the global challenge of climate change into a national opportunity, but it needs another decade to advance its technology to the point where superior manufacturing and lower costs will secure its dominance of the clean-tech sector. By giving China more time to develop its capacity while neglecting our own, America is not just losing the clean-tech race, it's forfeiting it.

Beijing (CNN) -- Although the United States narrowly avoided an unprecedented default following congressional approval of a last-minute compromise plan to raise the debt ceiling, China's leading credit rating agency Wednesday downgraded U.S. sovereign debt after putting it on negative watch last month. The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington's long-term ability to repay its debts.

On September 17, 20,000 people will swarm into lower Manhattan and occupy Wall Street. Last week Anonymous endorsed #OCCUPYWALLSTREET with a video that attracted over 60,000 views before being deleted by YouTube. The Department of Homeland Security has warned the nation's bankers to be prepared. Corporate owned media is taking notice. Today, Paul Farrell, columnist for the Dow Jones owned MarketWatch.com posted this rousing portrait of what may now unfold:

A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress's generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.