The problem with the business cycle under this analysis, you’ll notice, is not the bust ”” it’s the boom. That’s when the bad investment decisions are made, largely because political influence in the markets (housing policy, tax breaks, artificially cheap money and other interest-rate subsidies, risk subsidies, etc.) distorts economic calculation.
Which brings us back to the entitlements. It’s easy to say: Well, we’ll just raise the retirement age, or cut benefits, or means-test them, or raise taxes on the wealthy who receive them (which amounts to means-testing, but Democrats like that version better). And, yes, that probably is what we will do, eventually. But that does not get us out of the economic pickle: People have been making decisions for years and years ”” decisions about saving, investing, consuming, working, and retiring ”” based at least in some part on what are almost certainly faulty assumptions about what sort of Social Security, Medicare, and other benefits they will receive when they retire. When those disappear, a lot of consumption is going to have to be forgone ”” and a lot of capital dedicated to producing those goods and services for consumption will be massively devalued. Businesses will have to retrench, probably in a way that is more disruptive and more expensive than the housing-bubble recession necessitated.
Another example: average cost of educating an autistic child in California from birth to 18 is $2,000,000. Estimate of of autistic children living in California is 30,000. Even assuming a cost half of estimate, the cost for just those 30,000 would be $30,000,000,000. Clearly unsustainable.
He has hit the nail right on the head. But so much of what he is talking about is supply side economics and trickle down. And, of course, no respectable liberal believes in trickle down. Only they don’t know how to explain this lingering recession and this even tougher problem of continued high unemployment, other than to say that the government didn’t put enough stimulus into the economy, when it put in its original $850 trillion. But I guess that may be right if all 55 jobs created (or kept – hahahaha) costs the taxpayers $111,000,000 in LA.