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Kevin Williamson's harebrained economic analysis
August 23, 2011 - Mike Maneval
Kevin Williamson, writing for National Review's website, shared some commentary Tuesday on a proposal to extend temporary payroll-tax cuts. Williamson calls the idea to give productive Americans tax relief "harebrained," but its Williamson's understanding of economics that's harebrained.
The biggest flaw in President Barack Obama's proposal is its potential - even likely - impact on Social Security's stability - a point Williamson completely ignores. The second biggest flaw is that the extension is temporary. Williamson, to his credit, says any extension should be a permanent extension - though, again, he shares no thoughts on how to shore up Social Security, either through other revenues or a reduction in obligations such as raising the age of eligibility.
Instead, Williamson claims "nations do not consume their way into prosperity, they produce their way into prosperity," as though, first, produced goods and services have value beyond what consumers are willing and capable of paying for them, and, second, the tax relief proposed doesn't directly aid the Americans most central to production.
But produced goods and services don't have value beyond consumer demand - if Harley-Davidson increased its production by 20 percent without customers willing and able to buy all or most of the additional motorcycles, the expenditure simply would be a more convoluted way of burning up money. I would expect production's dependency on consumption to be painfully obvious, but perhaps I'm asking too much from a writer for a magazine dependent on persistently begging for handouts from its readers to keep afloat.
But even if Harley-Davidson ramping up production in and of itself was a harbinger of economic growth ... why shouldn't the factory workers most integral to that production be first in line for tax relief?
Because, Williamson's ideological dogmatism means "investment" - i.e., money lending - deserves all the credit for all that is positive in America. Because a writer for a magazine that vilifies decent compensation levels for factory workers, school teachers, cops and prison guards and that has spent the last couple months concocting loopholes for the minimum wage in hopes of further gutting non-unionized labor's paychecks can't acknowledge the role the productive - those who actually produce the goods and services rather than collecting a check for either financing or second-guessing the productive - play in productivity. Because, even eight years after large cuts for capital gains and other "investment" tools, with the joblessness rate following this pro-investment tax policy stagnant and in or near double digits, Williamson still wants to pretend, in his words, that "capital investment is where growth and jobs come from."
It isn't. It never has been, and the sooner we recognize that America's prosperity came from labor gaining the purchasing power to support other people working and producing goods and services for consumption, the sooner we will be able to pry away the usurers' death grip on the revenues labor's work created in the first place and the sooner we will get our economy back on the right track.
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