sectoral balance model

Here's the next group of Ryan's follies from his answer to the President's 2011 SOTU.

On bureaucracy and innovation:

”Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked – and it won’t work now.”

That may be. But depending on the big banks and big US corporations to either get lending going again, or to bring innovation and jobs to the United States also won't work. What will work is for the Government to increase aggregate demand by deficit spending in areas of the economy we want to grow.

“Bureaucracy” is just a scare term. The big corporations that Ryan, the Republicans, and many Democratic Congresspeople serve are all just as bureaucratic, and in the case of the health insurance companies, even more bureaucratic than the Government. The dirty little secret of the social sciences is that bureaucracy comes with large size whether we're talking about private or public organizations. So, unless Ryan has plans to break up the large banks, insurance companies, pharmaceutical companies, telecommunications companies, and exporters he loves so much, he really ought to shut up about “bureaucracy,” because his precious private sector has absolutely nothing to crow about when it comes to that feature of large organizations.

If we don't like bureaucracy, then what we need is regulation that will break up large organizations, making them illegal beyond a certain size. Then perhaps we might create functioning markets and be able to shrink the Federal government too. But this kind of solution is off the table for Ryan and Romney since regulation is a no-no from the standpoint of their ideology. Read below the fold...

Here's Part Two of my textual analysis of the deficit reduction portion of Paul Ryan's Republican response to the SOTU.

Then the President and his party made matters even worse, by creating a new open-ended health care entitlement.

What we already know about the President’s health care law is this: Costs are going up, premiums are rising, and millions of people will lose the coverage they currently have. Job creation is being stifled by all of its taxes, penalties, mandates and fees.

Read below the fold...

Many of my recent posts have focused on fairy tales I thought the President would tell in the SOTU and also those that he did tell. The reason for this is that I think people on the left have a greater need to be informed about Obama's fairy tales, then they do about Republican fairy tales, since they are automatically skeptical about what Republicans say given their 40 year history of systematically lying about reality every chance they get. Read below the fold...

Yesterday, I scored the SOTU on the 7 Fairy Tales I discussed previously, and concluded that the President was subscribing to at most two of them, and that he accepted the deficit reduction framing of the Republicans as a basis for negotiation, and was trying to point the US in the same direction as export-led economies emphasizing fiscal austerity, thus joining the world's race to bottom. Today, I want to analyze the details of the portion of the SOTU dealing with deficit reduction. The President said: Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President would probably deliver in his State of the Union Address. And in a series of later posts, I looked at 7 fairy tales I thought he would tell. Finally, in a summary post, I offered a table summarizing the fairy tales and corresponding truths. In this post, I'll do a post-mortem. How many of the 7 fairy tales did he tell us? Read below the fold...

In a beautifully simple post that should crystallize everything for you, Professor Stephanie Kelton of the University of Missouri at Kansas City crystallizes the logic of the Sectoral Financial Balance Model for President, Obama, the Catfood Commission, the deficit hawks and doves and you and me. She says:

In a 'closed economy' (one without foreign trade), the government's budget position is, by accounting logic -- the negative of the private sector's (firms and households combined) position. Thus, a public sector DEFICIT is equal to the private sector's SURPLUS. To the penny.

So, in a closed economy, a Federal Government budget deficit adds to private sector financial assets, while a Government surplus represents a leakage and subtracts financial assets from the private sector. Or more briefly, Government deficits make private individuals richer; Government surpluses make private individuals poorer. Read below the fold...

It's been nearly 35 years since we've had a “tax and spend” political party. During the 1970s, the Democrats gave up fighting the Republicans about the “tax and spend” label, and the Carter Administration tried to escape from that charge by making very serious attempts to balance the budget. During the 1980s, more and more Democrats emphasized their concern for reducing deficits and balancing budgets as a way of distinguishing themselves from the Reagan Administration's unprecedented peacetime deficits. Read below the fold...

Earlier this month, Thomas Geoghegan wrote a piece for The Nation telling the Democrats the ten things they could do to really get the base excited, and at the same time do good things for the country. Here's his list.

1. Raise Social Security to 50 percent of working income.

2. Let's extend Medicare to people 55 to 65.

3. Make it a civil right to join, or not to join, a labor union.

4. Put in a usury cap of 16 percent.

5. Set up small government banks like the German Sparkasse.

6. Give everyone the right to six days of vacation -- six consecutive paid working days.

Read below the fold...