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George Pataki is laughing at you.

George Pataki is laughing at you.

The metropolitan transit system is the most developed mass transit system in the United States. It carries workers (including me) from their houses to their jobs inside and outside the five boroughs. It is an essential piece of infrastructure for New York City, New York State, and the Tri-State area. Its importance cannot be overstated. The economic activity made possible by the transit system produces the lion’s share of taxes that go to Albany, and a sizable income for Newark and Hartford. Without the MTA millions would be unemployed.

So why did Governor Pataki try to starve it in the 90s? This is from an article in the New York Times:

At first the programs were financed with a combination of money from the state and city and borrowing. After George E. Pataki became governor in 1995, he sharply cut state funds for the capital programs and told the authority to borrow more. As a result, the last two five-year plans have been, in the words of the authority’s current executive director, Elliot G. Sander, put on a credit card.

The massive irresponsibility of the governor’s policy is all the more glaring now that the MTA is gasping for air. So why wasn’t there more of an outcry when the electorate could do something about it?

The answer is The Great Conservative Tax Swindle, also known as the Laffer Curve. The Laffer Curve is some spurious (and typically conservative) economic snake oil sold to the masses by Reagan and his legion of followers. At first it seems reasonable: if taxes are too high people won’t work. But taken to the extreme It says that all taxes are bad, and that rests on the assumption that only private capital is able to finance the public weal.

Some things are too important to be left to private initiative. In order to form a more perfect Union (as our Founding Fathers believed) we must come together as a people, and that means we will elect a government. Conservatives, deeply suspicious of government, have for the last twenty-eight years elected sabateurs whose explicit vow was to dismantle government. Deeply suspicious of public capital, they actively and openly raided the public treasury to enrich private capital. The time has come to roundly condemn this insanity. In the words of Roger Toussaint, president of Local 100 of the Transport Workers Union:

With a dramatic and historic increase in ridership, more service – not less – is needed on our subway and bus lines. Failure to maintain and reinvest in our transportation infrastructure now will result in huge costs to riders and all taxpayers down the road.

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Ronald Reagan and Lee Iacocca, Detroit, 1980

Ronald Reagan and Lee Iacocca, Detroit, 1980

The clamor is coming from all sides: extend the bailout to the car companies.

The rationale for doing so is that it is responsible fiscal policy: only by saving automobile manufacturing jobs will we be able to save Michigan. And as Michigan goes, so goes the country.

The holes in this argument are big enough to drive a Hummer through.

In the first place, whatever happened to the jobless recovery of 2003? I thought all the manufacturing jobs were already gone?

In the second place, as I have argued before, bailing out failing industry is a mistake. A firm line must be drawn between what is public capital and what is private capital. We have worshipped in the temple of private capital for two and a half centuries, while the idea of public capital has never been adequately articulated. The agopee of “privitization”, that is making what was public capital private, came with Reagan.

Reagan privitizing a Michigan State Fair T-shirt

Reagan privitizing a Michigan State Fair T-shirt

The end of that privitization happened when Henry Paulson was handed the keys to the Treasury and used them to write checks to his former pals in the financial industry. “Don’t worry boys — you’ll get your Christmas bonus this year!” The same is about to happen to the Big Three if they get their “bailout”: Executives will get to save their houses, while the workers’ jobs are eliminated and shipped overseas, and their retirement is left to a non-existing public dole. GM will not be able to build giant inefficient machines in the future. The market will not allow it. To prop them up will not save jobs for workers, it will only hold open the fire escape doors long enough for the rich to get out while their house is burning down.

Real fiscal stimulus has to do what the New Deal did: guarantee the future of the Re – Public by funding public capital.