The right to say “I told you so”

Both parties have the right to say "I told you so" a few years from now when it comes to the stimulus plan. The economists and pundits tell us that there are questionable parts of the stimulus bill while the Republicans tell us it’s a pork bloated waste of tax payer money. They say it’s better to give the money to the private sector and trust them to do what’s right for the unwashed masses.

Time will tell of course. I know virtually nothing about economics. I do know about human nature and won’t hold it against either party if they gloat over being right. George H. W. Bush first called Ronald Reagan’s supply-side economics "voodoo economics". He later embraced what came to be called Reaganomics.

I had to look it up. For those who like me don’t understand such things here’s what Wikipedia says:

Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. The term supply-side economics was coined by journalist Jude Wanniski in 1975… 

Today, supply-side economics is often conflated with the politically rhetorical term "trickle-down economics." …

The typical policy recommendation of supply-side economics is to achieve the proper level of marginal tax rates, which, by virtue of the high rate of taxes in general, equates with cutting of taxes.

Maximum benefits are achieved by optimizing the marginal tax rates of those with high incomes and capital investments who are deemed most likely to increase supply and thus spur growth.

Keynesian macroeconomics, by contrast, contends that tax cuts should be used to increase demand, not supply, and thus should be targeted at cash-strapped, lower-income earners, who are more likely to spend additional income.

Many early proponents argued that the size of the economic growth would be significant enough that the increased government revenue from a faster growing economy would be sufficient to compensate completely for the short-term costs of a tax cut, and that tax cuts could, in fact, cause overall revenue to increase. Reference

From what I can tell Republican’s are still supply siders despite the past eight years of their president’s failed economic policy.

Time waits for no man unless he’s moving at the speed of light. Lacking a star ship’s hyperdrive, we’ll have to wait two or three years to see what time has to tell us.

30 Responses to "The right to say “I told you so”"

  1. Hal Brown  February 15, 2009 at 8:55 pm

     Terrific thread, especially considering I wrote only ten or so paragraphs that said basically that I didn’t know anything about economics and only time will tell whether Obama and the Democrats are right, or the Republicans are.

     I continued to be impressed by the regulars who comment on the columns on Capitol Hill Blue.

    I have opinions on many issues but only claim to have expertise in psychology, so reading comments like these is an education for me.

     

     

  2. griff  February 16, 2009 at 10:12 am

    How about this for an “I told you so”. Scottish historian Sir Alex Fraser Tyler in “The Decline and Fall of the Athenian Republic”, 1799.

    “The average age of the world’s greatest civilizations has been two hundred years. These nations have progressed through this sequence: from bondage to spiritual faith; from spiritual faith to great courage; from great courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependence; from dependence back again to bondage.”

    I’d say America is right on schedule.

  3. almandine  February 16, 2009 at 11:33 am

    He is also credited with having said:

    “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”

  4. AustinRanter  February 16, 2009 at 12:06 pm

    As I continue to state in nearly every posting, in one form or another: The electorates will surrender all to those who they vote into power who make them the promises of “a car in every garage and a chicken in every pot.”

    There’s nothing like the pleasures of taking the path of least resistance.

    Our financial and economic crisis are small in comparison to the broken – twisted relationships between our electorate, political and government systems.

  5. almandine  February 16, 2009 at 1:46 pm

    Well Ranter…

    I suggest that the economic crisis is much larger and more intractable. While I agree it is unlikely to happen, it would only take a single trip to the ballot box to right that twisted political relationship of which you speak. The Depression will, in contrast, take much longer and exert much more collective pain before it works its way through the system. There is simply no ballot box equivalent for this one.

  6. AustinRanter  February 16, 2009 at 2:24 pm

    Almadine,

    What we are witnessing in our financial and economic failures are a direct result of not mere incompetent, irresponsible actions, but greed and powerism, actions that were 100% preventable.

    The hardest part of walking a mile is the first step. Until our politicians and government bureaucrats get the clear, indisputable message that makes them understand that their first allegience is to the Constitution, and to the will of We the People…and not the Corporations, or special interest then they will continue to be self-will-run riot government, without the slightest fear of consequences.

    The only way that we can begin to deliver that message is at the ballot. I’ve repeatedly sent letters that have been so abrasively blunt, and in the aftermath of doing such, I cringe and feel a wit bit embarrassed at my expressed anger. I’m tired of getting form letter replies that clearly shows that they simply don’t give a rats ass. My voice as an individual apparently doesn’t matter, but a collective voice at the ballot does.

    A transformation in our political and government systems will be a process, not an event. Like correcting our economic and financial debacle will take years…so will reconstructing our government.

    If we don’t take a stand now…when will we?

  7. almandine  February 16, 2009 at 2:46 pm

    We are in sync.

  8. griff  February 16, 2009 at 7:37 pm

    Odds are that we won’t make a stand. As you said, these things were one hundred percent preventable. Unfortunately the masses are hard-wired to the TV and have been brought up on the fabled left vs right, lesser-of-two-evils control system.

    We had a chance for some real inroads with this election in the campaign of Ron Paul. The media simply refused to cover his campaign of real change, thus opting for the Establishment frontman in Obama.

    People will only get off their asses when their couches get repossessed, and not a minute before.

    In the meantime, check out Campaign for Liberty, if you haven’t already. Join the cause, donate if and what you can, become a precinct leader, and help spread the message.

    In another post I mentioned a number of states considering legislation declaring sovereignty under the Tenth Amendment of the Constitution. The number of states is now twenty-five.

    If you happen to live in one of those states, call your representatives and voice your support for this legislation. If you don’t, call your representatives and tell them you would like to see similar resolutions in your state. Call friends and family in your state or others.

  9. AustinRanter  February 16, 2009 at 11:09 pm

    Griff, I might add that I’ve discovered that I get a tiny bit better response from sending emails and/or letters to my House Representative…because they have short terms…and they fear the voters a bit more.

    My Senators…well, one is one of the worst in the nation…Cornyn. The other is resigning to run for Governor. Kay Bailey Hutchinson. Hope she wins over the Bush Jr. we now have as Governor. He’d like to run for State Dictator if he could. Talk about a mess. Anyway…Senators don’t really give a flip as a rule…they really think voters will just forget what they’re pissed about before election time rolls around.

    Anyway…keep them civil-nasty cards and letters flying in.

    And, take it from me…don’t call you’re Congressional members F***** Liars in your letters or email. I had to change that to, “dishonest, deceitful, and mendacious opportunist”… :)

  10. griff  February 17, 2009 at 12:39 am

    Ha. Yeah we haven’t fared much better up here in upstate NY, although we have shed ourselves of one Hillary Clinton. Rick Perry’s a piece of work, yes? Love what he’s done with the Superhighway. Oops, silly me. There is no Superhighway.

  11. griff  February 14, 2009 at 11:50 am

    I’m no economist either, but I do know when I’m being robbed. I also know that our economic system is so convoluted, corrupt, and permeated with government intervention as to defy any real classification.

    So the Democrats can blame the Republicans, and vice-versa, for their economic ideologies, but both parties work for the interests of the banks and corporations, the People be damned.

    The regulations and laws are selectively enforced in favor of the politically connected. There is a revolving door between the lobbies, the government, and the corporations/banks.

    “Throw the bastards out” doesn’t even constitute a threat to politicians. They just move on to more lucrative and profitable positions within the Military-Industrial Complex when their usefulness in government has come to an end.

  12. AustinRanter  February 14, 2009 at 1:02 pm

    Hal,

    We have a shameful situation. Nobody will win from the “I Told Ya So’s”.

    What I’d like to see happen between now and 2010 is the American people clearly recognize that, for some time now, we’ve had a rogue government operating.

    Our politicians past and present all know in their hearts that they’ve brilliantly, and repeatedly, scammed the citizens. In 2010 there are a number of the older, wiser, more devious members of Congress who need to be voted out of office.

    The framework for the role of government, as it was designed by the founders, has been severely breached, abused, and even disassembled in some respects, without shame, guilt, or remorse by those who have exploited their Consitutional commitments.

    We the People have to abandon the concepts of conservatives, liberals, Republicans, or Democrats. What we now have are two primary factions inside our government walls who fight over who controls our nation’s resourses and wealth by which they use to secure and proliferate their own personal interest.

    In other words our two parties are much like the Gambino and the Genovese crime families fighting for territories to conduct their criminal businesses. In this case the “territories” are the lobbyists, the PACs, and all of the related major Corporation connections who fill their pocket books, which is used to mutually enhance their respective power.

    I don’t at all believe what I opine is an exaggeration. I think that we have all of the proof that we need.

  13. almandine  February 14, 2009 at 7:52 pm

    “They [Republicans] say it’s better to give the money to the private sector and trust them to do what’s right for the unwashed masses.”

    I think that this interpretation is one of the problems with respect to so-called Republican economics. In fact, it has nothing to do with “doing right for the unwashed masses”… instead, the whole idea is to let market economics balance supply and demand, based on the notion that equilibrium will be achieved with regard to price, availability of goods, and economic growth, when there is no government intervention.

    Private vs. public arguments are actually over whether the government needs to step in and grant those unwashed masses the resources necessary to buy “inflated” goods, i.e., goods whose price is not in equilibrium, but much higher than would be the case otherwise, because government has meddled in the marketplace to reduce interest rates, foster debt, and create unrealistic demand in the first place. Housing is the best current example.

    Such an approach can ONLY lead to bankruptcy… as eventually not only the unwashed masses, but those who have supported them, will be overwhelmed by the debt load. How could it end otherwise… especially when DEBT is the only form of currency?

    Even Vladamir Putin knows better: http://www.therightperspective.org/?p=1472

    Thus, being able to say “I told you so” is only a fools play. Politics writ unbelievable. Unfortunately, though, status quo in Washington D.C.

  14. bryan mcclellan  February 15, 2009 at 1:22 am

    Mine he said.
    And mine shall be his master.

    My dear Mother spoke these kind words.

    Too bad they take so long to get to Washington, and are inevitably ignored.

  15. John Farley  February 15, 2009 at 12:28 pm

    Hal, here’s the problem with “supply-side economics”. The “private sector” (big corporations and wealthy individuals) is already sitting on a pile of cash. But they’re not investing.

    Would you? Would you invest in real estate (when prices are crashing)?
    Would you invest in a new automobile company (when the existing auto companies are nearly bankrupt?)

    Throughout the economy, production has outrun effective demand. And the more lopsided the distribution of income, the more the purchasing power of the vast majority of the population is held down.

    “Supply-side economics” is based on the doctrine that production creates its own demand. Which is a ridiculous idea. If you own a business, and you fear a recession coming, would you step up expansion plans in order to create demand?

    Capitalism has been in danger of sinking into s stagnation, and now it’s happened.

    For an explanation of the financial crisis, see the new book, “The Great Financial Crisis,” by John Bellamy Foster and Fred Magdoff.

  16. almandine  February 15, 2009 at 2:01 pm

    “Capitalism has been in danger of sinking into stagnation, and now it’s happened.”

    And why is that John?

    Certainly, not because “the purchasing power of the vast majority of the population is held down.” In fact, the elimination via government intervention of interest on debt as the beacon of market demand has made the marketplace unreliable. That is why business does not now invest in expansion… because for way too long, cheap debt [money] allowed the purchasing power of the vast majority to escalate unchecked… and the inflation that expansion has produced is now coming home to roost in widespread bankruptcy, both personal and corporate. There is no vast corporate hoard that is being withheld from production, especially relative to the hundreds of trillions of derivatives and CDS instruments that have sucked the life out of all things financial – again, a process rigged by the policies of the Fed and our so-called leaders. Idiots one and all.

    Left alone, markets reach equilibrium through actual supply and demand processes that need neither supply-side nor inflated-demand stimulus. Purchasing resources and available goods balance… entrepreneurs exploit demand opportunities for needed new products that can be bought with existing savings or loans based on the time-appraised value of work for money.

    That is where we have gone wrong. Nothing financial is based on reality anymore. Everything is and has been about a debt-based system in which the cost of all things is pushed higher and higher, while the value of things is stagnant or falls. The system is structurally unsound.

    Our financial structure is doomed not becuse of the failings of Capitalism, but the bastardization of our marketplace through the heavy hand of government. Look for more of the same, only worse, with this new round of government intervention in the name of “saving us”.

    As for Books, you’d be better reading “Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse” by Thomas E. Woods Jr.

  17. woody188  February 15, 2009 at 3:04 pm

    When all they teach is Keynesian Economics at universities should we be surprised of any of this? Ask an econ student about the Austrian model and they’ll say they’ve never heard of it.

    50% of college graduates never read another book after college, 75% of high school graduates never do, and nearly 50% of US adults are functionally illiterate. How do we ever stand a chance? It’s like we’re living in a real life Idiocracy.

  18. almandine  February 15, 2009 at 4:10 pm

    It’s not like it… IT IS!

    Thanks for the new term (to me anyway) that will come in very handy.

  19. griff  February 15, 2009 at 4:38 pm

    I asked an economics professor at Colgate University that same question not long ago. She had no idea what I was talking about. She said that they only study the current economic model.

    Of Monkeys and Man…

    Start with a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, one of the monkeys will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the monkeys with cold water.

    After a while, another monkey makes an attempt with the same result, all the monkeys are sprayed with cold water. Pretty soon, none of the monkeys will try to climb the stairs.

    Now, put away the cold water. Remove one monkey from the cage and replace it with a new one. The new monkey sees the banana and wants to climb the stairs. To his surprise and horror, all of the other monkeys attack him. After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted.

    Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm! Likewise, replace a third original monkey with a new one, then a fourth, and then a fifth. Every time the newest monkey takes to the stairs, he is attacked. Most of the monkeys that are beating him have no idea why they were not permitted to climb the stairs or why they are participating in the beating of the newest monkey.

    After replacing all the original monkeys, none of the remaining monkeys have ever been sprayed with cold water. Nevertheless, no monkey ever again approaches the stairs to try for the banana. Why not?

    Because as far as they know, that’s the way it’s always been done around here.

  20. Ardie  February 15, 2009 at 4:39 pm

    You must be referring to the Austro-Keynesian model of Joseph Steindl and Kurt Rothschild, which is a modification of old Bismarckian state socialism. Indeed, one of the main features of the Austrian system is the social partnership between industry, Unions and the government which also deploys key Keynesian ideas with regard to full employment and fiscal policy.

    A post script I hasten to add, in my economics textbook Keynes is hardly mentioned. Still a classic, the best book for a university student who wants to get into Keynes is _The Economics of John Maynard Keynes: The Theory of a Monetary Economy_ by Dudley Dillard (1948). It is in easy to read English.

  21. almandine  February 15, 2009 at 6:08 pm

    “Indeed, one of the main features of the Austrian system is the social partnership between industry, Unions and the government which also deploys key Keynesian ideas with regard to full employment and fiscal policy.”

    He was talking about the Austrian School of Economics.

  22. Ardie  February 15, 2009 at 4:19 pm

    The foundation for supply-side economics came from J.B. Say as in “Say’s Law” which basically states that supply generates demand. Say lived in a barter economy. His views have long since been refuted where today we understand that aggregate demand drives the economy. Any economist who is not part of the ancien regime of economics understands this. They also understand the Keynesian “multiplier effect” and its importance in a stimulus package. Tax cuts, during a recession, have little if any multiplier effect whereas rebuilding our decaying and neglected infrastructure does as does investing in the intangible infrastructure such as education.

  23. almandine  February 15, 2009 at 4:34 pm

    The notion that government [Keynesian] dollars have more stimulative effect than tax cut dollars is pure hokum. In fact, since government dollars have to be first taken from someone in the real economy who could have used them without the government having to siphon some of them off to pay for managing the process, private dollars can be said to be much more directly stimulating.

    As for supply-side, one must only look to the Superbowl, et al, for marketing of some “new and improved” thingamabob in order to understand that demand can be created instantly, if the marketeer does his job well.

    That is not to say that such an approach is laudable, but only that our fellow citizens simply cannot resist the new and the shiny!

  24. Ardie  February 15, 2009 at 4:55 pm

    Really? Procurement for defense has about a 2 multiplier effect when on the other hand some guy in Kickacock Tennessee who uses his tax remission to pay off his trailer has about a zero multiplier. Also, I know the argument you are making. It is called the Treasury view. It was refuted by Keynes. Let me say that one risks becoming a laughingstock in economics for using the Treasury view. It is hare brained for obvious reasons. As for your defense of Say’s Law, having a supply of kumquats doesn’t necessarily lead to a demand for kumquats, especially if consumers are unemployed and squirreling away their dough under the mattress. Say’s Law, by the way, presupposes no unemployment.

  25. almandine  February 15, 2009 at 6:26 pm

    Really. Without data concerning private purchase of defense items – firearms aside – there is no way to even compare.

    As for trailers, most government housing that has ever been built has succumbed to serious abuse and disrepair in nothing flat. Thus, while somebody got a job from building it, there were no more jobs created per housing unit than any bought by individuals, and the long-term value of that housing is almost assuredly lower than that purchased privately. Thus, in terms of residual property tax dollars alone, the private investment was a much better deal. In terms of continuing human value, there is no comparison at all.

    Regarding dough under the mattress, that doesn’t address my point about equivalency either, but it’s clear your point is not to discuss but only to ridicule. As for kumquats, where are the shiny new ones?

    Keynes??? ho hum, yawn… and as for your misperception above relating the Austrian school to a social partnership between industry, Unions and the government, that is unbelievably off the mark.

    So it is with those who would do violence to liberty in the name of… exactly what?

  26. Don Quixote and Company  February 15, 2009 at 7:22 pm

    ANY FORM OF GOVERNMENT ABUSED WILL FAIL……
    That’s right…Mr. Farley, Mr. Brown, and especially almandine. The system of government, and thus in effect its system of economics/commerce is only as good as the people who run it. Almandine wants to blame government. Yes, that is true, but in so doing we must blame ourselves, The People, for our government’s failures. How many people were protesting in the streets after Enron, World Comm, or let’s look even earlier Silverado, Keating, Senator McCain. The answer is “zero.” I am not a communist, nor am I a socialist. I do know the Poli Sci 101 weaknesses of these systems, i.e. the lack of incentive in these paternal systems for people to aspire to produce/work to their maximum abilities. An uninspired populace of Russians gave us the Yugo, for example. So what is the weakness of the economic system of a Republic like ours? Capitalism is weak when those who are orthodox capitlists are allowed to dominate Corporate America. Much like the fictional characters of Star Trek, the Ferringay (?), profit for profits sake at any cost(other than the cost of obtaining profit) has been the order of the day since Reagan. Nothing akin to Patriotic Capitalism, or Christian Capitalism has been on the horizons. That is why a massive trade deficit has been “okay” with Uncle Sam for so long, while the Senators and Congressman buzz around the halls of our Nation’s capitol. And, that is why an employment deficit was allowed to be given birth (maybe when we first starting seeing Wal-Mart, Cosco, etc.), that would be on Reagan’s watch historically. No jobs, no population that has money to buy goods. Real simlple. The last decade (before Obama) has been cheap tricks to keep the Titanic economy afloat. Including cheap credit, almandine.

  27. almandine  February 15, 2009 at 9:47 pm

    Hey Don –

    Is not government only shorthand for those who hold the levers of power? Frankly, we citizens gave up those levers long ago. In fact, somewhere between the long time ago that I was in school and now, processes were put in place to dumb down our people, turn them into consumers instead of citizens, and globalize the world financial system so as to make us not the America that I once knew, but a mere part of the World Apparatus that would treat all humanity as cogs in the great wheel of elitist expansion and wealth. The illuminati and all their machinations.

    But in retort to your claim, orthodox capitalists as a genre do not “dominate” America unless they are crooks to boot – which many are. You won’t find Patriotic or Christian capitalism defined anywhere, except that as practiced by patriots and Christians; those terms can only have relevance when discussed as the alternative to criminal activity of the kind that has brought us to the juncture at which we now find ourselves. In and of itself, capitalism, as a system by which to distribute resources in the serve of humanity is better than any other. Certainly, pure capitalism respects the liberty that free men exert in the pursuit of happiness, our ideal.

    Beginning with Reagan, our modern practice of capitalism has gone awry in the service of Empire – even though I doubt he would have turned it that way had he been able to foresee today. They had him too. Humanity has taken a back seat to the Trilateral Commissioners, Bilderbergers, and Council on Foreign relations types, who have worked their grand agenda for world domination. Americans might legitimately ask: “Are they doing it for us?”

    So since around 1913 when the Federal Reserve was pushed through to begin this awful process, and then in 1971 when the dollar was set free from Gold, our debt based system has expanded – but rotted thoroughly in the process. The American Dream for which many Americans have toiled, fought, and died for is now a caricature filled with color TVs and fancy cars. And the solution to our current problems??? Refill the bank coffers so that cheap credit is available to restart it all again, establish new porkbarrel programs to cement the undying patronization of the unwashed masses, and jigger the political process to establish a permanent majority of those beholden to the handout Gods in Washington. Damn, ain’t life grand?

    So, you are right, it is not the system of government that is to blame… only those we have allowed to run it. As far as complicity by the people is concerned? They don’t even know the difference… and even if they did, what are their choices at this point? After all, most of those Washingtonians don’t know the difference either.

  28. almandine  February 15, 2009 at 9:32 pm

    One quick note Don…

    The Yugo was built by Yugo-slavians.

  29. Don Quixote and Company  February 15, 2009 at 7:53 pm

    Nationalism Not A Sin……
    Some form of nationalism, i.e. protection of ones economy, number one is jobs, production, number two is trade equality is not a sin. We can see that now by the position we are in. The real question is who allowed this to happen? As I stroll in the aisles of Wal-Mart, most items are made in China, Taiwan, Indonesia, India. What is it that we are producing that distinguishes us from the other world markets? Disneyland? Posh Hotels? Belair and Beverly Hills? The delusion for America is that the basic necessities of life became something they are not. When you become unable to produce your own necessities, you become a parasite dependent on a host. Maybe it is time for us as Americans to morph back into free-thinking men and women. That would entail kicking out any politician who would compromise the well-being of America, and that would be akin to the lightning speed that Grey Davis, and Blego were shown the door. Congresspeople, Senators, Beware!!

  30. AustinRanter  February 15, 2009 at 8:58 pm

    Well Don,

    If you read my postings throughout CHB Front Page, then you would immediately know that your message, is for me, like you singing to the choir. And thanks for singing my favorite song.

    The CHB staff writers (and I’m sure other posters) get sick of me kicking and screaming about the lack of voter responsibility and our duties under the Constitution, which requires us to maintain the health of our government by electing individuals who know who they work for…and why.

    I can’t say it loud enough that the respective concepts related to the terms or words, conservative, liberal, Democrat, or Republican are just out and out obsolete.

    We the People have turned over our nation to two rivaling factions who act like the Gambino and Genovese crime families who are fighting for control over Lobbyists, PACs and other corporate resources who fill their pocketbooks.

    But, we all know that in reality that we have a reciprocal power structure at hand. The corporations and our Gambinos and Genoveses are in this gig together.

    “We the People” act dumfounded as though we are victims of these rivals who not only want the Corp. resources under their controll, but every citizen’s as well.

    We the people came to be in the awesome mess out of apathy and ignorance. As long as somebody promises us a car in every garage and a chicken in every pot…then all is cool.

    The very worst of it all for me is…that we have historically have, and even up to this very day, still blame our victimization on politicians BECAUSE THEY LIE and a media who MANIPULATES THE FACTS.

    How much longer can we use that excuse?

    I know, I know that logic and reason isn’t fashionable, but we have to come to grips with what the core problem is or there will never be a solution to our political and government problems.

    The “I told ya so’s” aren’t going to be the ones to say it. See you in the soup lines..

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