San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Tuesday, August 16, 2016

Republican Plank # 3: Gross Economic Ignorance On Display

In the economic portion of the Republican platform, under a section entitled "Fair and Simple Taxes for Growth," the Republicans state, "Republicans consider the establishment of a pro-growth tax code a moral imperative. More than any other public policy, the way government raises revenue — how much, at what rates, under what circumstances, from whom,and for whom — has the greatest impact on our economy’s performance. It powerfully influences the level of economic growth and job creation, which translates into the level of opportunity for those who would otherwise be left behind. Getting our tax system right will be the most important factor in driving the entire economy back to productivity."
Both Republicans and Democrats fiddle around with the tax code constantly.  Their various changes to the code usually have no impact upon the one item that is most important for the health of the economy.  That item is the total amount of federal revenues taken in as a percentage of Gross Domestic Product.  The federal government is a gigantic parasite sucking the lifeblood out of the free and voluntary actions of millions of individual participants in the economy of the Socialist Democracy of Amerika.  Insofar as the federal government takes more of that which is produced in the free market, the free market will suffer.  The less the federal government confiscates the more the free market can prosper.  The graph below shows how much money the federal government stole from the free market for the last four years of the administration of King George II and the first seven years of King Obama.  Notice any difference?

The simple fact of the matter is that neither Democrats nor Republicans are committed to reducing federal spending and, thus, reducing the need for federal revenues.  Career politicians are in the business of getting re-elected and remaining career politicians.  No person can remain a career politician in this envy filled land without promising billions of dollars of free stuff to the people who vote for him.  That guarantees that federal spending will never drop and that guarantees that federal revenues, regardless of what the Republicans might say, will never drop.  In a word, the Republicans are hypocrites.  They claim to reduce taxes but revenues remain the same and spending goes up, along with the national debt.
Under a section entitled "A Winning Trade Policy" we find the following economic mumbo-jumbo:
"International trade is crucial for all sectors of America’s economy. Massive trade deficits are not....We need better negotiated trade agreements that put America first. When trade agreements have been carefully negotiated with friendly democracies, they have resulted in millions of new jobs here at home supported by our exports....We cannot allow foreign governments to limit American access to their markets while stealing our designs, patents, brands, know-how, and technology. We cannot allow China to continue its currency manipulation, exclusion of U.S. products from government purchases, and subsidization of Chinese companies to thwart American imports."  Let's consider these assertions for a moment.
Republicans believe that trade deficits are bad for the SDA economy.  That belief is economic nonsense and the Republicans are too stupid to realize it.  A trade deficit, as the politicians like to define it, is any situation in which the SDA imports more goods from another sovereign nation than it exports to that sovereign nation.  Politicians hate trade deficits because they believe they are indicative of unfair trade practices on the part of the foreign nation.  In their infantile understanding of the economic world they believe that the citizens of the SDA buy more goods from another country only because that other country is subsidizing the production of those goods, thus costing the SDA jobs as domestic producers are unable to compete with subsidized foreign producers.  I have written about that nonsense before here.  The simple economic truth is that there is no such thing as a trade deficit.  Trade deficits can only theoretically exist when the person doing the measuring restricts himself to goods and services alone, ignoring the monetary side of the transaction.  When the SDA runs a trade deficit with another foreign country it also runs a currency surplus with that country.  When both sides to an economic transaction are taken into account (the goods sold and the currency used to make the purchases) there is never any imbalance of trade.  The concept of a trade deficit is a political construct only, it has no correspondence to the real world. 
The Republicans have adopted Donald Trump's concept of trade as an act of war.  That is not surprising given their love for the warfare state.  They refer to trade agreements with foreign countries in terms of "winning" and losing.  In true free trade both parties to the transaction are winners, otherwise the transaction would never take place.  It is only when political or military hegemony is involved that it is proper to describe a trade agreement in terms of winning or losing.  In the ignorant world of Republican economics, they believe a trade agreement is only good when it results in a surge in SDA exports, thus propping up SDA jobs and ensuring the continual re-election of Republican political candidates.
As is the case with everyone these days, the Republicans want to wage a trade war with China.  This plank accuses the Chinese of subsiding their domestic producers to the harm of SDA businesses.  Go here for a blog post that exposes the idiocy of that accusation.  Mittens Romney wanted to wage a trade war with China as well.  I wrote about the economic lunacy of that idea here so I will not restate the arguments against it in this post.  The Republicans also accuse the Chinese of "currency manipulation."  Go here for a blog post about that incorrect idea. 
For all of their talk about sound money, the Republicans are firm believers in the moral propriety of a central bank.  They dedicate a splinter of their plank on economics to discuss the Federal Reserve.  They make a big deal about the need for an audit of the Fed but take no steps to abolish that criminal institution.  Here are their own words about the Fed:
"Because the Federal Reserve’s monetary policy decisions affect job creation, upward mobility for workers, and equitable prosperity, they should be transparent. Similarly, the Federal Reserve’s important role as a lender of last resort should also be carried out in a more transparent manner....The first step is through an annual audit of the Federal Reserve’s activities. Such an audit would need to be carefully implemented so that the Federal Reserve remains insulated from political pressures and its decisions are based on sound economic principles and sound money rather than political pressures for easy money and loose credit."
The Federal Reserve is a criminal organization, pure and simple.  Go here for a post making that point.  If the Republican party truly wanted to establish sound money in this envy filled country they would abolish the Fed and allow the free market to establish the monetary standard.  That, of course, will never happen?  Why?  Because the Republicans, just like the Democrats, always spend much more money than they take in via taxes.  Republicans know that raising taxes costs them votes.  They also know that promising shiny things to their constituents buys them votes.  So they find themselves in the unenviable position of needing more money than they receive via taxation to pay for all their shiny things programs.  Where do they get that money?  From that wonderful institution the Republicans call the "lender of last resort."  Who is the lender of last resort?  The Federal Reserve.  You might think that an institution entitled the lender of last resort would actually make loans to all sorts of folks.  In this case the lender of last resort only makes loans to one person.  That person is the federal government.  Unlike the loans that you and I can obtain at profit seeking banks, which are at least partially backed by bank reserves, the loans issued by the Fed to the government are pure counterfeit dollars, with nothing more than hot air and printing presses backing them.
For all of their talk about free market economics the Republican platform is shockingly socialistic in nature.  That is why, once again, I am driven to just one word when I think of the Republicans.  That word is "hypocrite." 

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