Thursday, March 22, 2012

Different Perspectives

There are a lot of different ways to look at economics around the world and in America. Because of the recent debt crisis, recession, and whatnot, there are a lot of different groups and individuals spouting their quick-fix ideas to get everything rolling again. Places like the Cato Institute have come out recently to say that austerity in Europe is not working and that the only solution (ironically) is deregulation and tax cuts. On the opposite side, you have people like Paul Krugman, who say that taxes and regulations are important to preserving the recovery in Europe and the US, that stimulus spending can save, and that reinvestment is the key to prosperity.

The same debate is going on over oil prices, with one group saying it's the President's fault and another saying it has to do with speculation and supply/demand economics.

There are even debates going on over things like energy, whether it has to do with oil pipelines, green energy companies, fuel efficiency standards, or fracking restrictions. There are people who are on every side of every issue, and they all have evidence to show why they're correct.

This article is a bit dated, but is a great explanation of how Progressives and Democrats see the strategy of the GOP over the last several decades. They point to ballooning spending and deficit under GOP Presidents dating back to Reagan, and say that it's all part of a plan to stick Democrats with the bill and force them to make tough and unpopular decisions about cuts in social programs and tax cuts.

The ultimate solution to all our worldly political and economic woes is undoubtedly somewhere in the middle of all these arguments. Deregulation may not be the single solution, but it can be helpful in some cases. Restructuring government agencies to cut the cost and size of government can be helpful. Tax cuts targeted to certain groups can be beneficial. Infrastructure spending can be a boon to the economy. There are a lot of solutions, and they all have something to bring to the table.

Unfortunately, we seem to live in a world of one-track-minded leaders who can't see past their own partisan views to the bigger picture. Supply-siders scoff at the notion that demand drives the market, just like Keynesians can't figure out why supply is so coveted by those who like the Laffer Curve. Oil-drilling fanatics disregard facts about increased domestic oil production and it's minimal impact on gas prices, while green-energy fanatics ignore the blatant problems with our renewable energy technologies. It all ends up becoming a blame game and nothing gets resolved.

So, how do we solve these differences? Can we negotiate? At this point in time it doesn't seem possible to reconcile the two extremes in Washington. Whichever side you think is doing things right, the other side seems hopelessly misguided. The only way for us to get back to a meaningful discussion is to step away from the Left/Right extremes, come back to the center, and acknowledge that we all want what is best for America. We can quibble over tax brackets, emissions caps, the role of government, etc, but at the end of the day we have to understand that the person we see as our worst enemy is still our ally when it comes to making this a better place to live. Once we figure that out, I think we'll see meaningful progress again. And that can only be a good thing for the USA.

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