True, but the question wasn’t really set up for solutions like that. [/quote]
I’m sorry, but I fail to see the interest in the discussion then. Trying to guess on what is the most accurate generalization for the positions of conservatives and liberals is just dumb.
There are no accurate generalizations. When you generalize the positions to two basic ones, you have a huge margin of error. That’s Statistics 101.
Unless they argue that the US should not be so polarized and that there should be at least a dozen different parties that had representation in Congress (like in Europe).
Also, I’d like to see some big-time economists get into it with a debate on solutions, but for now I’ll have to settle for Chait and Goldberg, with their inherent limitations.
Now, what I wouldn’t give to see Friedman vs. Krugman… =-)[/quote]
We’ve had plenty of those debates over here in the Bay Area, both at Stanford and at Berkeley. I also to went to a couple in other places, including a couple of “think tanks”.
The problem – and possibly the reason the debates are not more public – is that it gets horribly complicated and rarely anyone clearly “wins” the debate. Why? Because the best solution depends on a) the objectives (i.e., what is the desired outcome) and b) the constraints (external and internal). So depending on the personal objectives and constraints of the economist speaking, the results are different.
The most interesting debate I ever had the pleasure of seeing involved several PhDs that worked together on an extremely complex model of the present-day US economy that used macro and micro-economic theory for the numbers and Game Theory, Cultural Anthropology and Biology for the constraints. It had some Chaos Theory equations thrown in the mix for some of the external interactions too. It is already brilliant but it already seems to be very reliable. However it’s still being worked on and I’ll be glad to post a link to the papers when they are published.
Of course, the variables that needed to be introduced in the model are the objectives and the proposed policies.
When running the simulation with the objective being an increase in GDP the results were interesting, because with most policies you introduced (including all the ones being proposed by both Republicans and Democrats) the increase either didn’t happen or was highly cyclical (with cycles ranging from 5 to 20 years).
The kicker was when they ran a more complex set of policies, that divided the US into two groups of “enterprises”: public-interest and market-interest.
In the public-interest group are mostly the companies that provide non-material (non-goods) services that everyone needs in order to have basic quality of life i.e., they put:
- Health, including Hospitals, Clinics, and – yes – Pharmaceutical companies
- Education, from High-Schools to Colleges
- Transportation, i.e., Public Transit, including trains, buses, airplanes, etc.
- Utilities - water, electricity, etc.
- Insurance companies
In the other group they put everything else, i.e., stuff from food and industry to retail.
The group of public-interest stuff was funded with tax money and nominal fees (“co-pay”), and expected not to make profit (but not create budget deficit either – which is not easy). The other group – the majority of companies – was funded by the free market, of course, and expected to make profit.
The free market was highly de-regulated, except for a strong anti-trust policy that prevented the existance of monopoly and cartels. Specifically policies were put in place to incite heavy competition in those markets, both internal and external, and prevent consolidation of companies at all costs.
Federal + State tax was set in exponential brackets starting at 0% for people below minimum wage and increasting up to 60% (Fed + State) for people that earned over 10x minimum wage per head (benefitting people that have kids and/or housespouses).
Sales tax was non-existant – with education, health, transportation, power, banks and insurance companies in the hands of the Government there was no point in inciting savings. The incentive was given to people to spend all their net income in order to fuel the economy’s growth.
I’m describing this in some detail because it was the only policy that provided sustained increase over the period of confidence of the simulation (200 years). The increase in GDP was small - only 2% a year above inflation - but completely sustained, so after the 200 years the results were quite spectacular vs the more traditional policies that created a rollercoaster.
Of course this represented a set of policies that are so far left for the US political spectrum, there is a higher chance of hell freezing over than for them to ever be adopted. No president will get elected by promising 2% over inflation growth and saying “it’s the best for our grandkids”.
Of course, the conservatives argued that the simulation was biased towards the left-wing but this was a year ago and nobody has been able to prove that the simulation is not as accurate as they can be. Including many conservatives.
I’m still leaving out many, many details, but this is already a long post – I can share more details to anyone interested.
The bottom line is that the result of the studies were that bar hell freezing over, we’re essentially going to live in continuous economical cycles of contraction and expansion from here on, independently of who is in power, with our great-great-grandkids inhereting a country that is not much bigger (economically) than the current US, and will by then be the world’s third economical power, with only 2% of the world’s population.
But deep down we all already knew that, didn’t we?