All Stiglitz is saying it that what goes up must come down, or expansion leads to contraction. I don't think we will be part of the first bull market in history that does not get followed by a bear market, if that is his case. He is partly right in saying tax cuts possibly leading to government deficits, but he is wrong about why there is inflation into the market. Government spending, contrary to what P.E. Trudeau said, is the sole arbiter of inflation. If tax cuts led to an economic boom, or precede an economic boom, then they are not in and of themselves responsible for government shortfalls. Failure to curb spending, waste and expansion is the root cause. i.e. Ballooning M1 due to excessive credit largesse and huge government borrowing in order to expand government.
If tax cuts had been accompanied by Jeffersonian government shrinkage, and reasonable government credit controls, then there would have been no debt and no inflation.
Taxes cannot continue to go up. They are as rich as they can be. Service economies, i.e. government red tape bureaucracies, are as bloated as Washington halls will allow. People cannot pay more taxes without raising company costs out of sight.
Putting the tax burden on the wage earner raises the unit cost of products overseas and in the US too. If corporate, sales and /or excise tax, cheaper to collect and account, were the sole forms of taxation, then products would be cheaper. This would lead to increased competitiveness in wolrd markets and more available income. Either domestically more retail money would be spent or,iof salaries were lower, then foreign exchange would increase wiping out the deficit.
So far no administration has had the courage anywhere except in Norway and Ireland to cut real government expenditures and taxes. And what happened? Ireland and Norway, previously practically 3rd world, had their economies take off. Now they are rich. What debt? They don't have debt. They have balanced budgets. Cutting taxes does not automatically lead to debt.
In addition to cutting taxes you have to stimulate the economy and investment from everywhere including foreign countries. You cannot enviromentalize a country to death and forbid investment. What Canada did is to chase away foreign investors, nationalize or curtail its main foreign exchange producer, (mining) cut capital gains exemptions, reduce incentives to research and develoment, and then reduce payouts in certain needed areas of transfer to provinces. They reduced spending without reducing the size of government. Neat trick. Government sleight of hand allowed them to publish a lower deficit, but this wsa largely due to a economic boom and changed accounting of where the deficit lay. It was now with the ratepayer, wage earner and provincial government.
Governments treat themselves as money machines to carry out social programs that are needed because of their prejudice and antagonism of industry and their confisticatory tax and political en- and disenfranchisment policies.
The purpose of government is to act as a mediator within society's management of itself and its industry, and to create an economic, regulatory and social environment that allows regulation of that. It is not to build a pollyanna ideal world of work for someone's new age commune. It is not to build monopolies nor to fund or legislate them.
People within Canada country think we are capitalistic, democratic and not socialist. They never wonder for a minute why we had one broadcasting company, or authority, only a national film board not a film industry, two nationally subsidized railways, one government predicated airline, with only one real competitor, one government predicated phone company, and provincially practically only one power company owned by the government per province. All food products subject to quota, and all trees subject to government royalty. All free land was called owned by government for the purposes it is know known to be created as parks for the imagination of the bureaucrats as some form of preservation.
It is evident we are serfs living in a communist totalitarian state and we are taxed to death to satisfy the cronies of that evil empire which has deprived us of our heritage.
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