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Who Needs Free Candy?
Global equities (figure below) will be happy to see the curtain close on this week, not because anything went wrong, but rather because the rally seems to be losing some of its joie de vivre. Better to escape safely into the weekend than risk an "accident" with the casino open.
Stimulus is moving ahead stateside. Legislation providing for nearly $600 billion in assistance was advanced by the House Ways and Means Committee, which green lighted $1,400 stimulus checks and monthly tax credits for
The answer is obvious: more fiscal spending powered by higher taxes on high-income earners — incl. raising marginal rates on the top brackets, lifting the cap on withholding, closing the carried interest loophole, and flipping the charitable deduction so as not to reward the wealthiest for warehousing their wealth. A high-tax regime worked to create a more equal and prosperous America in the ’50s and ’60s — and woud have the same effect in the 2020s. Will the American public buy it? If Joe Biden’s approval ratings are any indication, one would have to say yes. Unfortunately, for forty-plus years we’ve had an entire political/media apparatus dedicated to a completely different set of policies — lower taxes on the wealthy, less government spending, greater income inequality. The mob is getting restless. Policymakers need to act quickly.
These are great points and would make great strides towards balancing the economic equation amongst the classes. I think the concern is going to be the people who continue to believe that taxing the rich hurts them because they dream of being rich and if they somehow get rich through “hard work”, they don’t want to be impacted by high taxes. This of course rarely ever translates into reality but, that doesn’t stop millions from dreaming.
I think the other side of this that needs to be put into motion soon is the always promised and never delivered infrastructure restoration that we desperately need. Again, hearkening back to the 50’s and 60’s we undertook massive infrastructure initiatives that generated massive employment opportunities. I think this is the answer to how we don’t go back to status quo when stimulus runs out. There are so many infrastructure projects across the country that badly need to be implemented, getting those projects going is how you return to full employment.
I think that both higher taxes and infrastructure spending are absolutely critical but those are backwards looking solutions, fixing problems that have been building for 40 years or more but we’ve got even bigger problems now. We need to do them and fast, like yesterday fast but within this year before Democrats burn out their current control.
But we also need serious fiscal policy to address the elephant in the room. A $15 minimum wage is a start but it’s barely an answer to the reality businesses are actively wage fixing unless you’re say a CEO or VP. Obviously making businesses pay their employees more is beyond dead in the water so let’s just start providing a basic universal income. Businesses get the advantage of more demand and people get to live. We need to invest in education and higher education while also cutting the profit motive out of education. Every adult and child should be getting $20k per year tax free pegged to inflation. We should provide student loan forgiveness in full and you could even just make all education costs past or present tax credits. That would be an easy way to distribute it and nobody could complain “but I just paid mine off!”.
Then you would see a massive amount of demand generated and skyrocketing corporate profits and maybe then you could start turning up the interest rates to encourage people to save and get out of this mess once and for all.
Increase the money supply within reason, and invest in people and infrastructure.
The eventual uptick in inflation is well worth the tradeoff.
Instead of supply-side economics we should use a moniker that is more descriptive of what it does to the dynamic between classes. I proposed tinkle down economics with occasional references to the yellow liquid.
Without an education how would you know how far behind you really are.
H, Once again you have outdone yourself. Unfortunately I feel like shouting from the rooftops that supply side economics is the worst. I know that none of the people who could hear wouldn’t know what I was talking about. I will admit that I bought the lie originally when Reagan started it. But by the end of his second term I already saw that is was getting a few people getting very rich. Fast forward 30+ years and the foreseeable results have happened a couple thousand people are very rich, and a lot of other people wondering where their next meal is coming from.