President Bush, acknowledging the risk of recession, embraced about $145 billion worth of tax relief Friday to give the sagging economy a "shot in the arm. " Bush said such a growth package must also include tax incentives for business investment and quick tax relief for individuals. He said that to be effective, an economic stimulus package would need to roughly represent 1 percent of the gross domestic product - the value of all U.S. goods and services and the best measure of the country's economic standing. White House advisers say that, in current terms, 1 percent would amount to around $145 billion, which is along the lines of what private economists say should be sufficient to help give the economy a "short-term" boost.
Unfortunately regardless of how one views the specifics of the Bush plan, there is wide agreement among many economists that its purpose is a permanent change in the tax structure and that this will not create jobs and growth in the near or long term. President Bush's plan is also aimed at helping to shore up the what he calls "struggling stock markets". The problem is that the debt-laden US economy with a manufacturing base which is mainly outsourced, is no longer capable of providing its population with a adequate living standard which utilizes its own productive resources. Cutting interest rates also increases the danger of inflation.
The basic economic objective of any country should be to guarantee sufficient individual income to everyone. Governments should not need to be worried about, or cave in to the wishes of the stock markets. Stock markets, lets face it, are very similar to gambling casino's. They fuel on speculative games focusing on hedge, equity, and a variety of other funds. Of these, the so-called hedge funds are probably the most dangerous to any economy, because they are unregulated and account for more than one third of all stock trades. The hedge funds in the US represent approximately $2.5 trillion in assets and they pay their managers exorbitant salaries
The reasoning used by President Bush to promote his permanent tax cuts, tax relief and the financial deregulation for corporations and the wealthy is that these benefits will eventually trickle down to the general public and make the economy healthy again. "Tell me another story". The actual situation is quite different. The British Guardian wrote today, "The Fed is doing its best to give the impression that it is still in control of the US economy, but its reassurances are as hollow as that given by Herbert Hoover - on the weekend after Black Thursday in October 1929 - that the fundamentals of the economy were sound. If anybody is running economic policy, it is the big banks and investment houses on Wall Street.
The World's economic system needs a drastic overhaul. The control over the economic wellbeing of the world needs to be taken out of the hands of the private banking system and investment houses and returned to transparent democratically elected governments. This might appear to be a revolutionary solution, but it really means moving away from the idea of jobs to that of income. A world economy which is not burdened by interest bearing debt can provide a good income to just about anyone on the planet. Unfortunately the proposals by President Bush today can only increase the problems. Instead he should have proposed; the regulation of the financial industry, a return to the gold standard; a general amnesty of all personal debt for anyone earning less than $50.000; a total ban on unsecured personal credit; a national productivity fund in which every corporation puts a percentage of their pre-tax profits to provide a minimum income for the most needy; a universal health care program; and moving 60% of the military budget to education, research and development, including alternative energy resource development. Regardless of what the doom sayers, industry or financial establishment will say, this new approach would shift the present economic emphasis from a financier-banking controlled system to an economic democracy which will enable to energize the world economy through the forces of innovation, natural wealth and indigenous resources. The time for "bandage economics" has come and gone.
No comments:
Post a Comment