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The Ten Worst Economic Ideas Of 2011


The Ten Worst Economic Ideas Of 2011


Let’s hope the New Year brings some new ideas, because this year’s couldn’t have been much worse — or more widespread.

I was at an Occupy Wall Street demonstration this weekend and many clergy addressed the group. One nun told the crowd it was Christmas season and that it was time for something new to be born in America.

It was a nice thought, and I hope that the “something new” is good sense, because it has been a year in which some of the worst economic ideas ever have gained support and are being applied around the world. So here’s my list of the 10 worst economic ideas of 2011:

1. Taxes should be more regressive.

At the top of the list for sheer scandalous insensitivity are Herman Cain’s and New Gingrich’s tax plans for America. Cain and Gingrich are both flat tax advocates. Cain proposes “9-9-9″ — a 9 percent sales tax, 9 percent income tax, and 9 percent corporate tax. He would also eliminate most deductions. Would this raise more or less money? The romantic conservatives claim the lower income tax rate would mean more growth. Never mind that the evidence to support that claim has been found profoundly lacking time and again.


  1. kurt.lorentzen December 23, 2011

    So let’s take your list one at a time.
    1) Taxes should be more regressive.
    What you mean is taxes shoule be less progressive. You might find it odd that an independent member of the “logical” party agress 100% with thois asessment. People woho earn a boatload should pay more – they simply reap the benefits of capitalism more than joe factory worker and do it largely on joe’s back. So on we go…
    2) Austerity works.
    Well, Keynesianism is equally questionable. One of my kids, for a high school history class, had to write an essay either supporting or refuting the notion that FDR’s “New Deal” policies extended the depression. There are a growing number of historians and economists who support the notion that, left alone, the 1930’s economic debacle would have resolved itself much more quickly without intervention and that WWII was the one and only reason for US economic recovery (Europe, in the wake of the war’s devastation took decades longer to recover). the merits of austerity can be debated, but there’s no clear winner. To suggest otherwise is pure politics.
    3) Export growth models are sustainable.
    This absolutely doesn’t apply to the US. I would argue that if export growth is not sustainable, that export deficit is equally so. A balanced trade model is the only workable, sustainable model. Rebut that!
    4)Fannie and Freddie did it.
    They may not have done it, but they enabled it by using public funds to become “big buyers when the damage was already done”. Government has no business supporting, bailing-out or otherwise meddling in commerce. Government has demonstrated its fiscal incompetency over and over again. In my view, business has to be ideologically blind to succeed. The minute you inject politics into the mix you destroy the “sanctity” of the market. I do agree that government has a role in seeint to it that businesses play fair, bit that has not happened as big donors and other special interests have corrupted the political system.
    5) Cutting Social Security benefits is a priority.
    I agree it’s not a priority given the current state of our economic affairs. But it’s not to be ignored either. I’ll be around in 2035 (much sooner with the payroll tax extensions being perpetually extended) when the fund goes bust. It’s barely more than 20 years away. That might seem like forever to a 22-year-old, but at 55 I can assure you the day of reconciliation is far nearer than you imagine. The ideal that everything that is not at critical mass should be put off is a reversal of the policiy that made the US the dominant economic power over the previous 50 years. The current trend to diverge from that wisdom has proven to be devastating. And still you argue for for it….. Amazing!
    6) Inflation is just around the corner.
    OK, it’s being staved off by the European soverign debt crisis. Everyone, remarkably, still hold to the adage that the US is somehow more solvent than soverign European countries. Once the world markets realize that we’re no different, inflation is a certainty. Regardless of the economic model you subscribe to, you’ll not find any deviation in the fundamental truth that the issuance of currency based on debt is the perfect example of the very definition of inflation. To reject this conecpt is just plain “head-in-the-sand”.
    7) Competition between Medicare and private health insurance will reform the health care system and reduce costs.
    Did you hear President Clinton last night on O’Reilly’s show? Even the oracle of all Democrats admits that competition in health insurance will mitigate prices. Clinton goes even further in recommending that insurance companies be allowed to compete across State lines (Medicare be damned). Maybe you should listen to your own!
    9) Federal spending should be capped at 21 percent of GDP.
    Again I invoke President Clinton’s interview last night where he all but endorsed Simpson-Bowles. As much as all of us would like to provide regardless of funding, it’s just not realistic. The greater good is served by living within our means. History shows that over and over. Those of us steeped in logic rather than rhetoric agree with President Clinton.
    10) Balancing the budget should involve equal parts tax hikes and government spending cuts.
    I disagree with this. Spending cuts should be the greater part. The Constitution clearly lays out what the functions of government should be. At least half of the spending can be attributed to things OTHER than those listed in the Constitution. That includes foreigh wars, welfare, tuition supplementation, and the list goes on and on. If the government didn’t write a check for whatever amount they were billed, prices for a CT scan, textbook or a college credit would quickly falll to 1/2 of its current price. This borrow, spend, subsidize cycle has led to inflation of every industry it has targeted. I challenge you to show me otherwise.

    The point is, socialism doesn’t work, at least in the long term. Capitalism is the only sustainable path, and history bears this out. I believe that regulation needs to exist to insure that every player in every industry has an equal shot at success – but the rules have to apply across the board. You can’t have a nationalized healthcare system where big donors like Wal-Mart get a pass. I think you’d find that Americans in general support a national healthcare system, but not with exemptions for the wealthiest companies! Given that, I’ll take the free market. But let’s open it up and truly make it a free market. If we’re still stuck paying $3000 for an X-ray, then you might convince me that socialilzation is a viable solution. But let’s try what we know has worked for 220 years first.

  2. jhonmwells December 23, 2011

    I am completely agree with the quote of kurt.lorentzen. Lets wait and watch what the political parties will make changes in state law. for any query related to 24 month bad credit loans, 24 month instant loans, 24 month personal loans and 12 month unsecured loans read out online resources with out hassle.

  3. Hankk December 23, 2011

    Here is what we need to cut first, the Government Entitlements and they must be cut the same persentage as those of us that worked/work for a living. Cut all self given government wages 33 1/3%,healthcare 100%, retirements for active and past elected,hired,and appointed congress members as well as all government paid employees 100%, remove all other benefits 100%. These are the true entitlements that the media and congress continue to talk about. Eliminate all ear marks and all lobbiest’s, cut taxes for everyone 5,000.00 to 24,000.00 3%, 25,000.00 to 45,000.00 6%, 46,000.00 to 75,000.00 10%, 76,000.00 to 125,000.00 15%, 126,000.00 to 250,000.00 18%, 260,000.00 to 1,000,000.00 22%, above 2,000,000.00 26%, eliminate all deductions except,personal family,(mom,pop,and children deduction,) property taxes for only the house you live in,those to a legitimate charity and none that you are connected to. If congress exceed’s (over spends) their yearly budget by 3% during their term, they can never run for re-election again. hankk, MI

  4. freethinker December 23, 2011

    After reading the article, it was clear that not only has the writer not done any real research, but he also can’t do math, knows nothing about economics and has no ability for logical thought. Kurt tried to do a rebuttal, but his assessment of tax policy missed the boat. The overwhelming majority of rich do not reap the benefits of capitalism on Joe’s back. They do it with hard work and brain power. They invest their money which does grow the economy. Giving a $40/week Social Security deposit holiday for Joe to buy a pizza does nothing for the economy and further insures that SS will not be there for Joe when he wants to retire.

  5. Common Sense Patriot December 23, 2011

    Jeff Madrick’s article is absolutely mind-boggling with it’s stupidity and adherence to ideas that history has proven do not work. He cites the lessons of history in a general way but doesn’t tell us what he’s referring to. I looked at his bio and like his thinking, it’s a bit vague. He certainly writes on economic ideas, but it doesn’t say if he is an economist. If so, he’s undoubtedly a Keynesian — the very economic policies that got us and Europe into the mess we see now. It says he was educated at New York University and Harvard but it doesn’t say if he graduated, and if so, in what field? I am not an economist, but I did spend the last 20 years with a close association with economists and listened closely to their ideas. I also read everything in economics I could get my hands on. One thing i learned for a fact is that if you put 20 economists in a rooom and ask them what we need to do to improve the economy, you’ll get 20 different ideas. They are some of the most “head in the clouds” ivory Tower academics I’ve ever met, with the marvelous ability to ignore any theory or fact that disagrees with their pet theory. If economists are so bright, and thousands of them are employed in corporations, the government and on Wall Street — why did only a hand full warn us about the coming economic collapse of 2008? (Which technically started in December, 2007.) If they are so bright, how come all the economic advisors to President’s Bush and Obama haven’t found a way out of this mess after nearly 4 years? And most don’t expect much of an improvement for years to come. I strongly agree with the rebuttal written by kurt.lorentzen. I’m not going to cover all the detail he has set out, but I will say that it is Keynesian economics and the idea that we can spend our way out of this mess that has gotten us into it in the first place. We’ve been on the wrong economic path ever since Woodrow Wilson ushered in the era of Progressive/Liberal politics. And where has it gotten us? The Great Depression. Numerous recessions. The current Great Recession. Keynesian economics are not far from Socialism, and Democratic Socialist is what has led to the current economic crisis in Europe and America. You can’t spend you way out of a problem. That’s just plain common sense. Government can’t spend a dime that they don’t take from somebody. And in the process, they waste 8 cents of it on idiocy, corruption, greed, and lining their own pockets. The only people it has helped are the uber-rich, who captured 50% of the all the wealth, including stocks and bonds, in this country.Them, and the ultra poor, who seem to have been sold on the idea that the way to make a living is by bovernment handouts. It’s not that I don’t have any compassion for the poor- I was born poor and raised poor. I know what it’s like notto have money to buy clothes and food. But I worked my way through college and up the corporate ladder to an upper middle class income. All wihtout taking one dime of government handouts. So let’s stop the handouts and start giving a hand-up to those that need it: make welfare temporary and require job training and education so they can support themselves instead of setting up dependence on welfare for generation after generation. I believe the best way we can spend taxpayer dollars is to recognize that the world has changed. We are in a world market, like it or not. Our businesses and our workers have to compete with cheap labor in China, India and other developing countries. The only path out of it for us is to become the most highly educated and highly skilled nation in the world. College and post high school trade/skilled training should be free. All we have to do to pay for it is stop wasting billions on foreign wars that accomplish nothing except maiming and killing our troops, since the politicians make the decisions, which are almost never good military policy. I have no problem with going into Afghanistan after Al Aqaeda and the Taliban, but for good ness sakes, the most rudimentary military concept is that you don’t give the enemy a safe haven to run to where they can re-arm, re-train, and recruit. Yet that’s exactly what we did. And you don’t listen to exiled Iraqis who have a vested interest in getting us to go in and overthrow Saddam Hussein. Of course there were no WMDs. It was just a ruse, telling us what we wanted to hear. Anybody that tried to tell the Bush Administration something different was told to shut up. After all, we wouldn’t want Vice President Dick Cheney’s Haliburton to not make the billions they did out of the Iraw War. How stupid can you get? I’m not off the subject here because I’m counting the billions (and the lives) we spent there that ultimately will prove useless as those countries fall into civil war and revert to fanatical Islamist doctrines. Where the he…ddouble ll…do we get off thinking we can rebuild a country we didn’t destroy in the first place as a democracy when the people have no idea what democracy is all about or how to run one? Aside from that, nearly everything else we’ve done in fiscal policy in this country has been down the track of Keynesian economics that has led us into $14 trillion of debt that is trhreatening to devalue the dollar and make us default on our loans. We have to follow austerity measures. It’s the only way we’ll every get back to fiscal sanity. You can’t spend money you don’t have! Yes, it is going to be tough. You can’t turn around an economy built on deficit spending for nearly a hundred years without incurring some hard, difficult sacrifices. These are not the worst ideas of 2011; they are th eonly way to ultimately put us on a sound footing and make it possible for people to have good jobs and opportunities in life. To do that, we’ve got to stop corruption in Washington and greed ruling the day in business. There’s nothing wrong with a profit motive, but corporations enjoy certain legal benefits granted to them by law. In return for that we have a right to expect them to operate at least partially in the public interest. Yet, while we suffer through massive unemployment and the disapperance of the middle class, corporations are sitting on a record $1.93 trillion in cash and similar assets in December, 2010. Corporate profits reached an annual rate of $1.659 trillion in the third quarter of 2010. Profits for all S&P companies are on course to rise 14 percent, the eighth quarter in a row they will have grown more than 10 percent. Profits for 2011 are on pace to surpass the annual record set in the boom times of 2007. Yet they are not using it to create jobs. They are cutting and exporting jobs. Instead of investing in growth or hiring, companies have used their cash to buy back their own stocks , enriching executives and shareholders. Stock buybacks are preferred by executives because they increase the values of their own existing shares. Over the last three decades, CEO compensation more than quintupled (increased 5 times) relative to average workers’ pay. The average (arithmetic mean) worker pay in 2010 was $33, 959 but the average CEO Pay at S&P 500 Companies for 2010 was $11.36 million. More than one quarter of the Fortune 500 largest U.S. corporations paid little or nothing in federal income taxes during the 2008-2010 period, despite registering profits in all three years. Many had more than one year paying no tax and/or received tax rebates. In 2009 alone, 49 companies earned combined profits of $78.6 billion, yet paid no taxes – and collected tax rebates totaling $10.8 billion. So, the top 20% of income earners can easily afford to lose the Bush tax cuts. And I say this as a lifelong conservative who has voted mostly Republican. But I’m disgusted by the radical politics of both parties, controlled by extremists. We need some politicains/leaders with common sense and morality, with concern for everyone, not just the rich who fund their compaigns and help them get rich in turn. We certainly won’t get there by following a Keynesian economic model. Austerity is needed. Not handout for corporations or people who are unwilling to work.


    Fully understand where you are coming from. I too was born poor but managed to pull myself up by the bootstrap to be where I am at today. I have never taken anything from the government and am grateful for many who helped me thru education. Most of my DEMO friends think I am too Conservative and my conservative friends think I am too Democratic. What I see is the failure of both parties to sit and do that which is right for this country in stead of pandering to those with the money. We ought to get rid of all of them and start from the beginning.

  7. HeinrichAnton December 24, 2011

    Jeff Madrick has some very bad ideas (solve debt problems with even more debt!) and obviously has not seen a wage list of industrialized countries. He thinks Germany can sell its machinery and his cars because they are cheap (he says wages are so low in Germany). The opposite is true! German products are the most expensive ones and are not bought because of price, but of QUALITY!!! Just ask any BMW or Mercedes driver, he knows better than Jeff Madrick. He should also explain where the subsidies are in Germany….there are none! And the taxes are among the highest worldwide and all other benefits (vacation time of 30 working days/yr, extra pay, extra long maternity leave, no penalty or vacation deductions for sick leaves, etc) are all adding enormous cost to the products. If you are broke, you don’t go to the bank and get more loans! You tighten your belt and go to work. The US has a trade deficit between $ 30 and $ 60 Billion a month(!) over decades (that includes petro dollar payments). Stop blaming the others for your misery, make better products, that the world wants to buy!

  8. dpaano December 29, 2011

    I have to agree with some of what Common Sense writes above. I have a couple of ideas regarding welfare and our government.

    1. Let’s limit welfare to a specific time frame. Pay for child care, education/training, etc. Once a person has graduated, help them to find a job. After 6 months on the job, they are dropped from the welfare list. If they do NOT stay on the job, they are not eligible to come back for more welfare.
    2. Limit the number of children a welfare mother can have….if they have more and don’t have a husband to support them; then you do one of two things (1) you go after the father of the child for child care; and (2) she doesn’t get paid any more money for more children!
    3. As for our government…there are SO MANY departments that do the SAME job. We need to go over EACH department in the government, get rid of the ones that are duplicated or meld them into one major department. This way, we don’t have different departments dealing with the same problems in different ways. It’s like the CIA, the FBI, and the Secret Service…they have NO way of knowing what the other one is doing (look at 9/11, for example). The Agriculture Dept has so many various subdepartments that don’t “talk” to each other. The work is overlapped when it should be kept in ONE department. With this, we could have more than enough inspectors available to monitor our farms, etc.
    4. Get rid of lobbyists and corporate donations to campaigns. Let the individuals run on their OWN merits and for their constituents and NOT for the corporations. There are too many laws going through Congress and the House that have to do with various corporations….and too many politicians who will vote any way these corporations want them to vote because of their campaign donations! It’s ludicrous to think we can get ANYTHING done in our government that relates to the common man when more money is given to them by the corporations!!
    5. Set up term limits for our Congressmen and women; also for the House of Representatives. Once their term is up, they are out! They do NOT get retirement benefits unless they’ve paid into a 401K plan like the rest of us peons! They do not, especially, get lifetime health plans, etc. They should NOT get anything that you or I (the common man)don’t get when we work for a living. They are NOT special and most of them are millionaires as it is!
    6. We need to go over the U.S. budget line by line and delete anything that seems totally out of line. There is NO reason why we should be paying more for a toilet seat than what you would pay to get one at Home Depot or Lowe’s! There are many items in the budget that could be cut significantly if we viewed them line by line. I’m sure we could cut the budget enough to make up the deficit eventually without having to cut jobs (which, in turn, cuts revenue coming into our government via taxes, etc.).

    I think these are some supportable and doable jobs that would help get our government and our states back on the road to success….and none of them would cause the problems we’re now having and may even solve a couple of them!

  9. olelady2 December 31, 2011

    The reason medicare is in the shape it is in is because of the greedy sticky fingered politicians!NC is the worst! Giving the states the right to alocate these monies is by far worse than the way it was, especially in NC. They cater to the drug addits and other people that have never worked for it. You take someone that is totally disabled and tell them they cannot have any healthcare for 2 years, but turn around and give the druggies and young people with nothing wrong all access. What is wrong here? You take people that fought death and won but are not able to work and they are denied the basic rights of healthcare. My husband is in very bad shape and can not afford to pay full price for med/care or meds he needs. Their response, well that’s the way it works. WRONG!

  10. mikemorgananalyst January 1, 2012

    My econ 101 professor used to say we know how to cure a depression, but the steps were too drastic to get a consensus on using them to cure a recession. In my later years, I recall seeing stagflation, trickle-down economics (emphasis on first five letters, just so you know where I’m coming from), and a host of other solutions to the so-called business cycle. I won’t say I haven’t experienced the thrill of being in the 1%, or the desperation of having NO money, or the angst of never having reached the income and wealth levels that I aspired to. I have lived in the ghetto and gotten to know the truth about that community (believe me, a lot of us are much more sick in the head than those folks are). I chuckle at the Republican debate participants tripping over each other to propose ways to protect the position of that 1%. It used to be 10% in the beginning, then 5%, and now 1%.
    Well, it’s time, guys, to bring back what used to be thought of as humanity in social action. Yes, FDR in his fumbling, ineffective programs, but mostly Truman and Eisenhower in their adhering to a truly tough, fully progressive income tax. Use it or lose it, boys, and we don’t mean investments to support your own narcissistic lifestyles. It means building factories, creating jobs and coming up with new markets, new products, and a really good “shew” for consumers. We are not kidding, the me-generation has lost its mojo. Of course, there are charities you can give to, I guess. But jobs and a meaningful life for the middle class is where you want to go. That used to be the case in the 50s and 60s, and it’s time to go back to that.
    So how are we different from the 1930s? We’ve learned not to take it, not to accept public blather about efforts. In the years since, we have learned the phrase “outcome-based programs,” though that started in affirmative action. Let’s see some outcomes, boys, before we do, as a democratic society, decide to do it for you (despite the FDR stumbling around).
    The whole idea of the Occupy Wall Street movement was to make us visible. Guess what? We’re in the majority. And we win. You guys work for us, not the other way around. We like your moves, in fact, but you’d better bust some moves pretty quickly in our direction.
    Love keeps us alive,

  11. jhonmwells2 January 3, 2012

    Your ideas are quite interesting and innovating let see what the political party will do for our economy. For any cash assistance visit 6 month loans, 12 month loans, 24 month loans


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