I think this is a ridiculous combination of Marxism and Keynesianism typical of high-level government officials, with a stress on Marxism, perhaps indicative of a former Labor Secretary.
1) A Marxist devotion to egalitarianism. Good and bad are evaluated in terms of less equal and more equal. Marxisms relies on a fervent hatred of the rich. Here’s an example of why pure egalitarian analysis is flawed:
Imagine a rich town where infant mortality is 3/100,000, and a poor town where infant mortality is 6/100,000. Imagine some technological breakthrough which reduces it by one in each town. So infant mortality becomes 2/100,000 and 5/100,000. Normal people would hail this as an improvement. But Marxists see that it represents an INCREASE in inequality. Instead of infant mortality being twice as high in poor areas, it’s now two and half times as high.
2) He claims we should hate the rich and that there’s a budget deficit because the rich aren’t paying their share.
Shouldn’t the fact that government spending doubled under Bush, and tripled under Obama enter into this analysis? Isn’t that a no-brainer?
Even if the government slaughtered all the rich people and took their money (something which had been attempted in Ukraine and elsewhere), even if the government took 100% of the profits from all fortune 500 companies, we still couldn’t afford the 2011 budget.
Here’s Iowa Hawk’s wonderful illustration: www.youtube.com/watch?v=661pi6K-8WQ#t=2m29s
There’s also the fact the rich aren’t the same people from decade to decade. There’s a lot of mobility.
3) “instead of joining together” workers are competing
The Marxist dichotomy of all workers vs. all employers is bullshit. Workers compete against each other and employers compete against each other. Only politicians claim that the interests of huge groups of people are identical. Politicians need large groups of people to hate and/or fear other large groups of people.
4) The middle class can’t borrow, lacks purchasing power = high unemployment.
Spending does not drive the economy, and debt certainly doesn’t drive the economy. Savings do. When people spend less on consumer goods, it means they are saving more (ie planning for the future). In a free economy, this would mean that investment money becomes available for long term projects that will produce goods in the future.
Certain business need to close but opportunities are created for long term projects. The structure of production needs to change, and we ought to simply let it change.
In our Keynsian economy, the government tries to keep spending going, even though people are trying to save.
5) He’s also suggesting something completely ridiculous and wrong headed. He says that politically connected people have too much sway over government, and wants to fix this by giving the government more power. This would back fire if he ever had his way. Giving more resources and power to government means more incentive for people to control government. Letting people keep more of their money is a much better solution.
Also, Austrian School economist Robert Murphy addresses of glaring falsehoods in the former Labo Secretary’s presentation:
Osama al-Nujaifi, the Iraqi parliament speaker, has told Al Jazeera that the amount of Iraqi money unaccounted for by the US is $18.7bn – three times more than the reported $6.6bn.
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