Governor Snyder of Michigan: The Anti-Robin Hood

So far I see no evidence that Governor Snyder's "Modest Proposal" - and now, our law - to tax the elderly and give the money to corporations is working. In fact, if Governor Snyder had two brain hemispheres to rub together (he only has one!), it would be bloody obvious that there are no jobs not because of taxation, but because of reduced demand: people are not spending.

August 16 2011

Interview with Nouriel Roubini by the Wall Street Journal

WSJ: (~4:00) So you painted a bleak picture of sub-par economic growth going forward, with an increased risk of another recession in the near future. That sounds awful. What can government and what can businesses do to get the economy going again or is it just sit and wait and gut it out?

Roubini: Businesses are not doing anything. They're not actually helping. All this risk made them more nervous. There's a value in waiting. They claim they're doing cutbacks because there's excess capacity and not adding workers because there's not enough final demand, but there's a paradox, a Catch-22. If you're not hiring workers, there's not enough labor income, enough consumer confidence, enough consumption, not enough final demand. In the last two or three years, we've actually had a worsening because we've had a massive redistribution of income from labor to capital, from wages to profits, and the inequality of income has increased and the marginal propensity to spend of a household is greater than the marginal propensity of a firm because they have a greater propensity to save, that is firms compared to households. So the redistribution of income and wealth makes the problem of inadequate aggregate demand even worse.

Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process.

If Mr. Roubini is remotely correct, then Governor Snyder has made the situation greatly worse!
To be honest, I consider Governor Snyder to be little more than an educated "footpad" (an archaic term which I use all the time) or highwayman who saw it his duty in a time of reduced demand to deliver more of the money of the poor to the rich!... since the poor did not see fit to spend it right just now!
He is the perfect Anti-Robin Hood!
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