The Economy: Does More Government Help or Hurt?
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Slides from the like named public forum presented at the Kansas City Public Library, Plaza Branch, on September 16, 2014
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The Economy: Does More Government Help or Hurt?
- 1. Stephanie Kelton, Ph.D. Chair, Department of Economics University of Missouri, Kansas City KC Public Library, Plaza Branch September 16, 2014
- 3. For Example…. How to Help the Economy Limit the size of government Do anything else
- 5. Lucy Laffer Charlie Brownback Unshackling the Spirit of Initiative
- 6. The poor won’t work because they have too much money and the rich won’t work because they have too little.” ~John Kenneth Galbraith
- 7. Let’s Do It, Art!
- 8. “If you build it, they will come.”
- 9. Is it Helping? “We’ve had conversations with people and think it’s nice, but we haven’t seen any rush to hire new people or build new facilities,” Robinett said. “There’s still the tendency to wait for the demand first. It’s unusual to take the approach to build up the supply and expect the demand to come.” ~Tom Robinett, VP for Government Affairs Overland Park Chamber of Commerce
- 10. Better Question: Whom is it Helping? • Growth in private sector jobs lags national average by a full percentage point • KS is behind MO, OK and CO • Kansas Legislative Research Dept. estimates total $4.5 billion decrease in revenue by 2018 • The bottom 20% are paying about $166 more in taxes, while the top 1% are paying $19,786 less
- 12. Capitalism is a system that only works when there are enough customers, spending enough money, to keep sales and profits growing
- 14. The Great Recession Hemorrhaging jobs
- 15. How Government Helps A Countercyclical Shock Absorber
- 16. How Government Hurts • When the economy starts to weaken, unemployment rises and the deficit increases • The impulse is to fight against it (with austerity) to keep the deficit in check • But that only makes things worse • Like turning the wheel in the opposite direction in skid • You have to turn into the skid to regain balance
- 17. Our “Economy” is Measured It’sSp Aenbdoinugt CCananliobt rbaet tihneg E nFelomwy s Customer Killers in Sales Leakages Injections Saving Investment Taxes Government Spending Imports Exports I + G + X S + T + M DTreaxitn Faucet Plea for Austerity
- 19. FOREIGN
- 20. (Some of) Our Problems Private Government
- 22. Even a “Recovery” No Longer Top 10% Improves the Majority
- 24. Not Enough Jobs, Given Demand
- 25. Workers Get Less & Less
- 28. What to Do? • Federally-funded jobs program modeled on the WPA, CCC, NYA • Infrastructure • Education (Pell example) • Student Debt • Research & Innovation
- 29. Those are just some of things that government can do to help lay a foundation for long-term prosperity. Thank You! @StephanieKelton
Editor's Notes
- You have to be very careful with a question like this. If you think you’ve got an easy answer, you’re probably oversimplifying.
- If your answer to the question “What are the best ways to grow the economy?” includes only this recommendation, you’re probably oversimplifying!
- Here’s one philosophy about how to help grow jobs and the economy.
- And here’s how that philosophy gets executed in the policy arena. Government’s job is to set the right “atmosphere” for the job creators, who will unleash their talents once you remove burdensome taxes and regulations.
- This is the magic of Supply-Side economics or “Voo-doo economics” as it came to be known.
- Art Laffer was paid $70k for those pearls of wisdom.
- The economic equivalent of the “Field of Dreams.” The idea that if you build it, they will come. Does it work?
- Only demographic where he is ahead is with those who have no high-school degree. Leading in age, gender and race in virtually every poll.
- Also why states with highest average incomes are those least dependent on federal government transfer payments.
- Capitalism is a system that only works when there are enough buyers to keep sales and profits up.
- We used to have a much more unstable system than the one we have today. We had a very small government, no Central Bank and a gold standard. As bad as the Great Recession (2007-2009) was, it was nothing compared to the Great Depression or the many depressions that preceded it. Families lost their farms, bank deposits, homes, etc. It took years and sometimes decades to recover, only to face another depression soon after.
- The US economy was hemorrhaging jobs during the Great Recession. The recession itself was brought on by the bursting of a massive real estate bubble driven by fraudulent lending practices (lenders, auditors, brokers, ratings agencies, etc.) and a huge run-up in private debt.
- Probably the most important way the federal government helps in the modern era. Full-blown depressions are avoided because we have institutionalized the response of government. It puts a floor under incomes to support sales!!!! Unemployment compensation, Medicaid, Food Stamps, etc., etc. And progressive income taxes. Means the deficit automatically increases when unemployment is rising. When the economy is recovering (people are finding jobs again), the deficit automatically shrinks.
- When the private sector tightens its belt, the government must loosen its belt. If everyone tightens at the same time …. The economy will contact.
- There’s your “crushing burden of debt and inferior standard of living” Congressman Ryan!
- Earning $10.10/hr for 40hrs/week, 52 weeks/yr = $21,008 (gross annual income), enough to get a family of 2, 3 or 4 out of poverty with one person working full time.
- These some of things that government can do to help lay a foundation for long-term prosperity.