Thursday, September 22, 2011

Elizabeth Warren, The Left's New Class Warfare Poster Child

The Left has a brand new heroine, and it's Massachusetts Senate candidate Elizabeth Warren, who's being touted as just the one to take back Teddy Kennedy's old Seat from Republican Scott Brown in 2012, even though she's not a Massachusetts resident.

Greg Sargent over at the Washington Post is all afire touting her as the new progressive champion:

This must-watch clip of Elizabeth Warren aggressively rebutting the GOP’s “class warfare” charge is burning up the internet, and once you watch it, you’ll understand why...

The gist is that Warren rebuts the charge that asking the rich to pay a little more in taxes is “class warfare” by pointing out that no one grew rich in America in isolation.

{...} very few Democrats are able to make the basic case for the social contract quite this effectively. And this is coming from someone who only started campaigning seriously a few weeks ago. So she may have lots of room to grow.

Here’s why I think this video is so important. As I wrote the other day, a Warren candidacy could test the electoral limits of true populism in a way that few other Dems have been willing to venture. Here we’re seeing the beginnings of this — this is a candidate who is starting out with her own voice.

Actually, she's Obama with a slicker line, but easily rebutted.

The guy building a business is the person who actually pays for all the progressive wet dreams people like Ms. Warren love so much..not only by dealing with all the fees, regulations and taxes the government levies on anyone in business but by employing others who likewise pay into the system. Thus the Evil factory owner pays a much larger chunk for the government services she mentions than say, a college professor or a government functionary.

Raising taxes strangles an economy. Lowering taxes, up to a certain point stimulates it because when people have more of their own money, they spend or invest it, since there's nothing else one can do with money aside from burning it in the fireplace or burying it in the back yard....and spending it on goods and services or investing it generates more tax revenues.

The Eurozone has been embracing the 'eat the rich' philosophy for years, doing exactly what Ms. Warren is advocating. You can see where it's gotten them.

The 'blame Bush ' line might play well in Massachusetts, but I think the president pretty much has worn the novelty of that tune out. A quick check with the Office of Management and Budget reveals that the really huge increase in the deficit coincided with the Democrats taking control of Congress in January of 2007, and went on steroids once Obama got into the White House and had a Democrat super majority to do exactly what he wanted for two years.

I seem to recall a presidential candidate telling the country in 2008 that if he couldn't fix the economy in three years, he wouldn't deserve to be re-elected.


As I said, Ms. Warren may be able to get away with this sort of screed in Massachusetts, but I wouldn't recommend 'progressives' try this in other parts of the's so 2008.

please helps me write more gooder!


Anonymous said...

I don't get your argument at all. Most people I know are sitting on what little money they have left over after paying their bills, they're not out buying houses,boats and cars, and they're certainly not investing in the stock market.

Maybe rich people do it differently, which is why they need those tax breaks.

Speaking of class warfare, this sounds like a class warfare argument by you for the rich. How do you justify that?

Anonymous said...

The parasitical financial sector in the US need to be reduced by at last 33%.

Of course, class warfare works both ways--the problem is, the rich, often bailed out, and who have NOT had their jobs outsourced---they are making great gains and have more time to do class war, while the outsourced are pounding the pavement on wild goose chases for no longer existing jobs and have less time to do it from their end.

Rob said...

Hello Anonymous,
A respectful response always gets one from me.I've gone over this before, but you might have missed it.

You're entirely right, a lot people are sitting on their surplus money, keeping it in checking, savings or money market accounts in fear of what could happen.

Believe it or not, that comes under the category of investing albeit at a very low rate of return.

When you stick your money in a bank, you get a small return in the form of interest,but your money doesn't sit there. Most banks and credit unions have a liquidity ratio of less than ten percent compared to the deposits they're holding. Instead, the banks put it to work in the form of mortgages and loans or in investment vehicles themselves, all at a higher rate than they're paying you. This is know as 'profit'.

Some people of course have money under a mattress or in a safety deposit box, which means the money is useless paper until they choose to do the only two things you can do with money - spend it on goods and services or invest it. QED.

That applies to everyone, rich or poor, like gravity or the First Law of applies to you and to me.

However, just like the banks, the Evil Rich have the potential to spend or invest more, simply because they have more.

By definition, spending or investment generate more economic activity, and the more there is, the more income there is to be taxed.Lower taxes mean more money to spend or invest. They also mean more jobs ( because there's more economic activity, there's more of a need for workers and there's money to invest in hiring them) and believe it or not, more tax revenues because more people are both working and producing more wealth, which can then be taxed.

An academic like Elizabeth Warren is clueless about how this worked, since she's never dealt with business or private industry. The same could be said of the president.

Economist Arthur Laffer proved this with the Laffer Curve, and you might remember that the tax cuts during the Reagan Administration got us out of the Carter stagflation and depression.

Bush's tax cuts did the same to the recession he inherited from the Clinton years, even though the effect was moderated because as you might remember, he only received part of what he wanted from the Democrats in Congress...and also by the trillion dollar hit of 9/11.


Rob said...

Hello Anonymous 1:20PM.
I agree with you..the problem, however is deciding whom the parasites are, who gets to decide, and how they're 'removed'.

The American Revolution was not based on class, and thus was very different from what happened in France and later Russia.I doubt anyone wants to repeat the French Revolution and The Terror here.

These days, from where I sit, billionaires like George Soros, Peter Lewis and others on the Left seem to be much more involved in class warfare than the rest.

A look at Soros' background ( he's always made money from chaos and disorder) tells you why.

Anonymous said...

I'm the first anonymous. OK, I get your point about saving being investment and about money either being spent or invested. Seeing how little banks pay it's not much of one, but I guess it is.

I still don't get why you're defending tax cuts for the rich.


Rob said...

Hello Tony,
I'm glad to see we're making progress.

Actually, I'm not defending tax cuts for The Rich,but for everybody. Up to a point, the more of your own money you have, the more economic activity you're going to generate when you spend on goods and services or invest..and remember, that's ALL you can do with money, one or the other.Remember the rich can do more simply because they have more, but it works for everyone.

Assuming you're working you get a paycheck, usually every two weeks. Let's say your salary those two weeks is for $2,000. Except you don't get two thousand, you probably net between $1400 to $1600, depending on your situation and where you live.

You deposit your paycheck, write checks to pay your bills, maybe with what's left over you go get a pizza or a couple of beers at a bar or maybe a shirt you need.Your generating economic activity at your bank, the pizza place, the bar, or the store you buy you're shirt at.

Let's suppose that instead of only $1400 to $1600, you ended up with an extra $200 because of lower taxes. That represents $200 more of economic activity for you. Maybe you save it, which means the bank makes more loans or investments which in turn generates other economic activity. Maybe you buy a suit instead of a shirt, or have pizza twice instead of once. Maybe you save up for a vacation, or for a car.

Anyway you slice it, you're generating economic activity. And multiplied by millions of other people, it adds up to more jobs, more investments, more economic growth. It might even mean more business for the company that employs you, meaning more overtime, more promotions as new jobs open up, more m-o-n-e-y. And thus even more economic activity.

Everybody benefits..on different levels, sure because there's never been a totally fair economic system developed yet and some people just have more to play with, but it benefits everybody. It even benefits government, because more economic activity means more tax revenues.


Anonymous said...

Warren would have prevented the Collapse, at least when it occured. She would have banned CDSes and CDOs and had Glass-Stegall in effect.

Deregulation of finance caused the Collapse. What caused deregulation?
Regulatory capture of the government by High Finance.

Warren was opposed to all of this, if I have her history right and assuming her sincerity.

Zachriel said...

Rob: When you stick your money in a bank, you get a small return in the form of interest,but your money doesn't sit there. Most banks and credit unions have a liquidity ratio of less than ten percent compared to the deposits they're holding.

Currently, there are several trillion dollars not being reinvested in the economy due to lack of demand. Capital is sitting on the sidelines.

More importantly, you seem to misunderstand Warren's argument. It is not "class warfare" to suggest that no one is an island, and that everyone owes something to the larger society.

Joshua Pundit: Raising taxes strangles an economy.

Taxes are a necessary component of government. Whether "raising taxes strangles an economy" depends on how much and under what circumstances.

Rob: An academic like Elizabeth Warren is clueless about how this worked, since she's never dealt with business or private industry.

You can be sure that Warren is aware of the basic principles concerning the money supply.

Rob said...

Hello, Zachriel,Money never 'sits'. I assure you that reserves the banks have are invested elsewhere, even with demands for loans being slack.

As for the tax question, I made reference to the Laffer Curve and its basic principles in the comments earlier. Obviously a degree of taxation and regulation is necessary.

Elizabeth Warren is a Left wing law professor and no, I'm not sure she has much of an awareness of economics..or she wouldn't have said what she said.

Hello Anonymous 2:49 PM. I'm afraid I disagree with you as to the cause of what you term the Collapse.

Cheap credit and outright corruption in Fannie and Freddie were a huge contributor, since the toxic loans they pressured banks to make were spread by certain elements of Wall Street throughout the economy in the form of derivatives. You can't blame the banks for doing the kind of business the government was pressuring them to do and Wall Street, Fannie and Freddie were happy to buy from them at profit.

I primarily blame those that blocked the Bush Administration's attempt to institute some basic reforms in Fannie and Freddie for a large part of this problem.Ridiculous government spending exacerbated the problem.

Your reference to Glass-Stegal is interesting, and I don't doubt Warren would have opposed President Clinton's signing the repeal instead of vetoing it. But its antiquated walls between commercial and investment banks and between banks and insurance probably would have hurt rather than helped the problem since it retarded economic activity, and the investor protections it offered were largely continued by Gramm-Leach-Bliley, which superseded it.

Using Glass-Stegal as a rallying cry is simply looking for a scapegoat in all the wrong places.


Anonymous said...

Let's see the government, which had already been "regulatorily captured" by the banksters, was "pressuring" those who had captured it to do what they were otherwise unwilling to do.

And I'm sure they had no clue they would emerge unscathed and unincarcerated and un-bailed out.

Anonymous said...

should read "and bailed out."

Rob said...

Spoken like a true Leftist. Like Warren, you essentially agree with 'corporatism', the true name of fascism as Mussolini admitted...heavy government control of everything by the State.

You're certainly entitled, but I love my freedom, thanks.

We'll see what the American people decide come next November.

Anonymous said...

Accepting your terms for the sake of argument,the worst fascism is that of unregulated High Finance because it knows no national imperative,merely Mammon-worship. With the "conventional" fascism at least one gets a chance the strong man will give a damn about his country.

Zachriel said...

Rob: Hello, Zachriel,Money never 'sits'.

Of course it does. There's $1.6 trillion sitting in the Federal Reserve right now.

Rob: You can't blame the banks for doing the kind of business the government was pressuring them to do and Wall Street, Fannie and Freddie were happy to buy from them at profit.

The unregulated shadow banking system in securities predates Fannie and Freddie's involvement. The risky securities were designed by Wall Street. Fannie and Freddie were the "greater fool" as the investment houses unloaded their toxic assets.

“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower." — Alan Greenspan

Rob: Economist Arthur Laffer proved this with the Laffer Curve, ...

The Laffer curve doesn't "prove" anything. It's a simplified graph of the elasticity of taxation, which may or may not be a simple curve.

Rob: and you might remember that the tax cuts during the Reagan Administration got us out of the Carter stagflation and depression.

The recession was designed by Volcker and Carter to wring inflation out of the system. Once the fed led off the brakes, the economy rebounded naturally. It was painful, probably more painful than it needed to be, but it ended the inflation threat for a generation.

Rob: Elizabeth Warren is a Left wing law professor and no, I'm not sure she has much of an awareness of economics..or she wouldn't have said what she said.

Warren was correct that the tax cuts, wars and Medicare expansion were funded by deficits. Her other point is nothing more than that everyone has a stake in society.

Rob said...

We have a fundamental disagreement here, Zachriel.

The money in the Fed isn't sitting. It is in t-bills and federal notes and garnering interest.

I likewise find your defense of Fannie and Freddie incomprehensible, since I have direct knowledge of how the secondary market in loans operates and the pressure that was put on lenders to make toxic loans, largely to minority borrowers, who did not meet regular underwriting standards.

Fannie and Freddie were happy to but the toxic paper however, and bundle these as mortgage securities with good loans that Wall Street could in turn sell for profit. That's what caused the problems with AIG, who had mortgage securities reinsurance as a primary business.

As for the Laffer Curve being 'simple' and Jimmy Carter and Paul Volcker , 'engineering' the recession, I can only shake my head at your disingenuous point of view, frankly.

But you're certainly entitled, just as you're entitled to think that Ms. Warren's quasi-Fascist views merely reflect that we all have a stake in society.

The mythical factory owner she mentions has ALREADY paid his or her share and more for the items she mentions.

And if we take her views literally, than I want a larger share of her salary a piece of her home, and some of what she has in the fridge.After all, she's benefiting from taxes I pay, so why not?

From each according to his ability, to each according to his needs, no?

Oh wait...haven't we heard that somewhere before?

Anonymous said...

even though she's not a Massachusetts resident.

As far as I can determine, her current residence is in Cambridge MA. Why do you say she is not a resident?
Frankly, MA has been the favorite destination of many famous and successful carpetbaggers. Hello? Mitt?