Wednesday, 5 August 2009

Ron Paul - Cash for Clunkers



The reason I included this clip, that deals specifically with the car industry assistance, is that it gets to the heart of the bailout fraud in general. The bailout money is not actually going to help the poor, and it is not going into anything that will help the economy generate wealth in the long term. It's short term quick fix type fiddling that will not last.

The truth of the matter is that there are many fewer jobs in the US so that there is less money to be spent. The car industry (and other industries- like banks) require extensive overhauling and no matter what they do they still face real contractions in the market as wealth dries up in the cyclical form of lost jobs and lost buying power.

Think about the wider implications with regard to what Congressman Paul has said here in the clip.

[Posted at the SpookyWeather blog, August 5th, 2009.]

2 comments:

steven andresen said...

spook,

Rep. Paul is a good man. I think he's correct that this 'cash for clunker' program isn't good for the poor or the economy in the long run.

However, his argument is that government can't help the economy at all and so should do nothing. I am not sure about this.

It is my understanding that protectionist trade policies were responsible for the creation of much of our industrial base. So, if there is a tax on various items imported into the country to take away the effect of their cheap labor costs, say, then, there was a space to create a domestic clothing industry.

etc. for cars, steel, and so on.

Has Rep. Paul argued that this kind of taxation enacted to protect the creation of domestic jobs would be self defeating and against the poor?

I thought the argument was made that what made the Great Depression worse was protectionism that supposedly hampered trade. Instead, I thought it was corruption in finance and speculation on Wall street that caused the Depression.

I guess I think that there is a role for government in the economy, and I therefore have issues with Rep. Paul.

SpookyPunkos said...

yes, I agree that part of the problem is that the "quick fix" money is not being spent wisely. I too think that some money should be spent where needed.

I have noted that Congressman Paul is not totally in favour of no spending either. Recently he has reiterated the policy of ending the wars so that money can be spent on reducing the deficit and helping the poor. Although a small government/everyone for themselves Republican, he is a doctor after all. I'm sure you would see some help coming from the Government, but I think that the money for the help would come, eventually, from a more localised level- less taxes to the federal government, more dollars at the local level.

I also think that, being rather pragmatic, Paul would want a level playing field, and would have or encourage measures to protect US jobs from the cheap overseas labour costs. It might be that US companies would lose tax advantages for outsourcing for starters.

I'm not sure what Paul's argument is for or against protectionism however, I'm only guessing here.

You are right about the Depression. It was the banks again as far as I can see. A financial, cheap credit bubble that suddenly deflated and wrecked the economy, with unemployment + loss in consumer spending cycle making things worse.

There is a role for Government in terms of regulation, which Paul would describe as "Laws", and providing some services. If there was no Law about saving a private bank then Paul would let it fail.

Having written all this, I think that the Congressman would interfer more in the system than he claims. It would be interesting to see how things would go .... !