We Desperately Need a Twenty-First Century View of the Economy.

Evonomics ^ | 02-21-2016 | Nick Hanauer and Eric Beinhocker

[M. Dodge Thomas]

For everyone but the top 1 percent of earners, the American economy is broken. Since the 1980s, there has been a widening disconnect between the lives lived by ordinary Americans and the statistics that say our prosperity is growing.

Despite the setback of the Great Recession, the U.S. economy more than doubled in size during the last three decades while middle-class incomes and buying power have stagnated.... (yet) for too many families, the American Dream is becoming more a historical memory than an achievable reality.

These facts do not just highlight the issues of inequality and the growing power of a plutocracy. They should also force us to ask a deeper set of questions about how our economy works — and, crucially, about how we assess and measure the very idea of economic progress..

Our economic policy discussions are nearly always focused on making us wealthier and on generating the economic growth to accomplish that. Great debates rage about whether to raise or lower interest rates, or increase or decrease regulation, and our political system has been paralyzed by a bitter ideological struggle over the budget. But there is too little debate about what it is all for.

Hardly anyone ever asks: What kind of growth do we want? What does wealth mean? And what will it do for our lives?...

[Toddsterpatriot]

For example, that the banking system as it currently exists is so important to the economy that it must be bailed out at taxpayer expense

There was no "taxpayer expense" for the bank bailout.

[M. Dodge Thomas]

Years later, (with the exception of the $12 billion loss on the auto bailouts) the taxpayers came out (modestly, around 46 billion) ahead, and around 23 billon of that was from banks.

However - and this is a big however - it was not clear to anyone involved at the time, that the taxpayers would ever be repaid in full, or anything close to it.

The costs of systemic failure were considered so high that *any* amount of taxpayer loss would’ve been considered acceptable, and for several years taxpayers were deeply in the red.

The voters may not understand the exact nature of the bailout, but they had then, and have now, a good understanding of the reality that they were on the hook for any losses, and for several years losses were in fact what they saw.

And THAT’S what informs the voters current view of the bailout, and in my mind, rightly so.

______________

In this respect is worth considering what the alternatives might’ve been if the public interest rather than the solvency of the banks and investors had been the primary concern.

For example, instead of bailing Bank of America out of it subprime mess, the government could have refinanced mortgages for anybody who wish to, bpacked by treasury bonds, at around 3%, in return for government ownership of 50% of the proceeds on sale the property. In most cases write-downs could’ve been avoided, many more people would of stayed in their homes, and disposable income would’ve been much higher.

In my view, on just about every rational criteria this would’ve been a better program - but but of course it was never considered.-

[Toddsterpatriot]

The costs of systemic failure were considered so high that *any* amount of taxpayer loss would’ve been considered acceptable, and for several years taxpayers were deeply in the red.

When were they deeply in the red? Based on what?

In this respect is worth considering what the alternatives might’ve been if the public interest rather than the solvency of the banks and investors had been the primary concern.

The solvency of the banks was in the public interest.

For example, instead of bailing Bank of America out of it subprime mess,

How do you feel Bank of America was bailed out of its subprime mess? From what I saw, they lost hundreds of billions. The government didn't hand them any money to make up for those losses.