Sunday, December 27, 2015

Actually snake oil

Lynn Parramore, writing for Huffington Post Politics, interviewed Orsola Costantini, Senior Economist at the Institute for New Economic Thinking, about the Cyclically Adjusted Budget used by many governments around the world. It is an imprecise statistical estimate that guides government officials when they decide what to spend money on and how much money to collect in taxes.

In the 1940s the CAB was a great thing. It helped convince business owners that policies to put Americans to work after the war were good for business. It allowed the economic experts and the budget wonks, not just politicians, to give blessings to these policies.

But because it is imprecise the CAB is easily manipulated. In these times of income inequality and power held by the 1% we know who is doing the manipulating and in whose favor. The use of the CAB allows politicians and businessmen to...

* Use language that is technical and obscure, giving a veneer of objectivity that is indisputable.

* Avoid taking responsibility of their decisions. The CAB and budget wonks made me do it.

* Make drastic cuts in social spending as well as personal pay and benefits in the name of economic science, the smooth running of capitalism, or to keep inflation low.

* Limit choices available to fix a budgetary situation. We can't raise taxes! We'll face economic doom!

Through the CAB governments are able suck money from the poor to give to the rich.

Costantini said:
I suppose this shows the limits of democracy when information, knowledge, and ultimately power are unequally distributed.
Even the name of this tool, the “cyclically adjusted budget,” carries an aura of respect. It diverts our attention. We don’t question it. It creates a barrier between the individual and the political realm: it undermines democratic participation itself. This obscure theory validates, with its authority, a big economic mistake that sounds like common sense but is actually snake oil — the notion that the federal government budget is like a household budget. Actually, it isn’t. Your household doesn’t collect taxes. It doesn’t print money. It works very differently, yet the nonsense that it should behave exactly like a household budget gets repeated by politicians and policymakers who really just want to squeeze ordinary people.

Bill Moyers, also writing for Huffington Post Politics, takes a look at the budget bill recently passed by Congress and quickly signed by Obama. He lists many of the goodies for the 1% tucked in its 2000 pages. Did we expect anything else? The official spin, which news anchors uncritically amplified, was that it was a bipartisan bill that proved Washington can work. It isn't a perfect bill, but does a lot of good things.

Moyers asks the important questions: Washington works for whom? It does a lot of good things for whom? At what price?

Moyers wrote:
Can we at least face the truth? The plutocrats and oligarchs are winning. The vast inequality they are creating is a death sentence for government by consent of the people at large. Did any voter in any district or state in the last Congressional election vote to give that billion dollar loophole to a handful of billionaires? To allow corporations to hide their political contributions? To add $1.4 trillion to the national debt? Of course not. It is now the game: Candidates ask citizens for their votes, then go to Washington to do the bidding of their donors. And since one expectation is that they will cut the taxes of those donors, we now have a permanent class that is afforded representation without taxation.

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