Break from gaming

Taking a moment to address other issues. I was having a discussion with a friend of mine regarding a post on http://www.damonpayne.com/ titled "A war on excellence" Well I ended up writing a long response to it, which I have since decided to post since I put so much work into it. To be clear I consider Damon a very good friend, along with a person whose opinion is well thought out, and deserves consideration. I say this because if someone reading my blog chooses to add a comment on his site that is not done in a respectful manner, my next post will be entitled "Bashing the Douche Bag who just posted on DamonPayne.com" with that, here is my response:

His response is pretty consistent with what he believes. I understand his position on leaving banks alone, and there is some merit to the idea that thanks to the bailout people who have been irresponsible get saved at the expense of the rest of us. That's why I'm glad this money has thus far been handed out in the form of an investment, so hopefully later we can get some of it back.

Regardless of that, I think the bailout was necessary. The problem with letting banks fail is that it erodes confidence in the U.S. banking system, if that is lost, we really are in severe trouble and the economy would take years longer to recover.

As far as operating in the same Laissez Faire attitude, I think it’s interesting that even Greenspan testified last week that more regulation of the banking industry would apparently be necessary. He also said that he was "shocked" at the level of irresponsibility of executives in the financial sector, and attested it to the fact that they were given bonuses purely on quarterly results, with no incentive to protecting equity or liquidity. He testified that this method of operating had basically destroyed the notion that businesses will do what is in their best interests, an idea that had been a basis of his approach to economics for 30 years.

It's unfortunate that this happened at the end of his career, and that he has taken the lion’s share of the blame for this crisis. I really still consider him to be one of the most brilliant economic minds of our century.

As far as his complaints about taxes, what he is saying matches the same trickle down economic policies that we have seen over the past several years, and he saying it because he has been taught that if you lower taxes on "upper class", it will stimulate business growth, which will add jobs and benefit everyone. And he isn't wrong when he says that raising taxes on small business owners should result in smaller growth for their businesses, but at the same time when many people say this I believe they ignore other aspects of the economy, in order to make their statement true and scare the hell out of people. My argument is basically that a full two thirds of our economy is consumer spending, this is a fact, and it is not in dispute. So looking at that, I would argue that is you send more money towards the people who make less than 250,000 a year they will turn around and spend more, which should raise demand for the goods and services and business produce, which in turn should cause them to expand their business in order to meet demand, whether they are being taxed more or not. It also means that rather than just gaining increased revenue from lower taxes, they will have to compete more for the opportunities out there. I think we can all agree that competition still benefits everyone.

Now I'm not saying that this theory is foolproof, far from it. If the people who make less then 250,000 a year use the extra money to shore up their debt, which they should do, that isn't the same thing as putting money back into the economy, and we don't receive the benefit that is supposed to counter the negative effects of taxing small businesses more. Also as stated before many businesses are hooked on quarterly numbers, and as a knee-jerk reaction will tend to want to lay off people, which again, benefits no one. Also, like farmers depending on subsidies, business owners learn to depend on lower taxes. Following my theory, their perspective is going to have to shift towards competing more for the extra money that's entering the economy through consumer spending. This takes time, and if what I'm suggesting works there will probably be a period of added instability before anyone sees the benefits I am hoping for. This scares people.

Either way, though conservatives will point repeatedly at Jimmy Carter as an example of how Democrats handle rough economic times poorly, economic growth has historically been greater under democratic presidents. Lets all hope this is the case this time. And if not, let’s hope the people in positions of authority in this country have the poise and the wisdom to change their approach. I really do like Barack Obama. I’ve been a supporter of his since he launched his campaign is Springfield Illinois. I have also volunteered for his campaign several times. I think he has provided leadership to the Democratic Party, which resembled a failing disorganized ragtag mob in my eyes back when his campaign was launched. In my opinion John Kerry was something of an empty suit, and finally for the first time in my life I actually see a candidate that I can be proud to support.