Economic Populist Commentary

Economic commentary by a pro-capitalist, economic populist. Demand-Side Economic theory. Consists of author's economic views. Questions & comments appreciated. Dissenting views are VERY welcome and encouraged. Main "agenda" is crafting and advocacy of a "populist" economic agenda. A secondary goal is prevention of an economic Armageddon. Encouraging open discussion of US economy.

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Location: Southern California, California, United States

The author is a physician by profession, and a "student economist" by necessity. The current status of our economy necessitates the latter. The intent of this blog is to explain and discuss economics in layman terms. It is designed to promote thought and discussion. It is written by a layman. Comments and critiques of these theories and letters are welcome and ENCOURAGED. Dissenting comments are also WELCOME! They form the basis for discussion.

Wednesday, June 15, 2005





HOW I BECAME AN ex-CONSERVATIVE

For 20+ years, I was a Republican. Back then, I didn't like the "share-the-wealth" thinking the Democrats seemed to embrace. I voted for Ronald Reagan twice.
Then I saw an interesting graph regarding the National Debt. It showed how well Bill Clinton had done, and how poorly the Republican presidents on both sides of him had done. Bush had done MUCH worse. Considering I voted AGAINST Bill Clinton, this gave me pause. I began researching economic statistics, and economic principles.
Then a light suddenly came on. My previous views of the benefits of increasing investment capital by reducing taxes on corporations came into question. When I began reviewing economic principles and statistics, I realized financial commentators were omitting something. In fact, they ignored the most important aspect of economics. They ignored consumer DEMAND. It was as if that concept didn't even exist. And yet, many commentators were also stating that consumer spending is 2/3 of all economic activity. Since consumer spending creates DEMAND, this seemed like a serious ommission. It made me question everything I was hearing.
In fact, the importance of DEMAND should have overshadowed all other commentary, such as "investment creates jobs," the "onerous regulatory burden," etc. No attention whatsoever was paid to consumer buying power. I thought that was strange, considering profits are made by SELLING goods, not producing them.
I began to realize that my previous "right-leaning" economic beliefs were wrong. VERY WRONG. Worse still, I realized they didn't even make sense. When I started doing some serious thinking, I independly re-discovered 2 Keynesian concepts. The 1st was that of AGGREGATE DEMAND. The 2nd was that of "Marginal Propensity to Consume." It wasn't until later I realized Keynes had already described these concepts. To me these were just common sense concepts. And yet, many of the financial talking heads act is if they had never heard of these principles.
This is when I crossed over to the so-called "left" side of the road. From that point on, my view on economics was changed forever. Though Democratic and Liberal economic policy is sometimes described as "share-the-wealth" policy, they are also "increase-the-wealth" policies. Increasing investment is of no benefit unless demand also increases. Increasing production without increasing consumers' ability to buy production makes no sense. It's even worse when the increase in capital (to increase production) is at the expense of consumer buying power. That's what's happening today. That's why I'm now an "ex-Conservative." Current Neocon economic policy is illogical. It defies even common sense.


unlawflcombatnt

HOME: http://www.unlawflcombatnt.blogspot.com/

16 Comments:

Blogger peaknik said...

I'm glad you've come to this conclusion! I'm not as economically savvy or educated as you may be but I do understand the concept of considering demand over supply-side theory.

Without any formal education in economics, I imagine that supply-side economists don't regard their playing field in a box (as in America is a box). They look at the whole world in their theory and don't consider the lifestyle an American would have to forfeit. We are expendable. That is why I don't favor globalism.

4:01 PM  
Blogger taters said...

I look forward to coming here. Its a little late for me tonight, I'm on the East Coast.

9:44 PM  
Blogger timnayar said...

Perhaps it would be a good idea to expand upon this post but go into the discussion of the topics you presented. I was able to follow your talk because I remembered my ECON class from high school, but I think it would do wonders of good if you made a longer sort of "lesson-style" post about this subject. You can explain each topic as you come up to it and show the reader the mindset you are approaching from. Just a thought... loved the post.

1:52 PM  
Blogger unlawflcombatnt said...

Tim,

Thanks for your response. I like your suggestion and I think I'll probably do that in the future. My next mission here is to start each topic with a brief summary about what I'm saying, so readers don't have to wade through it unprepared. (Of course, I haven't gotten around to doing this yet.)

Thanks again for your response.

Mike (unlawflcombatnt)

3:01 PM  
Anonymous TrueLeft said...

So you used to think share-the-wealth meant you would have less (so you didn't "like" it.) Now you've come to find that you would have benefitted. Do we have to wait 20 more years for you to abandon your greed and complete your swing?

OK, maybe you were altruistic and thought that investment would "lift all boats." Now likely you realize that pure speculation fails to do that. Perhaps you realize that the distribution of ROI can be managed so that productivity can increase while the majority of boats sink. Perhaps you will soon realize that capitalists enjoy power to evade the "laws" of simplistic economic models and conceptions and that for the good of the people the state must enforce laws to protect them.

My biggest problem with you is that through your prior propagandized ignorance, you have enabled this corruption. Too bad for us that you "independently re-discovered" Keynes wisdom. Examine why you failed to know it earlier. We have been near here before, our predecessors dealt with it as best they could, yet this wisdom has been forgotten? I think not. We have been played, via the hubris and greed of people like you.

Finally, as a physician you should be aware that all your theory should be in service to your compassion. Let's hope that you get your values rectified as well as your knowledge.

12:16 PM  
Blogger unlawflcombatnt said...

TrueLeft,

Though I always appreciate comments, I have no idea what you're talking about. I don't know what you mean by my "prior propagandized ignorance," as well as what "corruption" I have enabled.

I'm more than happy to either argue with you or agree with you. But I can't do either unless I know what you're talking about.

As far as my "independently rediscovering Keynes," this was because I knew little about economics in the past. I have already clearly explained that issue. I simply did a lot of critical, independent thinking, and arrived at some of the same conclusions Keynes did. The reason this "took so long" is because Keynes was highly demonized during the 70's and 80's, and his ideas fell out of favor.

As far as your assertion that my previous opposition to "share-the wealth" plans related to my own self-interests, you are completely wrong. I did not think that "share-the-wealth" plans would cause me to have less. To the contrary I would have had more.

I was not a doctor 20 years ago, and share-the-wealth plans would have been in my own immediate best interests back then. I was definitely on the "poor" side at that time. I certainly was not opposed due to my own self-interests. Then, as now, my position was based on what I thought was in everyone's best interests.

In contrast, I am more affluent now (though certainly not "rich.") Now I do think some so-called "share-the-wealth" ideas are in everyone's long-term best interests.

7:07 PM  
Anonymous TrueLeft said...

I am grateful that you are a temperate soul. Forgive my false accusation of greed.

Still, maybe you drank a little bit much from that poisonous supply-side well. You admitted "The reason this 'took so long' is because Keynes was highly demonized during the 70's and 80's, and his ideas fell out of favor." That is part of the propaganda I am referring to. As was supply-side economics, union-busting, radical business restructuring, off-shoring, etc. which focused on the efficiency and agility of business at the expense of the sustainability and well-being of the worker.

The corruption, in abrupt terms, is the belief that we can have an ownership which benefits everyone. Through this falsehood your investment money was used to destroy the ability of the worker to maintain his demand.

Now please tell me how could you treasure a theory (that increasing investment capital by reducing taxes on corporations lifts all boats) but ignore the potential and actual pitfalls? Moreover, just why was Keynes wisdom forgotten? Do you not sense yet that you have been manipulated into a disastrous situation, the likes of which has been before?

12:13 AM  
Blogger unlawflcombatnt said...

TrueLeft,

Yes, I definitely think I was manipulated by the supply-side propaganda.

The major reason I have posted my blog, and posted on many discussion boards, is an attempt to refute supply-side mythology, as well as give Keynesian economic principles the credit they deserve.

The supply-side mythology simply falls apart, if one thinks about it very long.

I try to start my refutation of this mythology as simply as possible, by stating that "profits are made by sale of goods, not production. It follows that simply producing more goods is of no benefit, unless someone buys those goods.

The ability to buy those goods is ultimately what limits production. It is also what drives production. Increasing investment capital through supply-side policy does nothing to change this limit to production. Increased investment does not create jobs, unless there is increased demand for production. Increasing investment capital without increasing demand creates absolutely NO jobs.

Job creation takes place in the face of increased production demand, either anticipated or current. No amount of investment creates jobs without a demand for them.

Consumer demand for production creates demand for workers to provide that production. Consumer spending is what creates the demand for production, and consumer income limits that spending and the demand for production it creates.

In order for hiring to increase, aggregate labor/consumer income must increase.

Shifting the tax burden from the affluent to the less affluent increases potential investment capital, but reduces consumer spending. The increased investment capital that results from this is worthless. It creates no jobs, because it has reduced the consumer production demand necessary to create those jobs.

The discrediting of the importance of demand is the major error in supply-side economics. Demand is absolutely essential. The dismissal of demand as an important factor is what makes supply-side theory "voodoo economics."

6:29 PM  
Anonymous Anonymous said...

Great blog! I am very glad to hear you have moved away from the Dark Side! In the post you put up on politicalcrossfire you were able to verbalize what I have been trying to say to people forever. But I am not nearly as good at explaining it logically.

I will pass around your blog to people that need to 'see the light'.

12:31 PM  
Blogger unlawflcombatnt said...

Anonymous,

Thanks for your comments and for visiting my blog. I'm glad my post was helpful. Feel free to repost my letter(s) anywhere you'd like. The more people that understand, the better.

3:56 PM  
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