Mooronomics

Here is the latest emission from our favorite film-maker on how to fix the economy.  I’ll transcribe:

To me, the solution is quite simple. First of all, we’re not broke. This country is not broke. The state of Wisconsin is not broke. There’s a ton of cash in this country, trillions of dollars of it.

Stop the tape.  First off, Moore seems to be confusing the government being broke with the people and companies within the nation being broke.  The assumption rolled into this is that all the money really belongs to government.  Because if you don’t assume that, then government is broke. We are getting warnings about our debt.  The interest payments alone are consuming a bigger and bigger chunk of the budget—taking money away from the liberal programs that Mikey and his compatriots love so much.  Medicare, Medicaid and Social Security have over $100 trillion in unfunded liability and the latter began running into the red this year.  And our national debt is projected to break 100% of our GDP within the decade.

If this is not broke, I’d hate to see what is.

Now granted—if you seized the money of all the big corporations, we wouldn’t be broke anymore.  We also wouldn’t have jobs.

But I interrupted.  Please continue to make a fool of yourself.

But it’s a finite amount. There is only so much cash.

Stop the tape.  At any one moment, yes.  But in the long run, wealth is not finite.  As P.J. O’Rourke said: if you eat a few extra slices of pizza, that doesn’t mean I have to eat the box. Human wealth has grown massively over the last two centuries, mainly because of the explosion of human capital—the unleashed creativity of programmers, artists and even over-rated film-makers.

We’ve allowed the vast majority of that cash to be concentrated into the hands of a few people. And they’re not circulating that cash. If you don’t believe that, go try and get a loan right now.

Loans are tougher to get now.  But that’s because the banks are—correctly—being smarter about lending.  Maybe too smart, true.  But that is preferable to the free-for-all that set up the recent crash.

They’re sitting on the money, they’re using it for their own—they’re putting it someplace else with no interest in helping you with your life, with that money. We’ve allowed them to take that. That’s not theirs, that’s a national resource, that’s ours. We all have this—we all benefit from this or we all suffer as a result of not having it

A national resource?  Other people’s money is a national resource?  You will find few statement as socialistic as that one.  To Moore, your money does not belong to you—it belongs to government (unless, of course, you’re trying to get a tax credit for film-makers).

Moore is also repeating the talking point that businesses are sitting on tons of cash, unwilling to hire people because of some nefarious plot. This is a myth. Corporations are maintaining liquid assets to hedge against further downturns and deal with existing debt.  And their cash has only seemed to grow because their illiquid assets—real estate, especially—lost so much value.  In the mean time, that cash is not “sitting there”.  These guys aren’t making big piles of bills and rolling naked in it.  It’s being invested—much of it in bonds to support our big-spending government. If you want more money available for loans, stop having the government borrow so much.

(Frankly, this point—which Moore made repeatedly during the last recession—has never made sense to me.  Why would businesses sit on cash if they didn’t have to?  Hiring people is how you make more money.  Don’t businesses want more money?  And the complaint that they’re spending it on themselves—isn’t spending supposed to stimulate the economy?  Didn’t we just have a whole huge multi-hundred billion dollar spending bill that was supposed to do just that?)

In the end, businesses do not hire because they have cash.  They hire because more income is anticipated.  Moore knows this, or should.  He doesn’t hire people when he’s not making a movie because he has money siting around; he hires people when he anticipates making another movie and making more money.  But it’s hard for businesses to anticipate more income with growing regulation and the constant threat of ... well, what Moore says next:

I think we need to go back to taxing these people at the proper rates. They need to—we need to see these jobs as something we own, that we collectively own as Americans and you can’t just steal our jobs and take them someplace else

Michael Moore is self-employed.  He owns his job.  Most of us do not.  I certainly don’t own my job.  If I leave town or quit, I can’t take my job with me.  If my employer goes belly up, I can whine all I want about “my” job—that won’t bring it back.  Jobs are not property in any real sense.  You can’t ship them and you can’t store them.

What we do own are our bodies, our labor, our skills, our intelligence and our work ethic.  When opportunity exists—when the business environment is good—people will offer us jobs in exchange for those things.  But we do not own those jobs any more than our employers own us.  It’s a mutual and voluntary exchange.

And if Michael Moore wants people to stop “taking jobs someplace else”, maybe he should stop advocating that we “tax these people at the proper rates” (his only suggestion) and other such nonsense.  High business and personal taxes tend to drive businesses away, not bring them in (many businesses file taxes as individuals). The Sarbanes-Oxley law has crippled IPOs and start-ups. American businesses are facing large hiring costs thanks to the insurance mandate.

We need to do the opposite of what Moore is suggesting.  But then again, that’s usually the case.