Well, it could be, if he decides to use it.
I was reading about this in an interview on another blog. Apparently, Dennis Kucinich has organized a brain trust of financial and political advisors to help reindustrialize America and save it from the financial pit falls that face it. So the question becomes, will Obama indeed be open minded enough to listen to these more progressive voices or will he succumb to his Chicago School associates and Clinton left overs as Krugman fears?
Join me after the jump.
The interview is with Michael Hudson, a former Wall Street economist and it is well worth reading the whole thing. I'll include a few quotes within fair use limits but you will learn a great deal about how the American economy got to where it is today and how to get out of the hole that's been dug by reading the article.
Taxation
One of the more interesting questions he answered regarded taxation. He rephrased the question as it not being so important how much you taxed as "what" you taxed.
Fast forward to today. The tax system favors speculative gains and absentee ownership. Ironic as it may sound, really wealthy people prefer not to make any income at all. They prefer to focus on total returns, which they take in the form of capital gains. This is why hedge fund billionaires pay a much lower tax than their secretaries. Real estate is still our largest sector--most of its market price consisting of the land's site value--rather than industry and other means of production. Given the existing loopholes, I would prefer not to tax corporate profits or even income at all, if the government could tax the free lunch of economic rent at its source. The discussion of WHAT to tax therefore should take precedence over how highly to tax the scant income that wealthy people are obliged to declare from the FIRE sector--finance, insurance and real estate.
Giving what amounts to tax subsidies for debt leveraging and other financial shenanigans amounts to giving a strong economic push to those industries. Giving incentives to companies that actually produce jobs and productivity should be the emphasis.
Free Trade
There is not a long enough section on free trade. I would have liked to see more of his ideas on this. Here is a glimpse.
The reason U.S. labor has lost its competitiveness is not simply a race to the bottom. To see why U.S. exports are being priced out of world markets, you need to look not only at the take-home pay of workers, but also at what employers are not investing to raise capital productivity, and what they don't get from government in the form of basic infrastructure support.
He also goes on to mention the cost of health care and other cost of living issues much of which he blames on the financialization of the US economy.
Much more meat in the interview that I can possibly summarize here. Do go and read it.
My first time writing a diary here and I hope when I push that publish button that all goes well. Thank you for reading.