Thursday, May 10, 2012

EUROPE SAYS 'NO' TO AUSTERITY. WHAT DO WE SAY?


Today’s posting includes a couple of my items.  One deals with the economic issues which President Obama and Mitt Romney should be discussing.  The other is a short story which I hope you’ll enjoy.  I would hope the next posting will contain some of your work as well as mine. 


JL

                                                     

Austerity:  Yes or No?

The prior posting on this blog listed what I feel are the real issues in the upcoming Presidential election.  In view of recent happenings in Europe, let’s take a quick look at one of them.

8.  Whether belt-tightening austerity is the solution or government pump priming to boost the economy is the answer must be decided.  You can’t have it both ways.

With the economies of European nations facing the same problems as we face, these two alternative solutions are on the table there as well.  Germany, whose economy is flourishing, is willing to assist in bailing out countries like Greece, Italy, Spain, Portugal, Ireland and even France to some extent, but only if those nations address their problems (which are not all identical) by belt tightening and austerity.  The governments of these nations have been providing services which their revenue streams cannot support, and their ability to borrow to fund what they are doing is shrinking.  The thought is that later retirements, salary cuts, benefit reductions and the like will enable these governments to secure the funds they need to handle their enormous debt loads, with Germany leading the pack of bailer-outers.  As these nations, thereby gaining some breathing time, pick themselves off of the floor, their economies will improve with job creation solving the problem.  But austerity is a pre-requisite to this happening.  No one will bail out spendthrifts.

The other approach is that only by continued government spending for “pump priming” can these economies be put on the right track.  But the money to prime the pump is not there nor is anyone willing to lend it without solid commitments to austerity.  Without that commitment, it appears that the remaining solution is a redistribution of a nation’s wealth by significantly increased taxation of the wealthy and of businesses.  This is a Marxist position and abhorrent to many, but it sounds good to the working people of Europe who are being asked to bear the brunt of austerity.  That is why Hollande defeated Sarkozy in the recent French elections and we can look for future rebuffs of the austerity solution as Europeans go to the polls.  The Greeks have voted “no” to austerity.  Europe has a history of such populist reactions to austerity proposals while there is wealth around, but in the hands of others than the working people.

                                   
This was the basis of the French Revolution at the end of the 18th century, the Russian Revolution in 1919, the rise of Hitler in Germany, the unification of Italy, the Spanish Civil War, and if you go back to early Rome, as documented by Shakespeare, the downfall of Coriolanus.  Sadly, Europeans sometimes turn to authoritarian leaders when austerity is on the table.  What amounts to peaceful and democratic wealth redistribution, without austerity, is a difficult order to fill.   Many feel that the unfettered workings of a free-enterprise capitalist system provide a safer way to proceed, and would prefer it, but without the burden of austerity falling on most of the people.  That’s a hard bill to fill.  We may be fortunate in that we can look to what is happening in Europe in order to make our decisions.  


As to how our country deals with this problem, and our national debt cannot be swept under the rug for much longer, the Keynesian solution would be to increase taxes and with that money, (1) support private enterprise, via government loans, in job creation, (2) carry out government projects which temporarily provide jobs and (3) maintain the safety net for those who are being hurt by the economy’s downturn.   Ultimately, those with these newly created jobs would give a boost to the economy by paying taxes and spending money, thereby creating new jobs.  Eventually, when the pump no longer needs priming, taxes can be reduced for everybody, government spending reduced and the debt reduced over a number of years.  Combined with this financial solution would be a monetary solution where our money supply would be carefully increased.  When the government itself purchases debt with funds it really doesn’t have, it in effect increases the money supply.  This is what the Federal Reserve has been periodically doing and is part of a Keynesian solution.

The opposing “trickle down” theory (similar to the Lasser Cuive which Ronald Reagan believed in) maintains that there need not be any new taxes and in fact, the wealthy and businesses should get further tax relief so they will have more funds to invest in activities which create jobs.  Of course, until those jobs appear, austerity would be the rule, and the government would not be increasing the money supply.  But once that happens, the economy would flourish, with job creation bringing in more tax revenues and fueling additional jobs and with less need for a “safety net,” the debt can be reduced by cutting government spending.

I believe, however, that this can only work if it could be clearly documented that funds freed up by tax cuts were actually being used for job-creating activities such as plant expansion and opening new enterprises rather than being used for such things as retiring debt, outsourcing jobs or non-productive investment purposes such as hedge funds, which are sometimes managed to make failure profitable for some.  I feel that no individual nor business, if given a tax cut, would accept the idea of their government’s telling them how to make use of the freed up money.

I feel the Keynesian approach is the preferred choice.  An example of its successful working is the salvation of the auto industry in this country.  But there can be failures as well, such as the loans to Solyndra which could not, despite them, compete with China.  

                                         
                                                                          John Maynard Keynes

Please, if you have any thoughts on these questions, send me an Email, or make a comment on this blog.
Jack Lippman


                                                      



Camporee 

David Schechner, Assistant Scoutmaster of Boy Scout Troop 37 stood in the middle of the floor, in front of the stage, in the basement auditorium of Temple Oheb Shalom.

“Scouts,” he said, addressing the thirty or so uniformed boys standing at ease in a formation consisting of the troop’s four patrols, “Monday morning at 7 AM, we’re going to be meeting right here in front of the Temple.  You all know what to wear and what to bring with you.  Scoutmaster Schwartz and I will have the food, the tents and the other stuff loaded into his station wagon.  Go over your lists, go to bed early on Sunday night, right after Jack Benny, and be ready to move out smartly on Monday morning.  Okay?”

The District Camporee of the Robert Treat Council, Boy Scouts of America, consisted of scouts from about 30 troops from Newark camping out for two nights at the Schiff Scout Reservation, a mile or so off of the old road connecting Dover and Chester in the foothills of the Appalachians, about 40 miles northwest of the city.   Monday and Tuesday were school holidays so it was an ideal time to schedule the Camporee, which would enable the scouts to practice their outdoor skills, qualify for merit badges and have the kind of good times that only boys in their early teen years can experience around the campfire.  Troop 37 always made a special effort to look good on occasions like the Camporee, not only because they wanted to outperform Troop 48 from Temple B’nai Jeshrun, a Reform congregation a few blocks away, but because, as their Scoutmaster had told them often enough, as a troop consisting of Jewish Scouts, their behavior reflected on the entire Jewish community of Newark.                          

And so, late Sunday morning, the Fox patrol was told to pitch its pup tents in a level area at the edge of a dense forest where the ground bore scars from the many campers who had used that site before.  Marvin and Richie were to share a tent, and tired from the mile-long hike along the dirt road gradually winding upward to the Reservation from where the chartered bus had dropped them off, they sat down on the trunk of a fallen tree to catch their breath before going about the task of pitching their tent.

“Look, Marvin, I think we ought to get started pitching the tent before the good places are all gone,” the taller boy said to his companion.

“What do you mean, good places? It all looks pretty much the same to me.”’

“No, No.  It isn’t all the same.  You ever pitched a tent before?”

“No, but what difference does that make?  You haven’t either, I bet.”

“Of course, I have,” Richie answered with an air of authority.  “When I used to go to Camp Chippinaw when I was a kid, we camped out in the woods overnight in tents just like this.  And like I was saying, it isn’t all the same.  You gotta be at the end.  You don’t want to be stuck between two other tents.  That could be noisy at night, and if it rains, you might get flooded from the run-off from both tents.”

Marvin looked thoughtfully for a moment.

“Richie, didn’t the Scoutmaster show us how to dig a little trench around the tent so that if it rains, the water will drip off the tent and run off in another direction away from the tent so we won’t get wet?  So if everyone does that, it doesn’t make any difference whether we’re in the middle or at the end.  I’d rather be in the middle instead of next to those woods.  Who knows what kind of stuff is in there?”

“Yeah, yeah, I know we’re supposed to dig those trenches, but I still want to be at the end.  It’s better.  Trust me.  I’m right about these kinds of things, believe me.  Now let’s get started, Marvin.  I’ll put the tent poles in the ground and you get the tent pieces ready.
Let’s go.”

With that Richie got up and walked over to the edge of the clearing and started poking one of the tent poles into the ground.  It took them about an hour, but they managed to put up the tent, secured by rope to three pegs hammered into the ground along each sidewall of the tent.  Marvin, not wanting to argue any further, had followed Richie’s instructions, which really were quite good, and finally picking up a small shovel and getting on his knees, he started digging the trench.

“I’ll be back in a few minutes,” Richie called out as he went into the woods.  “You ought to be done with the trench by then.”

A few minutes later, Richie came back with his arms spread out before him carrying an enormous load of greenery, consisting of  pieces of long grasses, vines and clumps of leaves.

“That’s enough of a trench, Marvin.  Now help me shove this stuff under the tarpaulin we’ll be putting our sleeping bags on.  That way, the tent floor will have a cushion under it.”

“Where did you hear about doing this, Richie?  Did they tell us this at the meeting where we talked about putting up tents?  I don’t remember anything about making a mattress out of junk like that.”

“Nah, it was something I read in a magazine.  But trust me, Marvin. This is the best way to set up a tent.  Believe me, I’m right about these kinds of things, always.”

                                        

That evening, after a day of setting up camp, playing team games, classes in nature lore taught by the Reservation’s Ranger, and after eating a dinner cooked over the troop’s campfire followed by songs and ghost stories, Marvin and Richie went back to their tent and curled up in their sleeping bags.

“Richie,” Marvin asked, “Did anyone ever tell you that you’re a pretty bossy person?”

“It’s not that I’m bossy, Marvin.  You don’t know me that well, except from Scouts, but I’m usually right about things, so why should I put up with doing things wrong?  And if you don’t like it, Marvin,” he added, sitting up and leaning on his elbow, “you can lump it.  Now, let’s shut up and try to get some sleep.  There’s a busy schedule tomorrow and I hear they are waking us up at six.”

“Richie,” Marvin continued, “I’m not like you.  Most of the time I don’t know whether I’m wrong or right, but I figure that if I do what they tell me, I mean the Scoutmaster and Dave Schechner, everything will be fine.  I guess that’s the way I am in school too.  I get pretty good marks and I don’t get into trouble like a lot of kids do. Is there anything wrong with that, Richie?”

Richie sat up and to Marvin’s surprise, took a pack of Lucky Strikes out of the pouch on his nearby knapsack.  Taking out a cigarette, he lit it and took a long draw of smoke into his mouth.

“Marvin, you’re a schmuck.  The only way to get anywhere in life is to do things the way you want to, making your own rules, and that’s perfectly okay if you are sure you are right, and about most things I am, believe me.  Do you want a cigarette?  Of course you don’t.  You probably never had one in your life, and even if you do want one, you’d probably say it’s against the rules.  Fuck the rules, Marvin.  Now, shut up and go to sleep,” he said as he pinched out the cigarette.

Marvin and Richie didn’t talk to each other very much for the rest of the Camporee.  Richie qualified for three merit badges the next day and finished first in what amounted to a scavenger hunt game in the woods which the Ranger had set up.  Richie had proven that he certainly knew how to get around in the woods, better than anyone else.  Marvin did well too, earning one merit badge, and by sticking to rules, ended up with the fewest demerits of any of the Scouts in Troop 37.  Demerits were given for having a messy campsite or uniform, or not knowing all of the rigamarole that Scouts are supposed to memorize.  As a result of this, he was appointed by Scoutmaster Schwartz to step up and accept the medallion which the Camporee Committee decided to award to Troop 37 as the best performing troop at the Camporee.  The Scoutmaster smiled to himself at the thought of holding that over the head of his counterpart at Troop 48, at least until the next Camporee.

Shortly thereafter, back home, both Marvin and Richie each came down with a bad case of poison ivy, undoubtedly acquired from the luxurious cushioning they had placed under the tarpaulin forming the floor of their tent a few days earlier.  Richie even had to be hospitalized, but eventually, both recovered.

JL

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