Phony Fear Factor

"We live in a golden age of economic debunkery; fallacious doctrines have been dropping like flies. No, monetary expansion needn’t cause hyperinflation. No, budget deficits in a depressed economy don’t cause soaring interest rates. No, slashing spending doesn’t create jobs. No, economic growth doesn’t collapse when debt exceeds 90 percent of G.D.P.

And now the latest myth bites the dust: No, “economic policy uncertainty” — created, it goes without saying, by That Man in the White House — isn’t holding back the recovery..."

http://www.nytimes.com/2013/08/09/opinion/krugman-phony-fear-factor.html?hp&_r=0

Good article so thanks.  In reading the comment section I chose one that I particularly liked, here it is:


Seems like the business climate is downright friendly for the investor class. Last I checked:

1) Corporate profits were at record levels.
2) The stock market was a record levels.
3) Corporations paid a 17% effective tax rate in 2012 versus 28% in 2000.
4) The top 1% got 23% of the income, versus 10% from 1950-1970.
5) The top 5% own 72% of the financial assets.

The picture is not so bright for the middle-class:

1) Housing prices down about 25% from their peak. Housing is the primary store of wealth of the middle class.
2) Creation of 5 million jobs since 2000, versus 20 million each decade 1970-2000.
3) Stagnant wages.
4) Serious job insecurity as corporations are free to out source our jobs in the lowest-wage country.

Corporations like Apple chose to put 700,000 jobs in Asia rather than here, citing lower costs and more flexible supply chains (e.g., folks could be roused in the middle of the night from their pens, er, dorms to make last minute changes to the product).

The problem isn't corporate confidence, it's consumer confidence. Get the jobs engine going and bailout the underwater homeowners and the rest falls into place. The government can either borrow the money, raising taxes in the future, or it can raise taxes on the rich now to pay for it.

Small biz is prohibitively difficult... and enormously important.