Marching Resolutely Backward
Dolors & Sense
by Sanford Rose
KISSIMMEE Florida—(Weekly Hubris)—9/26/11—Whatever happened to the Idea of Progress? The idea may still exist but the reality doesn’t—at least not in the economic sphere.
Household wealth has fallen to pre-2000 levels.
Median income has dropped to the 1996 point.
Poverty has risen to a post-1983 high.
And home equity ownership totals have retreated to what they were back in the late 70s.
We’re going in the wrong direction wherever we look. But never fear: the intellectual optimacy has things well in hand.
They’re planning how to distribute what are called “tax expenditures.” That’s the revenue the country will get when we end tax preferences like the deductibility of mortgage interest.
It’s a big amount—around $4 trillion over a ten-year period.
And where should this money go?
To reduce the debt load, intones Alan Greenspan.
To reduce marginal tax rates, contradicts Stanford professor John Taylor.
Split the total, says the owlish appearing (and just as wise) Harvard luminary Martin Feldstein.
All these worthies are addressing the long term, which is when, as Keynes forever reminds us, we’re all dead.
The long term is just a succession of short terms. Unless we focus on the success of some of those early successions, the long term won’t be worth talking about.
Success depends on forgetting the debt load or marginal tax rates—at least for now.
Success depends on having the Federal government spend enough to embolden consumers, who, bitten by the frugality bug, are now actually over saving, to get re-acquainted with the nation’s shopping malls and auto showrooms.
Every dollar of excess government spending, if wisely allocated, can fetch between $1.19 and $1.60 of incremental national output within an estimated nine months.
That’s a payback worth getting.
But in order to get it, we have to march back, not materially, as we have been doing, but spiritually—to when leaders confidently spoke of New Deals, Fair Deals and New Frontiers. To when the talk was about growth and more equitable sharing of that growth.
Not about reducing the national debt.
As anyone who has ever been run a business knows, when your preoccupation shifts from increasing revenues to reducing expenses, it’s time to shut your doors.
Sanford Rose
Sanford Rose, of New Jersey and Florida, served as Associate Editor of Fortune Magazine from 1968 till 1972; Vice President of Chase Manhattan Bank in 1972; Senior Editor of Fortune between 1972 and 1979; and Associate Editor, Financial Editor and Senior Columnist of American Banker newspaper between 1979 and 1991. From 1991 till 2001, Rose worked as a consultant in the banking industry and a professional ghost writer in the field of finance. He has also taught as an adjunct professor of banking at Columbia University and an adjunct instructor of economics at New York University. He states that he left gainful employment in 2001 to concentrate on gain-less investing. (A lifelong photo-phobe, Rose also claims that the head shot accompanying his Weekly Hubris columns is not his own, but belongs, instead, to a skilled woodworker residing in South Carolina.)