Airline Pilot Central Forums - Any "Latest & Greatest" about Delta?

Quote:

Originally Posted by alfaromeo (Post 1114083)

The most dangerous thing you can do is try to look at a complicated system and make simplistic conclusions. We had prosperity after WW II mainly because most of the industrial base of the rest of world had been blown up, much of it courtesy of the US industrial base that was never touched during the war. It sure is easy to be a manufacturing powerhouse when the rest of the world has been destroyed.

Go back and look at the Marshall Plan and the size of that stimulus plan for Europe. Adjust it for inflation, let me know what you think.

By the way, I am pretty sure the top marginal tax rate back then was 91%. That is not a misprint, 91%. Maybe you think high tax rates cause prosperity.

There is no simple answer to derive from a complicated system. The biggest problem we have in our country right now is that the problems are big and people keep trying to come up with simplistic solutions. As people become entrenched in these simplistic little bubbles, they no longer become interested in complicated solutions which is what is required by complicated problems.

Our current economy is hit by a dramatic drop in demand. People aren't buying things like they were, especially houses, and that has slowed the economy down. Businesses are flush with cash and are ready to hire and produce goods as long as someone will buy them. Talking about supply side economics is insane now, it is demand that is the problem. You can't push a rope.

There are two ways for the government to stimulate demand, the first is to give tax cuts, especially general tax cuts that hit the lower 75% of the economic spectrum. Virtually all of this money is spent and therefore will drive up demand. Sounds like we need to extend the payroll tax cut for at least another year, let's hope Congress agrees.

The other way to stimulate demand is by increasing government spending. The depression did not occur with the stock market crash. The depression happened when Hoover cut back government spending (demand) at the same time that the public was cutting back spending (demand). No demand, no economy, no jobs, etc. That is why the stimulus program was exactly the right thing to do back in 2009. It was completely counter cyclical to the drop in consumer demand. The stimulus program was about equal parts general tax cuts, aid to state and local governments, and public works projects. They probably should have spent more on public works projects because the reduced public demand drove down prices and the government was able to accomplish about 20% more than they originally estimated due to the low bids.

Cutting government spending will occur over the long run. It is not a panacea for all economic problems. If you cut too much now, then you will surely spark a new recession. In the end, to balance our budget we will have to have more growth, higher tax revenues, and dramatically reduce entitlement spending, especially Medicare and Social Security. All are very tough things to do, but simplistic answers will just keep us mired in this hole we are in.

The top marginal tax rates were very high back then...but no one payed them. They had more than enough loopholes so little to no revenue was earned from that. The Marshall Plan, which is still going on today in the form of endless military welfare for Europe, was money drained out of our coffers to build up the infrastructure of a future welfare state socalist competitor. Yet we still babysit them and call them our "ally" which really means we stand ready to fight for them. That's the one way nature of the obselete NATO we can't bring ourselves to let go of.

Government spending never produces real demand because the goverment can't produce real demand simply by spending. We need massive spending cuts to drive massive sustainable tax cuts, coupled with reducing regulations to get businesses and banks to start loaning, hiring and spending. And we need to give capitalism a chance for a change. Backstopping losses by the taxpayer doesn't just bleed us out today, it creates a perpetual system of malinvestment where the same mistakes continue to be made because the upside is always attractive and the downside is always mitigated. We have to have the freedom to fail for business to prosper but instead we have embraced mass central planning by government decree.

Luckily, we are still in a better position than Europe, Japan and especially China (the ultimate global money printing, debt addicted ponzi scheme) where if we did what we had to do now, we would emmerge from a harsh global slowdown as the undisputed leaders again, just like after the rubble of WWII. Although even if we did that, we would probably just re-waste it all again playing global stimulus provider and world police abroad and program after program at home.

Housing went through a massive correction, but there is more to come. The industry is still artificially propped up by an arbitrary mortage interest deduction, which is nothing short of a goverment subsidy to banks and housing. Plus all the programs for "first time buyers" and the like. They all sound so great, but they are all just false value by government decree that will find a way to come out of the system one way or another. Government policy of stimulating things is the definition of pushing a rope. And just wait til the massive college bubble pops. You think the big companies and banks squealed for a bailout over housing? You haven't heard nothing yet.

Government spending is by far the biggest impediment our economy has right now, yet it is being proposed as the solution. The one "simple solution" we need to abandon first is the notion that goverment, especially central goverment, can decree prosperity through policy rather than staying within the confines of the Constiution where it belongs. If you read the Constitution and the 9th and 10th Ammendments especially, you will see that what the highest levels of the government is even allowed to do is extremely limited by design. That's why everything now is an esoteric "interpretation" of little snippets like "the commerce clause" or "the general welfare clause" because there is no authority for massive departments and megatrillion stimulus schemes, but they do them anyway to get through the next election cycle and stay in power, regardless the cost.

Sometimes that can buff the ecoomic indicators because that's all they really target anyway, we call it a victory and worry about the false value and crushing debt later. But later is now. I hope as an airline we are positioned to take advantage of the global slowdown that's coming. There will be lots of opportunities around. We need to start with massive reductions in outsourcing and be ready to move on values that come up.