The Invisible Hand is Out to Lunch

I got scolded on the blog of my Libertarian sister for leaving a comment that I think tax increases under Obama are a better idea than tax cuts under John McCain. I would like to elaborate on my opinion here.

It is more than likely that the overwhelmingly vast majority of Americans will never see a tax cut under a McCain presidency. Is is also incredibly likely that taxes will need to go up because our deficit is 500 billion per year. Even by Reaganomic standards, this is insane.

In my college economics class, we learned about Adam Smith and the so-called Invisible Hand that guides market forces for good. I think that there is no Invisible Hand guiding the market. The government should take a more active role in regulation of markets to protect the welfare and domestic tranquility of the State. This is the fundamental difference between the economic philosophy of my conservative family and myself.

I also believe in some form of the so-called "Great Society" where social programs benefit those less fortunate. Most conservatives argue that the Private Sector should distribute wealth by paying more in wages, dividends, and investing in charities. But recently I've observed that Private sector investment in the poor only works when it suits the company's bottom line. Going green for the environment is much more about marketing non-solutions than it is about solving anything. Companies like WalMart, Target and other major retailers give money back to communities, but they can pick and choose who gets what, so there is no way to figure out the most equitable way. I believe that the government should be holding the lines of the safety net, not the private sector.

The point was made in my class that the government could never go broke because it could always print more money. And people will always loan the government money. Both points are of course true, but the end result of the government just printing more money would be disastrous. And now, no one wants to lend money to anyone, yet the Treasury wants to give hundreds of billions that it doesn't even have to Wall Street firms.

When do we start paying this check? Sure, no one thinks we should have to because it's not our fault. That may be true, but I find it unconscionable that people are just sitting there waiting for tax cuts for only the wealthy to trickle down and let the market take care of it. But we've already seen what the market will do when you give it more money. It crashes and takes off for a spa weekend.

Besides that, the Wealth of Nations, Adam Smith's book, was written almost three hundred years ago. People weren't even using electricity, let alone inventing risky financial instruments like Credit Default Swaps and Collateralized Debt Obligations. Republicans actually inserted amendments to pending legislation back in 1998 that allowed these instruments to be created and forbid them to be regulated.

I believe that the progressives will bring more accountability and organizational transparency. I believe in positive progressive solutions. I do not believe in theoretical conservatism.

I expect that I will be paying more in taxes under the next president, whomever is elected. What really matters is a future where the government works for everyone, not just the rich.