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MN2020 - Tuesday Talk: What will get the economy moving?
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Tuesday Talk: What will get the economy moving?

December 20, 2011 By Joe Sheeran, Communications Director

As the shopping season winds down, Black Friday’s early indications of economic rebound are gone. Sure people are spending on holiday gifts again, but a Wall Street Journal report indicates that folks are instead putting off normal household purchases, an economic wash.

Have we just learned our lesson about overspending? What policies will get the economy moving in the new year?

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15 Comments:

  • WAYNE THORSON says:

    December 20, 2011 at 7:58 am

    Keep giving welfare to the less fortunate and not to the most fortunate.  The less fortunate spend their money.  When they do this it creats demand and that will creat more jobs.  The most fortunate just put it in their savings accounts and it stays there.  It’s just a matter of economics.

  • herbert says:

    December 20, 2011 at 8:03 am

    We have NOT overspent! WE have undertaxed!

  • W. D. (Bill) Hamm says:

    December 20, 2011 at 9:00 am

    We can always hope for war with Korea. With very little effort we could probhably provoked it. The millitary industrial complex lives, war is good for the economy and good for the Iron range.

  • KJC says:

    December 20, 2011 at 9:25 am

    Looking at our history since WWII, the answer would be?  When the middle class is prosperous and has some aspirational money to spend, the whole country does well.  Including the wealthy.
    Then?  In the early 70’s trends turned against us.  Two things in particular:  (1) Energy costs (which are part of everything) skyrocketed (OPEC and our subsequent unwillingness to adapt)have kept downward pressure on our living standards. (2) The double-whammy: our natural economic competitors (Europe, Japan, etc) had been totally devastated in WWII. By then had finally gotten rebuilt… and were now strong enough to “come after” us. 
    At the end of that decade we had come to a crossroads.  Jimmy Carter warned (and got voted out) and Reagan promised essentially a free lunch (cutting taxes will raise revenues!!!!) and?  He got voted in.
    The “experiment” of trying that approach has been run for 30 years, and the aggregate results are devastating.  That “trickle-down economics” plan has utterly failed the average American.  From the census data, now 1 in 2 Americans now lives at our near poverty level.  That is the very definition of failure. 
    So?  We are at another crossroads.  We can?  Get “played” by the fear-mongers, with blame-the-victim politics and “react” with “road-rage voting” as we worry “we’ll be next.”
    Or?  See that we are all in this together, and that this great country is unbeatable in that mode.  Concentrate on what works for Average Americans instead of ineffective things like more tax breaks for illusory “job creators.” 
    We’ll change our tax laws, our spending and our trade policies.  And those who have benefited from the “top down” politics and policies of the last 30 years… with exceptions like Warren Buffett… will attempt to obstruct the whole way.     
    Standing together will be the first prerequisite, or those three elements will not get changed.  Hold back, you’ll “commit” after that gets done? That’s just more of the same… and guarantees the status quo, or worse.
    That’s what it’s going to take to get the economy moving, long-term.  I keep hoping that Americans will see that they are going to have to stand-up for each other… first… or at least admit to themselves that they are part of the problem.  We’re in the worst situation since the Great Depression, why would anyone be thinking that a whole new level of citizen responsibility wouldn’t be needed?  Sorry, wish I had better news.  We can do this.  Because?  America, as our Founding Documents openly proclaim, is: “We the People.”
    Happy Holidays.

     

  • Joe says:

    December 20, 2011 at 9:38 am

    Herb,

      Just a note the overspending reference was about holiday shopping not government spending.
    When it comes to government spending, we definitely have a lack of revenue.  In fact, over the last decade real, per capita, state spending in Minnesota has declined 10%, according to several MN2020 studies of state revenue documents.

  • Jennifer says:

    December 20, 2011 at 9:50 am

    Learn from history. Regulate the banking industry. Limit campaign contributions to people not entities. Implement a statewide general education levy and streamline the school funding formula. Invest in broadband and the green economy. Restore the Minnesota Miracle.

  • W. D. (Bill) Hamm says:

    December 20, 2011 at 9:51 am

    Hey Joe, while I agree that spending has decreased, how much has individual income/buying power decreased during the same period. Since the population percentage in poverty has increased it makes this answer clear. Now answer us as to how we continue to support government at the same level without taxing us all more. Why should we pay more to prop up the middle class public employee so he or she doesn’t feel the pain? Who will prop us up against the steadily increasing pain?

  • Bernice Vetsch says:

    December 20, 2011 at 10:02 am

    Jennifer has succinctly and clearly answered the question.  Thanks, Jennifer.

    I would add that, since income for average- and lower-income persons has not increased because all the wealth created is being shuttled to the top, much of the holiday gift spending was probably added to people’s current credit card debt. 

    This may help retailers (and will definitely help the credit card companies), but will probably be just a momentary bump in economic activity in the retail sector.

  • KJC says:

    December 20, 2011 at 10:34 am

    How long did it take?  By my count it took less than an hour for another divisive post… looking to blame and demonize another group of regular Americans… to appear.
      It in no way sought to bring Us All Together again, other than to be united in some kind of “feel the pain” misery.
    I say?  We’re better than that.  Where would we be if the Founding Fathers felt that matters would be sufficient if others just “felt the pain” of more injustice from British rule?  They hoped and stood for so much more than that! 
      Anybody that thinks public service employees aren’t feeling the pain is being untruthful.  Talk to the laid off teachers, firefighters and policemen and more all over this country.  Talk to those who accepted lower pay than the private sector for decades, with the back-end promise of a better pension… and now are having that pension attacked.
      Whenever someone says that other regular Americans are “the problem?”  I guarantee that they’re trying to play you, and in the most despicable way.   
    Period.
      We’re going to have to stand up for each other in the face of this kind of ugly divide-and-conquer obstructionism.  Or?  This tough time will be unnecessarily prolonged. It’s up to us, We the People.

  • Audrey Kingstrom says:

    December 20, 2011 at 10:38 am

    We are a very materialistic society—buying things we don’t need that deplete scarce resources and pollute the environment while often accumulating unnecessary personal debt. Hopefully we’ve learned some lessons from the most recent recession. Let’s use our resources wisely, both personally and publicly: invest in things that will improve the quality of our lives in the long run—vibrant libraries, mass transit, good schools, health care for all, abundant parks, clean energy, etc.  Let’s create a world that will produce lasting benefits for all.

  • Paul says:

    December 20, 2011 at 11:20 am

    The gov’t certainly hasn’t learned its lesson because the Pentagon just got a raise.  That’s where we should be focussing our spending concerns on and not on programs that support struggling working class people.

    We also need to get smarter about generating revenue.  The Harkin/DeFazio legislation that would impose a very small tax on financial transactions would reduce market instability as well as generate significant revenue.

    We also need to reduce the incentives for businesses to move jobs offshore.  I just got laid off last week because the company, which already has all its manufacturing and IT support overseas, is starting to move some R&D there also.

  • Mike T. says:

    December 21, 2011 at 3:24 pm

    Sorry to hear of your troubles Paul; it’s just no good when that happens.  Placing steep tariffs on imported goods should be on the table.  This will eventually shift manufacturing back where it belongs, no?  Or, we could try another trillion dollar stimulus since the first one worked so well.

  • KJC says:

    December 22, 2011 at 9:04 am

      What’s another potential plan, beyond the “slap tariffs” on things?  I feel the temptation too…bUT that could easily ignite a trade war in which EVERYBODY will lose?  This doesn’t mean that I don’t recognize that we’re being cheated by some of our trading partners.  We are, especially by Communist China.  (Notice how nobody likes to use that word “Communist.”)
    The question is?  What to do that might be effective?  And this time, couldn’t we do something smart.. for a change?
      What could that look like?  How about a new law that says “If you want to sell here, you will employ here.”  Just maybe Paul’s job wouldn’t have gotten “moved.” The 1% like it the way it is.. so we’d have to take a stand that our policies work for average Americans.  I leave it to economists and mathematicians to figure out an effective algorithm.  Other countries have all sorts of non-tariff barriers to protect their jobs… turnabout is only fair play, isn’t it?
    What’s so different about this?  It’s working on ourselves, instead of knee-jerk trying to force some outcome onto others.  This isn’t WWII any more.
      Really how well has American hegemony worked out for us over recent decades? I think of the trillion dollars spent in Iraq on a war that started with exactly this kind of “force an outcome” view.  We were understandably angry after 9/11 and there was a lust to have somebody “pay,” and that got twisted into a war with a country that had no part in 9/11.
      Think what that TRILLION dollars could have done here at home?!  Our economy would be lots better off.  We need to think ahead and use our heads… instead of thinking of our superior force immediately and then? Pay and pay, over and over and over.  Think the interest on the Iraq war debt might be a burden on the economy both present and future?
    Have we learned anything?

  • Dan Conner says:

    December 31, 2011 at 11:01 am

    While tariffs are generally pretty counterproductive, it might be of benefit if we tariff Chinese products.  They don’t import that much from us, so it would be difficult for them to effectively retaliate.  So, I suggest putting tariffs on Chinese products most heavily subsidized by China.

    Spending on defense is outlandish and over-the-top.  We spend more than the rest of the world put together.  However, I don’t feel this is a priority as yet.  Instead, we should just look to cut waste.  Defense already employs many people.  Cutting expenditures would just unemploy those people.  However, I do believe military contracting needs to end.  The Department of Defense spends many many billions of dollars on wasteful contractors.  These expenses need to be curtailed.  GI’s need to start doing KP, construction, and security again.  The contracts for these expenitures are exorbitant and wasteful.  Plus, it seems contradictory for our “free” country to have large mercenary armies.  In too many cases these mercenary armies have been involved in “seedy” operations, and they cost way too much.

    Let’s get back to a country with shared sacrifice.  The rich can’t buy someone for responsibility.  They need to be a participative group in our democracy in something other than a self-serving way.

  • KJC says:

    January 1, 2012 at 8:56 am

    We could use some government revenue in getting our economy moving.  We must rebuild our crumbling infrastructure, for example.  How about closing some massive tax avoid/evade loopholes?  Here’s the most recent story on how US Corporations use “transfer pricing” to shift profits to places like the Cayman Islands… and avoid paying taxes here.  This Bloomberg story centers on Fridley-based Medtronic, but it’s a practice that’s rampant at multi-national companies.
    I say this is the ultimate “entitlement mentality.”  These companies expect to do business here, making hundreds of billions… and yet do not show a reciprocal responsibility to the society that is making them superrich.  They expect to take out, but to put back in?  Similar effort isn’t there.
    When I hear those railing against “entitlements” take on stuff like this, instead of pounding regular Americans, then I’ll be willing to listen.
    Of course the big push now is? After getting that over Trillion dollars in profits overseas, often with tactics like Bloomberg enumerates, now they want to “repatriot” the dollars ... and they want a big tax holiday to do it.  They effectively cheated our system ... the rest of us… in shifting the profits overseas, and now they want to be able to bring those $$$ back here at gravely reduced tax rates.  And?  They apparently think they’re “entitled” to do that.  Think what this magnitude of revenue could have done (be doing) for our deficit, for example. 
    Oh, on that tax holiday ... we gave them one just five years ago… under a lot of big talk about investment and “job creation” here.  Where are the jobs?  That just didn’t happen, fool me once…

    <http://www.bloomberg.com/news/2011-12-20/corporate-america-puerto-rico-tax-break-shifts-to-cayman-islands.html>

    Bloomberg can not be accused of being a “liberal” news organization, I dare say.