Wednesday, December 3, 2008

Grab your shovels -- it's bullshit time

Everybody, it seems, has advice for Barack Obama. A lot of that advice suggests that he either delay or reconsider commitments he made during the campaign -- usually citing the current economic crisis as justification. Most of it is bullshit.

  • Bullshit premise #1: The Employee Free Choice Act, which would make it easier for workers to form unions, would slow the growth of new jobs and keep unemployment high.

    The argument is based on the notion that since unions would negotiate higher wages for members, employers could not afford to create as many jobs. That's total nonsense. Excluding nepotism, businesses never create unnecessary jobs -- and if a job needs to be done, somebody will be hired to do it.

    Also, anybody who ever has negotiated a union contract knows that you can't get blood out of a stone. If a company can't afford to pay higher wages, there is no way a union can force it to do so -- and if a business really is in danger of failure due to union contracts, unions (like UAW) will renegotiate. A union contract is worth nothing if a company is forced to go bankrupt.

  • Bullshit premise #2: Raising taxes on the rich must be postponed to prevent worsening the economic slowdown.

    Yes, Keynesian economics teaches us that recessions require tax cuts, but that doesn't mean everybody's taxes have to be cut. The spending of those with adjusted gross incomes of more than $250,000 a year will scarcely be affected by increasing their marginal tax rate from 35% to 39.6%, which was the top rate during the Clinton years. To increase consumption and stimulate the economy, tax cuts should be heavily tilted towards the poor, who spend every cent they have available.

    Now is not the time to forget that the immense shift in wealth from the poor and middle classes to the very rich was at the heart of the current crisis. Immense wealth looking for a place to go fueled the growth of mortgage backed securities, gambling on credit default swaps, and the drive to create all the other unregulated derivatives that continue to threaten our banking system. A downward redistribution, to undo some of the effects of the Bush upward redistribution, will do far more good than harm.

  • Bullshit premise #3: Health care reform must be delayed until the recession is over.

    Health care is not a good deployment of federal money now, say the critics of reform. Health care is too complicated and too expensive to address under current circumstances. If employers are forced to provide health care or, as in the Obama plan, pay into a fund to offset the cost of health care for the uninsured, businesses will not have the cash they need to survive and grow strong again.

    It's true that the Obama plan might not be optimal at the moment. It wasn't designed for a period of economic crisis. A far better approach right now would be national, single-payer health insurance. It would allow government to effectively negotiate cost reductions with health care providers and big Pharma. It would relieve smokestack industries, like the Big Three automakers, of their legacy health insurance costs, making them far more competitive with foreign companies like Toyota and Honda.

So, we are left to wonder what Obama will do when he takes office. Will he play it safe and "centrist," or will he follow through on his promises to the people who elected him? Judging by his cabinet appointments to date, one suspects it may be the former -- but who knows? He's played his cards pretty close to the chest so far. Maybe he'll surprise us all.

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