Economic Policy

In January 2009, Bruce Bartlett, a former Treasury Department economist and the author of “Reaganomics: Supply-Side Economics in Action”, wrote an article encouraging a government policy emphasis on investment.

A Republican strategist who helped craft the tax cut policies of the Reagan era, he finds fault with the tax cuts of the Bush era.  In an examination of economic policy of the past thirty years Bartlett contrasts the Democratic and Republican policy branding.  “There is never a time when Democrats aren’t in favor of more health and education spending, aid to state and local governments, and so on–just as there is never a time when Republicans aren’t for tax cuts.”

The increasingly sophisticated gerrymandering of voting districts has lead to a polarization of the dominant political parties, driving out the very centrists of both parties who might steer a course between the ideologies of each party.  The arduous process of running for office surely discourages many sane and competent men and women who might otherwise toss their hat in the national political ring.  What’s left are ardent ideologues and large personalities pursuing their destiny.

East vs West

In an op-ed in the Financial Times 12/28/09 the economist, Niall Ferguson, climbed on a tall mountain and looked back on the past 500 years.  He listed 6 key traits that have given the west an edge over the east in these past five centuries: “the capitalist enterprise, the scientific method, a legal and political system based on private property rights and individual freedom, traditional imperialism, the consumer society and what Weber probably misnamed the ‘Protestant ethic of work and capital accumulation as ends in themselves.'”

Social Security Privatization

Slowly, very slowly, I am going through a file box with articles that I clipped from ten years ago.  As the debate renews – or continues – about the privatization of Social Security, we can learn from the past. 

In 1998, there was a loud call for the privatization of Social Security, whose return on the contributions we make is about 3%.  In 1998 the stock market was continuing its historic rise due to increases in productivity, output, and employment.  The dot com and financing boom of the “New Economy” was growing in strength and returns in the stock market were above 17% per year.  Comparing that 17% return to the paltry 3% return on Social Security contributions – well, there was no comparison.

Twelve years and a “lost decade” of stock market returns later, the safe 3% return on SS contributions doesn’t look as bad as it did in the heyday of the late nineties.  In 1998, Dean Baker wrote an Atlantic Monthly article examining the myths about Social Security and the arguments for privatization.  The article is online and it’s worth a revisit.