Role of government when "unfettered market is not enough"

Wandel...

...I certainly wish Barack Obama a ton of luck in getting something done in this area. I hope most people...Democrats, Republicans, Independents...join in wishing him luck.

Something has to be done to stem this horrible slide into greater and greater inequality...and the bully pulpit of the presidency is a terrific place to start. The Congress has to get involved big time also.

We'll see where this goes.

Thanks for your thoughts, Frank. Obama is actually highlighting issues of political philosophy that have been debated for centuries.

I'm eagerly anticipating all the responses from the Cons who will maintain that government has no business regulating business or providing help to people unable to make it in today's marketplace. I can already hear the cries of "That government governs best which governs least" and "Government, keep your mitts off my profit margin."

The fact is that in today's USA, the middle class is largely a myth. There is no middle class any more. The rich aren't just rich; they are supper-wealthy. The poor get poorer daily. You either have several million $$$ to your name or you're eligible for food stamps and other assistance.

I'm 100 percent behind Obama on this issue. An "unfettered market" just puts the fetters onthe working poor.

Btw, good post, Frank.

The only economy to ever try a totally free market, NZ, went backwards (it's always otherwise kept a relative footing to the Australian economy). They had to dump the policy or see their economy destroyed.

It should also be noted that none of the developed western nations had their economy develop in a free system...it's only after development that they started spouted the pros of a 'free market'.

That is only a spoon of water in a dam in this sort of discussion....and like a dam, I doubt anyone can see every corner or depth of it. Economic discussions are like goo...hard to hold without it leaking through your fingers.

If income inequality is the "defining challenge of our times," then Obama has been a total failure as a president. It's a bit like Rob Ford complaining that drug abuse is ruining our society.

Here, will be listenting.

Enough to correct market failure. Not enough to introduce more government failure than the market failure it corrects. The optimum for this tradeoff is, of course, hard to measure. But my personal guess is that countries like Canada, Australia, and Switzerland pretty much hit the sweet spot.


See above.


What do you mean by "provide"?


Maybe it does, but so what? Governments exist to advance the general welfare, not to advance free markets. So the real question is, does governmental control harm people more than free markets do? For the specific government controls currently discussed in the US (universal healthcare, quantitative easing, stimulus spending on infrastructure and education, even a moderate increase of the minimum wage . . .) my answer is "no". The US government should go ahead with these.

Some government regulation is necessary, at least in America, as not every capitalist has the best intentions of the workers in mind. Contrary to popular belief, not everyone is a white hat wearing do-gooder. That's why business needs a certain level of oversight.

BUT...

Government should not become a hindrance to the business world either. When companies actively work to reduce employee hours, keep employee levels below a certain number due to government constraints and regulations and when government regulations swamp business in hours upon hours of paperwork you know that there is too much over sight.

When you get your OSHA inspection and the fine is only $5000 and you are HAPPY about that, there is too much oversight... read that sentence again... now read it like this... No matter what, OSHA WILL find something wrong. There is no business that gets an OSHA inspection and is not fined for something. It's become a self-feeding monster.

Yeah, we need government for sure. We need a certain level of oversight, but that is not what we have now.

So far as taking care of those that need it? Hell yeah. Get those folks the leg up they need. But, why are there now 10 million people on disability? That's the same as the population of Greece. Imagine that. The entire population of Greece could have moved to America and just gone on disability...

American dream, be gone with you. It's easier, though not as pretty, to just collect the check instead of working hard, saving money and bettering your position. That's only for immigrants now. People moving here from a place where they know actual misery. They move to the US, work their asses off and become successful. Natural born Americans have become the Weebels of the world. It's a real shame.

I was thinking about the extent of a government's responsibility to provide a "social safety net."

To the extent that society provides a social safety net, it should provide it for all, and it should provide it through democratically-elected government.

Income inequality (In the US) has been moving that way for the last 80 years.

The greater the poor percentage the more entrenched the cycle of poverty becomes...this part alone can take generations to reduce.

The 'priveleged' elite will fight tooth and nail to retain their status.

To expect any head of government to be able to significantly reverse income inequality in their term, is unrealistic. But making it a headline topic, and making a start is worthwhile, is it not?

No, just 30 or 40. Income inequality declined from FDR to Nixon, stagnated from Nixon to Carter, and has been skyrocketing ever since Reagan.


And yet, six presidents from both parties pulled it off once. There's no reason it couldn't happen again. Whether it it could happen under Obama, after he wasted five years on trying to be Washinton's community-organizer in chief, is more doubtful.

In November, the Congressional Budget Office issued a report on what can be done from 2014 through 2023 to reduce the federal deficit. Options include not only spending cuts, but proposals to increase revenue. The revenue options are described in Chapter 4 of the report which is available in pdf format through the link below:

http://taxprof.typepad.com/files/cbo-1.pdf

Ah, you just have to look at the tax ratio that employees vs companies are paying to know that it is 80 years...it's just that the rate has accelerated in the last 30-40 years.

In 1930 employees & companies contributed roughly 50/50 to tax revenue.

Now employees contribute 6 times more than companies to tax revenue.

The more pronounced the gap, the quicker the growth of the divide...in the last 30-40 years it could be said that the tax gap has widened drastically...hence why you think it's only been 30-40.

Of course, world economics/trade also plays it's part in the growing divide, including : multinationals, free trade, lower wage structures overseas (=lower cost of production), less red tape overseas (=lower cost of production), and the fact that developed countries are competing against such...this too has contributed to the growing divide.



As you mentioned regarding the last 30-40 years, and I clarified (re acceleration of the effect)...due to that acceleration it's much, much more difficult now (not that it shouldn't be undertaken).

http://finance.yahoo.com/news/solid-us-job-growth-cuts-unemployment-7-pct-163429433--finance.html

Hello Rabel,

I'm not sure how that is a comment on what I said.

(that said) I'm glad your unemployment has fallen to 7pc.

Its more a comment on the unemployment % which most conservatives continue to claim is getting worse under Obama. This just seemed a place to post it. Not arguing with you.

Oh, and the other thing that has widened the gap between the rich and the poor is (specifically starting after WW2, but accelerating from their) womens participation in the workforce.

That sounded odd to me at first, until it was pointed out that prior to this, where the husband worked and the wife stayed home...everything was dependant on the husbands wage. But as more women started working, professional minded men started marrying professional minded women (and the same across most sectors).

This lead to a doubling of incoming for the professional couples and a doubling of income for the struggling unskilled couples. Here then, comparatively, the professional couples had much more spare income than the unskilled couples.

The professional couples therefore had a much improved ability to invest (and much greater ability compared to struggling couples), which contributed to driving up the cost of housing (an increase much greater per year than the previous norms).

This then drove up the cost of rent, which lead to the struggling couples struggling even more. And this dynamic that occurred right across the spectrum, and also contributed to the growing divide between the rich and the poor.

That's not at all easy to reverse. And it's hard to argue that it should be reversed (ie. it shouldn't be - the govt has no business in who marries who).

But wage differential mitigation would still go a way towards helping close the gap.

Interesting. There are exceptions we're all aware of, but I see your point.
Meantime, hi, we haven't talked for a bit.