Tax Wealthy — Invest in Infrastructure and Schools

Assistant research professor at the PERI institute, University of Massachusetts, Jeffrey Thompson: Direct funding by states in infrastructure and schools is a much better form of stimulus and growth, growing the economy than tax cuts.

More at The Real News

Jeff Thompson’s report.

The Real News Network is a television news and documentary network focused on providing independent and uncompromising journalism. Read other articles by The Real News Network, or visit The Real News Network's website.

19 comments on this article so far ...

Comments RSS feed

  1. Cameron said on August 12th, 2010 at 9:09am #

    Mr. Thompson should really begin his work by describing his understanding of the root cause of this global crisis. Keynesians suffer from believing in the myth of Keynesian policies as a solution to the crisis. It never worked. The way out of the previous depression was WWII. Destruction of factories and work places around the world and opening up of new untapped markets helped capitalism overcome the secular tendency in the rate of profit temporarily. And then in the 70s it was over. The monetary and fiscal policies since then lead to the so called financialization. Now the system is on life support. Trillions have been spent and this is the result. All of those trillions to prop up the economy for one year? Keynesian policies this time around have already failed at such an astonishing speed.
    Mr. Thompson is recommending elimination of the corporate tax cuts which I support.“Tax Wealthy” is not one his recommendations as the title suggests. He wants to build the skills of the current and future workforce. So better skilled workforce to build more infrastructures? Mr. Thompson take a look at the wages Vs productivity for the past 40 years. Workers are not able to buy what they produce. Capitalists are not investing because of the existing excess capacity. Where will the demand come from? Government spending? Keynesian policies will fail regardless of the shape and form. Look beyond capitalism. Capitalism is the problem.

  2. Don Hawkins said on August 12th, 2010 at 11:29am #

    Thank you very much Cameron and can someone please tell me why when I go to Real New’s the net then get a report from Al Jazeera on the ice in the North is really the only place I can find it? In the States brain dead is a good word well two words something is wrong very very wrong.

  3. mary said on August 12th, 2010 at 1:44pm #

    I expect that Cameron above knows we have a Prime Minister with the same name. He is going to cut, cut and cut again until there is nothing remaining. He announces his plans to small groups of selected citizens and then these plans are then broadcast by the TV stations and the press. That is how we learn our fate. So democratic!

    Yesterday the Governor of the BofE was talking about ‘riding through choppy seas’ and that it would be many years before normality was restored to the economy. Meanwhile he continues to print money with which to do his quantitative easing.

    We are lost at sea with these clowns in charge and we don’t even have a compass.

    This is how one of tabloids saw it –

    Our economy is being likened to a weather forecast predicting storms and rough seas.

    Thursday August 12,2010

    THE Bank of England Governor Mervyn King put his latest economic forecast in nautical terms and it was far from “full steam ahead” or even “plain sailing”.

    He intimated that the tide of expansion had ebbed a little and that recovery would be “choppy”. The Stock exchange was immediately rather seasick.

    Nobody doubts that the voyage ahead will be rough and the bank’s forecasts must be taken seriously – King says the economy is growing more slowly than predicted. But the bank’s forecasting record has been far from perfect and it is important to keep the faith. negotiating financial squalls demands judgment, skill and high morale. We have to sail with proper realism but also with hope. To speak in Mervyn King’s language we are a seafaring nation and know how to weather storms.

    It is essential that everybody holds their nerve. The Government must tack between cutting our debt and stimulating recovery, employers must resist the temptation to bail out too much – they must have a nose for any
    hint of a following wind. Britain as a whole must look forwards with determination, fortitude and optimism.

    David Cameron at the moment promises little but blood, sweat and tears. These may indeed be “choppy” economic times. We have to get through them. We will do so best if we have faith that smoother waters lie beyond.


    Absolute BS.

  4. JoeJ said on August 12th, 2010 at 5:51pm #

    How does a new school teach someone to read and write? The answer is they don’t!

    It is the curriculum that is most important – not the school building.

    New or old schools that teach tribe, race, and gender values are of no value to America. Rap those subjects in pretty words or gutter words and the outcome will be the same – the destruction of culture. Garbage in garbage out!

    You could teach those things in ally or palace and the outcome would still be a divisive society.

  5. Kim Petersen said on August 12th, 2010 at 7:19pm #

    WWII was a form of Keynesianism.

  6. Deadbeat said on August 12th, 2010 at 10:55pm #

    Kim Petersen writes …

    Cameron, WWII was a form of Keynesianism.

    Technically that is correct and identifies a “technical” error in Cameron’s post that “[Keynesianism] never worked”. However, I think, Cameron is correct in his criticize of Keynesian policies in the end effectivelybailed out and propped up even more Capitalism.

    Keynesianism (which is closely identified with political Liberalism) rescued Capitalism from the Great Depression but at a huge cost. WWII and years of militarism there after. What Keynesianism also did was to form a wedge between Marxist critiques of Capitalism into the fallacy that Capitalism is manageable.

    Keynesianism help to create the false idea that Capitalism works as many workers bought into the system via the Affirmative Action programs after WWII such as the GI Bill, Social Security, Small Business Loans, Loans for Housing, Fringe Benefits, the building of the National Highway System, etc.

    It was during the Civil Rights years when Blacks started to demand greater inclusion and the end of Jim Crow that then you saw the rise of so-called “free market” ideology as whites where told their benefits came from “hard work” rather than from “government spending”.

    You still see this overhanging belief today coming from the Tea Party and their “cut government spending” but “don’t touch my Social Security” rhetoric. And also from Libertarians who have a skewed view of history due to their relative privilege position in the society. This is why they blame “corporatism” rather than Capitalism for the problems.

    IMO the consequence of Keynesianism especially for dissidents and Leftists is the weakening of Marxist analysis and as we see a rather “comfortable and middle class” Left an unwillingness to provide the necessary radical analysis and critique of Keynesianism of debt-financing which has put a poison-pill into Keynesianism.

    Keynesians are today continuing to argue for more government borrowing to finance spending in order to deal with the current crisis. However missing from their cry for more jobs is any demand for DEBT REPUDIATION. The message from Keynesians is work and continue to drive up productivity but pay the bank, the courts, the clerks and the lawyers. No talk of eliminating the current usury required for housing, transportation, education, and health care.

    Keynesians also tend to be elitists as they have crafted the discipline of economics to be distant from the masses. But clearly that is the obvious consequence of managing Capitalism — a hierarchal system of private property relations which limiting access to resources concentrates wealth and power.

    If you want to read an example of this read Paul Craig Robert’s “confession” on CounterPunch today. He was no Keynesian his piece reads like one. His article essentially is about policy errors made during the Reagan years. He was unable to foresee how Capitalists would ship jobs overseas. Such issues would cease and therefore no such policy errors a Socialist society. Ironically PCR concludes …

    If Marx and Lenin were alive today, the extraordinary greed with which Wall Street has infected capitalism would provide Marx and Lenin with a better case than they had in the 19th and early 20th centuries.

    When a former policy maker is unnerved to cite Marx the Left really needs to do some self-examination to understand why they (the Left) can’t get to square one.

  7. Max Shields said on August 13th, 2010 at 6:38am #

    If WWII was a form of Keynsian than why were the Soviets in there before the US?

    What is clear is that much of the developed world at that time was economically in rubble whereas the US was spared.

    Beyond that one can speculate with little to be gained. Cameron’s post, followed by others are lock step with the older paradigm of socialism/capitalism. Monetary systems, financialization of an economy, workers who do not go to work (or whose work requires little thought or whereby 99% of the human body lies dormant), production, capacity and pretty much the same ol same ol.

    That conversation keeps us pretty much floundering in the status quo. We push and the system double downs in its push back. And who knows, if Marx was alive today he may be a classical capitalist. Lenin would be shaking hands with Obama and signing meaningless global warming treaties with a nod and a wink.

  8. Cameron said on August 13th, 2010 at 10:54am #

    Deadbeat and Kim Peterson, was the WWII a form of Keynesianism? Not quite. Depends on which aspect of it. Are you referring to the war spending? I’d argue that the main reason for the recovery from the previous depression was not government spending rather it was a case of restored rate of profit via destruction. How? The impact of the slump before the war and the devastation by the war itself caused a massive destruction of old capital. Accumulation was able to restart with higher profit rates than in the pre-war period.
    Rate of profit in a nut shell is the ratio of live labor divided by dead labor. By dead labor I mean fixed capital like factories, machinery, tools and so on. The WWII destruction of factories and work places reduced the aggregate fixed capital in the capitalist world. The reduction in the denominator of the profit ratio resulted in a larger ratio, i.e. larger profit rate. But this wasn’t all. Many countries were brought to the orbit of capitalism and became new markets for goods produced in the industrial ones. The combination of which was the so called “golden age”.
    In my opinion Keynesianism never worked. How much is the US spending on the war machine annually now? What happened to the trillions recently spent around the world to jumpstart the economy? Aren’t many countries now distancing themselves from Keynesian policies?
    BTW, what was the impact of the former Soviet Union on creation of social programs like unemployment insurance and social security in the US? Who should get the real credit? USSR or Keynes?
    I do agree with you Deadbeat about the impact of it on the left. I hear some speaking from both sides of their mouth. Socialism on the one side and Keynesianism on the other. Not acceptable. The time has come that they’ll have to choose one.

  9. Cameron said on August 13th, 2010 at 11:44am #

    Don Hawkins and Mary, thanks Don for your kindness and continued support. Mary, I do know of the prime minister. It’s the same wine in a different bottle, another demagogue. Absolute BS seems to best describe it. They swing between neoliberalism and Keynesianism to no avail. One day it’s a bailout game, when that fails they speak of consumer and investor’s confidence and when that fails they blame it on high wages and benefits. In the meantime the rich is getting richer and the working class of course pays for it all in different ways ending up being impoverished even more. The good news is that this is the weak moment for the ruling class. This life support cannot last forever. The democratic veneer is fading fast.

  10. teafoe2 said on August 13th, 2010 at 12:08pm #

    I agree that no amount of Keynesianism will get homo sapiens out of the present crisis. That said, I think a lot of the reasoning in above comments is shaky.

    In the WWII era, most of the war budget went to pay wages or for commodities produced in the US with a high variable to constant capital ratio, so it had considerable “Keynesian” impact.

    The post-Vietnam ballooning DOD budget doesn’t have the same impact, since items produced in the US contain a much higher ratio of dead labor to living, exploitable labor — a case of hi tech machines producing hi tech weaponry — while inputs requiring a lot of living labor to produce are outsourced to low wage areas outside the ZI.

    Of course, money expended to bribe Iraqi local leaders has zero pumpriming effect on the US domestic economy:)

    An aspect of the massive destruction of fixed capital besides the restoration of the variable to constant capital ratio was the massive elimination of competition, leaving US capitalists the only ones able to supply worldwide demand.

    These are just a few random thoughts; the notion that application of Keynesianism could cure the current “malaise” has been thoroughly trashed by many who know the subject better than I.

    I wouldn’t follow Monthly Review’s Bellamy Foster around the block politically, but as I remember MR has covered this particular argument in exhaustive detail. Even ZNet publishes good work in this area: Doug Dowd, Jim Cypher, are a couple whose work I’ve read. British Marxists have paid a great deal of attention to Keynes; a check of the Race & Class archives should turn up enough to keep interested persons occupied for a while. If I wanted to really engage with the issue, I’d start by seeing what Samir Amin may have said on it recently.

  11. mary said on August 13th, 2010 at 12:31pm #

    @Cameron. Thanks I have the same feeling about the direction we are heading in and know that the present system cannot be sustained. I am not wise enough to be able to say what follows the inevitable collapse.

    In the meantime ‘Call Me Dave’ (as Cameron is known) has hit on this wheeze. Note the tax avoidance of this billionaire he has chosen. Green is known to throw megarich parties and flies his guests in to the South of France. (Shades of Gary Corseri’s excellent Something’s Wrong Somewhere here earlier).

  12. Don Hawkins said on August 13th, 2010 at 1:08pm #

    The time has come that they’ll have to choose one. Just read that from Cameron and still time just maybe they need a little help with that choice. This is about the whole ball game.

  13. Deadbeat said on August 13th, 2010 at 2:10pm #

    Cameron writes …

    Deadbeat and Kim Peterson, was the WWII a form of Keynesianism? Not quite. Depends on which aspect of it. Are you referring to the war spending? I’d argue that the main reason for the recovery from the previous depression was not government spending rather it was a case of restored rate of profit via destruction.

    My understanding of Keynesianism is that Keynes primary focus was on stimulating demand and thus WWII war spending created demand needed to stimulate the economy out of the Depression.

    However I like your explanation better. Because if government spending doesn’t restore the rate of profit growth then its useless for Capitalist to keep supporting it. Keynesianism was specially designed to rescue Capitalism and by the 1970’s Keynesianism couldn’t rescue the rate of profit growth from a restored Japan and rebuilt Europe and the stagflation that came from the oil shocks. Thus the system then turned to neo-liberalism for profit growth.

    What Keynesianism did was to prolong Capitalism and gave its beneficiaries a false understanding of how the Capitalist system actually works.

  14. Deadbeat said on August 13th, 2010 at 2:18pm #

    Cameron writes …

    BTW, what was the impact of the former Soviet Union on creation of social programs like unemployment insurance and social security in the US? Who should get the real credit? USSR or Keynes?

    Yes you are correct and knowledge about this is down a memory hole especially from the Liberals/Left.

  15. Cameron said on August 13th, 2010 at 2:24pm #

    Teafoe2, Keynesianism definitely has an impact. I never said it didn’t. It still does. The argument is whether it’s a solution for the current crisis and was the solution for the previous depression. My argument is that while it has an impact it doesn’t work in such a way to revive the economy out of the crisis. In fact, as Deadbeat points out, it prolongs it. So which aspect of WWII was detrimental in pulling the economy out of the Great Depression? Was it the destruction of fixed capitals around the world and creation of new markets or was it the war spending? I argue that it was the former. If anyone thinks it was the latter then why as you put it no amount of Keynesianism gets Homo Sapiens out of the present crisis this time around?

  16. teafoe2 said on August 13th, 2010 at 3:38pm #

    “So which aspect of WWII was detrimental in pulling the economy out of the Great Depression?”

    Assuming when you typed “detrimental” you meant “effective”, IMO it’s a mistake to conflate what effect Keynesianism had or didn’t have in the Great Depression/WWII era and what effect application of it might have at present.

    From my experience growing up the son of a manual worker first during the Depression and later during late WWII relative prosperity, it’s not completely clear to me why my father seldom could find steady work, until he finally did, helping to construct housing in Seattle and Portland for the millions of workers brought to the area to work in “War Production”. For our family, the Depression ended in 1944. For other people we knew the watershed came a year or two earlier. Clearly the key factor was the abundance of jobs paying decent wages, either in factories or shipyards producing for “The War Effort”, or producing items consumed by people employed in them.
    I think the main impact of the destruction of capital, elimination of competitors, and opening of new or newly-monopolized markets came at the very end of the war and for the first few years after it.

    Of course the “Police Action” in Korea brought about another round of federal spending, but the US workingclass had to share it with Japanese workers.

    The short answer to your final question is that no matter whether the US or global workforce are provided with abundant jobs at good wages or not, the collateral damage our current production/consumption patterns have already inflicted on our natural environment will soon overtake us, overwhelming us with a mass extinction event.
    However I refuse to panic; remembering Joe Montana in the two minute drill gives me hope:)

  17. Cameron said on August 13th, 2010 at 4:29pm #

    Thanks for the correction. I meant the most “effective”. Not sure why it’s a mistake to conflate its effect though.
    What’s stopping governments from creating good paying jobs now? Heck they might just do that in the US. It’ll depend on degree of panic. After all this is the model capitalism that was/is sold to the world. Unemployment will worsen. They’re trying very hard to publish a number below the magic 10%. They think they can hide and deny the reality for ever. But one can only spend the money one doesn’t have for so long. Eventually it’ll hit the fan whether a government or an individual.
    I did not realize you’re referring to the ecological collapse. Yes we’re facing two impending collapses. Economic and ecological. I refuse to panic too and I don’t even know about the 2 minute drill ? but could Keynesianism be the solution if the environment was not an issue?

  18. teafoe2 said on August 13th, 2010 at 5:00pm #

    The real answer to the question is it doesn’t matter.

    It doesn’t matter because the bunch currently in control of the Central Banking system don’t see any way that injecting purchasing power into the hands of the lower orders will benefit them. If they feel a need for more money capital they can order their flunkeys in the US Congress & Treasury Dept to pass another bailout.

    Some of the people accustomed to occupying comfy spots on the upper flanks of the Status Quo pyramid are very disturbed about recent events and current economic trends, but I see no sign that such angst pervades the top echelons.

    From my point of view, down here in the first basement of Capitalism, where we mark on our calendars the date of the next food give-away at the within-walking-distance church, I’ll take all the “keynesianism” I can get. But the fact is, alas, that it just ain’t happening.

    So arguing over whether another injection of “stimulus” would or would not save the system from itself is no more than a way to get some mental exercise.

    Econ Dept PhD’s have been predicting the impending collapse of the system ever since I learned to read so I’m not holding my breath. I’m a subscriber to the theory: “if you don’t hit it, it won’t fall”.

    The guys at the top don’t care if a billion or two surplus people starve or succumb to one plague or another. They’ll still have plenty of Reserve Army of the Unemployed cheap labor-power available.

    Their expectation is that things will go on more or less as they have in the past. Which might be incorrect, but there’s no use trying to argue with them, because they aren’t listening.

    It makes sense to try & understand what’s going on in the economic sphere, if our investigations can help us be prepared for qualitative changes in circumstances.

    Do we need to institute more Disaster Preparedness measures?

    Well, probably it’s best to have the best Emergency Survival kit you can put together, depending of course on how much you have left after coping with the day-to-day predicament.

    But like the guy said: “The philosophers have only striven to understand the world; the point is to change it”

    It may be wishful thinking, but I can’t help hoping that all these Concerned Citizens will shake off the evil influence of the Chomskyites & their philosophical sophistries, and get actively behind BDS.

    If the Zionists who control the US Congress/Exec/Media & Supine Court wanted to stop more BP disasters, they could do it in a flash. Because they ARE the ones with the power.
    Could they save capitalism by putting buying power in the pockets of us chumps? I doubt it but do hope they give it a try…

    But it ain’t happening. They don’t think that way.

  19. Deadbeat said on August 14th, 2010 at 5:14pm #

    Tf2 writes …

    The real answer to the question is it doesn’t matter.

    Yeah I just read Petra’s latest essay. With profits soaring there’s no need (from ruling class perspectives) for any Keynesian measures. Just keep grinding down workers and social program and profits will continue to soar.

    This is why I think making the argument against Keynesian measures is important. The only way the ruling class will change is when there is a radical and militant demand to END the system. Then you’ll get Keynesianism as a compromise.