Monday, November 10, 2008

Peter Schiff: Tool

I'm going to do this post in the style of Penn & Teller: Bullshit! (Warning: foul language.)

Look at this fucking asshole. He seems to think that deficits under Obama's tenure would be a novel thing. Numb nuts doesn't seem to realize that it was George Fucking Bush who ran up a trillion dollars in deficits during his last year alone. He's run up more than FOUR GODDAMNED TRILLION in deficits during his eight years in office. That's roughly 4.5% of GDP. One dollar out of twenty in the economy sucked into the public debt black hole.

And for what? What was bought for our 4 trillion? I mean, a real socialist might actually do some good, such as--Jesus fucking Christ!--fix some infrastructure, fund energy research, that sort of thing. You know, instead of blowing up brown people.

Anyway, an article by Schiff is what really blew my stack. A gigantic wank fest of praising Reagan, worshipping Mammon, and generally being a clueless douchebag.

Where to start. Oh, Reagan. I'm so fucking tired of hearing about how great Reagan was. Well, actually he was great--if you were the son of a wealthy tax deadbeat like Irwin Schiff. No wonder Peter got a great head start in life--while your mommy and daddy were upholding the virtues of good citizenship with their pocketbook, Peter's daddy was HOLDIN' OUT. I hope Peter visits his dear old dad on Saturdays. I'm sure the pat downs and security checks are annoying, but it's well worth keeping up with dear old Dad.

Right, Reagan. Reagan was naughty. He talked about how government was the problem instead of the solution, and then proceeded to rubber stamp more government spending than ever fucking seen in peacetime. Mostly the money went to terrorize the Russkies--who might have need terrorizing, but Jesus Christ. Either the government is evil or it isn't.

Schiff makes much of the marginal tax rate reductions, which did a lot to push huge amounts of the tax burden off of the wealthy and on to ordinary schmoes like you and me. Though dealing with the misery of bracket creep was only fair, the end result was ridiculous levels of public debt (though that was just a taste, apparently) and a fatter bank account for the Rockafellas. The Laffer Curve, much touted at the time, was in fact so much horseshit. And not even an original idea--even J. M. Keynes told us that taxing people at 90% might be bad for economic growth. But, that doesn't mean you can drop the marginal rate from 70% to 35% and expect to have a net gain in income. You're not going to lose half, but you are going to lose considerable money. AND VOILA WE HAD DEFICITS. Holy fuckin' shit!

Though I have my own skepticism of Paul Krugman, he exploded this Reagan worship quite eloquently earlier this year. I'll let that stand alone, but let's look at one more thing: Unemployment rates. Unemployment rates, of course, are a lagging indicator, and may continue to rise well into a recovery. But they shouldn't lag too hard, and if the economy is in good shape, they should drop sharply. This is an indicator of whether the economic expansion is evenly distributed.

The worst time to be trying to find a job in recent history was 1982. The national unemployment rate was just under 10%, and even if you had a job, your employer was doing nasty shit like giving you pay cuts instead of increases. All the while, inflation was still spiraling out of control. Paul Volcker was trying to contain this by raising interest rates up into the stratosphere (my parent's mortgage at the time was at 14%--imagine that.) All in all, a miserable time.

But energy policy was adjusted, taxes were lowered, and so Reagan's initiatives did have an impact on the economy. Eventually this led to job creation. But nothing much happened at first. In 1983 it was still about the same. But by 1986, things had softened and it was 7%.

1986 was the year that taxes rates were reduced further. But did a massive wave of jobs get created? Fuck that! The rate of improvement actually flattened, and in 1989 it reached a low of 5.35%. Yes, folks, when I was in high school, people thought that 5.3% unemployment was fuckin' awesome! Dickheads like Alan Greenspan suggested that 5% was "structural unemployment" and you really couldn't do any better any more.

Well, we all bought that shit, and, oooops I fuckin' forgot: We had this little recession at the end of the brilliant Reagan revolution. The recession wasn't all that severe by absolute terms, but the average guy took it in the...uh...shorts. The year Clinton was elected, the rate was nearly 8% again.

But then what happens? Clinton raises taxes! Disaster, right? Nope, I think all of you not only remember that unemployment dropped to unheard of levels (4% in 2000), but we got PAID a lot more than we had before. A lot more in some cases. My income increased nearly 200% (ie, tripled) between college graduation in 1994 and 2000. Of course, that was because of malinvestment in bad technology. Not everything was perfect during the Clinton years, but you can fairly say the benefit was spread more evenly.

What does this tell us? That rising tides do not lift all boats, and that lowering taxes is not the be-all end-all. But you can't expect the son of a fucking tax protestor to know that.

So, seriously, if we survived $1T in public debt from Ronnie, and $4.5T in public debt from Chimpy the Pinhead, it's difficult to imagine how the O-man can screw things up any worse. Seriously. Much more likely is that President-elect Obama will raise taxes on those who have the money to pay them, increase public investment and wage supports, and invest in research that can get our economy rolling sustainably.

I predict high deficits and some pain in the short term, but it is possible we might have a Clinton-like era of nearly universal prosperity. The hope of this eventuality is why Obama won--no one else had it. Let's hope he succeeds, and let's help him do it. And tell assholes like this Schiff character to STFU.

I will post more about Schiff, Austrian-school economists, and what I like to call "Paultards" in future installments.

[PS: Let's give Schiff a little due credit. He predicted the mortgage meltdown. Because, you know, it takes a genius to see that an epidemic of stated-income loans with nothing down on fraudulent appraisals backed by toxic options called credit default swaps is going to end badly. Way to go, Pete!]

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