“Growing up in East Texas, we didn’t have any money for books” – Moyers on Banned Books Week

October 4, 2012

Since the death of Radio Free Texas, banned books take on even more importance in the history of freedom and free thought, in Texas.

This is the state where, still, even the governor and the State Board of Education carry on unholy crusades against books and ideas, like evolution, racial equality, and voting rights.  Moyers knows what he’s talking about.

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Banned Books Week! Are you with the banned, in 2012?

October 4, 2012

It’s almost gone, and I haven’t even posted on it yet:  Happy Banned Books Week!

We’re celebrating this week from September 30 to October 6 — you’ve got two more days.

Can you identify each of these banned books?

Courtesy of Bookman’s, a book store in Arizona.

A two-minute video produced by Bookmans, an Arizona bookstore, is helping launch a national read-out from banned and challenged books that is being held on YouTube in conjunction with Banned Books Week, the national celebration of the freedom to read (Sept. 30-Oct. 6). The video presents Bookmans’ customers and staff urging people “to turn on the light” by celebrating freedom of expression. With light bulbs burning brightly above their heads, each of them reads a single line from a banned or challenged book that testifies to the importance of reading, books and freedom of speech. “It is a wonderfully creative and inspiring video,” said American Booksellers Foundation for Free Expression President Chris Finan. “We hope all supporters of Banned Books Week will use social media to share it with their friends and the rest of the world, giving a big boost to this year’s read-out.” More than 800 people posted videos on YouTube during Banned Books Week last year. More information about the read-out, including updated criteria and submission information, is available here.

Which are your favorite Banned Books?

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One more time, again: Why “supply side” economics doesn’t work without demand

October 4, 2012

I posted a short excerpt from a recent column by economist Paul Krugman, explaining why GOP reliance on magic to fix the economy probably won’t work.  Commenter David Xavier took issue with Krugman’s analysis.  David’s comment brought home to me just how badly many self-described conservatives misunderstand basic economics, especially the keystone free enterprise principles of supply and demand.

My explanation of why supply side economics can’t work came out for the 21st time at least.  Let’s make a post of it, in hope that more people may read it and view it, and understanding may increase.

David Xavier said:

Krugman wants the government to spend as this will drive demand. But “demand is constituted by supply”. To buy something you must first produce and sell something. The selling is what gets you the money, but the production of value adding output is what first allows you to sell. Without value adding activity, there is nothing to sell and therefore there is no basis for demand.

I replied:

Well, there’s the problem. You don’t understand either the law of supply, nor the law of demand. You’re talking “supply side” economics, which we discovered didn’t work way back in 1982 through 1988.

Supply does not stimulate demand, ceteris paribus. It’s the other way around. Henry Ford’s Model A didn’t created demand for transportation; the demand for transportation, coupled with a demand for transportation that didn’t involve horses and their natural effluents, created a demand for a horseless carriage. Ford created a machine that met that demand, and could manufacture it in enough quantity to matter.

Demand is not “constituted from supply.” Demand comes from needs, and wants. If supply can be created to meet that demand, demand can be met from supply.

But demand comes first, as Krugman, a Nobel-winning economist, well understands.

If consumers have no money to buy, the quantity supplied cannot matter in the least. If there were no demand for transportation at all, Henry Ford is sunk.

The law of supply explains how producers go about meeting demands — if prices are higher, they are happier to supply more. Again, if consumers have no money to purchase the good or service offered, the amount of supply is completely irrelevant.

Before Henry Ford’s mass production of automobiles created a demand for gasoline, gasoline was cast off from oil refining as a waste product from the production of kerosene for lanterns. Refineries from Standard Oil dumped millions of gallons of gasoline into rivers — no demand, the massive supply simply did not matter.

And as we can see from that example, demand not only creates the market, it can make a product considered to be waste, into the economic equivalent of gold.

Without demand, supply is simply excess manure, or gasoline by-product from the production of kerosene, to be dumped into a river (and thereby pollute the hell out of the river).

You’re right to say that without value-added activity, there is no economic activity. But tell that to Mitt Romney, who thinks finance is the magic, and not production.

A key problem with all of Republican economics is the ignoring of consumers, and ignoring the reality that consumers need money to stimulate demand. Tax cuts can’t help the hungry, who cannot eat tax cuts, nor the unemployed, who cannot take to the bank tax cuts on non-existent income.

Your odd myopia — maybe blindness — to the reality of how economics works, is shared by a lot of so-called conservatives. It’s a tragedy; it’s a tragedy I hope voters will put an end to, soon.

Did you ever notice that no supply-side economist has ever won a Nobel? Have you noticed that few supply-side economics articles are available in journals? Has your search for the numbers to back up the Laffer curve been as unproductive as they have been for everyone else — including Arthur Laffer? (Laffer promised to publish an article explaining how supply side economics work, as soon as he got the numbers together. That was in 1982. 40 years later, there is still no real intellectual foundation for GOP claims of tax cuts creating wealth. Those studies that have been done suggest tax rates maximize revenue when taxes hit about 70%, more than three times the rates Laffer proposes. History shows a much different story than Laffer claimed: Tax cuts in the Harding and Coolidge administrations led to bubbles that collectively burst in October 1929, leading to the Great Depression; tax cuts in 2001 led to bubbles in housing and the stock market, which burst in 2008, leading to our Great Recession.)

Right now, businesses are sitting on a pool of about $2 trillion, profits they’ve accumulated since 2008. If supply side economics worked, that money would be invested in manufacturing and service creation, and we should have an unemployment rate in negative numbers. The disproof of supply side economics is our current situation. Employers have plenty of supply of money, but they refuse to hire without demonstration of demand from consumers. Unemployed consumers, lacking money, cannot make that demand up from thin air. Magic does not work, in the real world of supply and demand, in economics.

Nota bene:  Videos come from a delightful series on economics created and put up on YouTube by Dr. Mary J. Glasson, licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.  Glasson’s series is available at YouTube and covers almost every topic in an entry-level survey undergraduate economics course.  Look for “mjmfoodie” at YouTube.com.

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More magic than a cape and red underpants needed to fix economy; but that’s all GOP offers

October 4, 2012

Despite the few details he leaked in the Denver debate — which contradict almost everything he and his campaign had said earlier, not to mention the GOP platform — Mitt Romney offers not much in the realm of a program to do better than President Obama in economics, in pulling the nation out of our economic doldrums.  Nobel-winning economist Paul Krugman explains:

Winner of the Nobel Memorial Prize in Economics, Paul Krugman - Tavis Smiley Productions image

Winner of the Nobel Memorial Prize in Economics, Paul Krugman – Tavis Smiley Productions image

As many people have noticed, Mr. Romney’s five-point “economic plan” is very nearly substance-free. It vaguely suggests that he will pursue the same goals Republicans always pursue — weaker environmental protection, lower taxes on the wealthy. But it offers neither specifics nor any indication why returning to George W. Bush’s policies would cure a slump that began on Mr. Bush’s watch.

In his Boca Raton meeting with donors, however, Mr. Romney revealed his real plan, which is to rely on magic. “My own view is,” he declared, “if we win on November 6, there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see — without actually doing anything — we’ll actually get a boost in the economy.”

Are you feeling reassured?

In fairness to Mr. Romney, his assertion that electing him would spontaneously spark an economic boom is consistent with his party’s current economic dogma. Republican leaders have long insisted that the main thing holding the economy back is the “uncertainty” created by President Obama’s statements — roughly speaking, that businesspeople aren’t investing because Mr. Obama has hurt their feelings. If you believe that, it makes sense to argue that changing presidents would, all by itself, cause an economic revival.

There is, however, no evidence supporting this dogma. Our protracted economic weakness isn’t a mystery; it’s what normally happens after a major financial crisis. Furthermore, business investment has actually recovered fairly strongly since the official recession ended. What’s holding us back is mainly the continued weakness of housing combined with a vast overhang of household debt, the legacy of the Bush-era housing bubble.

By the way, in saying that our prolonged slump was predictable, I’m not saying that it was necessary. We could and should have greatly reduced the pain by combining aggressive fiscal and monetary policies with effective relief for highly indebted homeowners; the fact that we didn’t reflects a combination of timidity on the part of both the Obama administration and the Federal Reserve, and scorched-earth opposition on the part of the G.O.P.

But Mr. Romney, as I said, isn’t offering anything substantive to fight the slump, just a reprise of the usual slogans. And he has denounced the Fed’s belated effort to step up to the plate.

Read more at the New York Times.

Why do I disbelieve?

  1. For more than a year Romney’s been pushing tax cuts as a solution to everything.  It’s rather late to back out of that now.
  2. Tax cuts can’t stimulate the economy — we tried them for 8 solid years, and they crashed the economy.  One can make a great case that the Obama economy is not soaring because he agreed to extend the tax cuts, in return for getting about half of the stimulus we needed.  At some point, people hurting in this economy will realize that they can’t benefit from a tax cut if they aren’t paying huge taxes, and they aren’t paying huge taxes if they are unemployed.
  3. Tax cuts cannot be revenue neutral.  They hurt deficits.  For months Romney’s been talking about defense spending and tax cuts that add between $5 trillion to $7 trillion in to the deficit.  If he wishes to argue that deficits hurt, he’s in trouble.  If Obama argues that deficits should be used to help people, Romney will be unable to make the math work on his plan if he tries to reply.
  4. Economic theory isn’t with Romney.  Can he make that big of a snow job on voters?  Even if he does, the economy won’t take it.

Now’s a good time to beef up on the high school economics most of us took, or the college class we took.  Can you see any way to make an austere, Spain-style economy work in the U.S. without putting us into a death spiral?

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