Lets make fun of Obama while he is still relevant.

[Eric the Green]

(12-02-2016, 02:05 AM)Warren Dew Wrote: Actually government spending is the least effective way to try to stimulate the economy.  The problem is that spending stimulus is inflationary, which means that you have to cut back on monetary stimulus to avoid excessive inflation. 

Why is monetary stimulus not inflationary, and spending stimulus is? No, government spending stimulus has always worked. It worked in the thirties, because right after the New Deal there was a modest recovery, and a bigger one after the big war. There was a modest recovery in 2010 that was cut short by Republican policies. Government spending pumped up the economy in the sixties and reduced poverty.

Quote:Supply side stimulus such as cutting tax rates in concert with monetization of the debt is the best form of stimulus; supply side stimulus is deflationary, permitting application of additional monetary stimulus.  Tax rate cuts are especially good as they increase the incentive to work and thus increase the labor market participation rate, which is particularly critical when the economy has a lot of retirees to provide for.

I don't see how you can keep cutting taxes, without raising them again later. Tax cuts to the non-wealthy might have some stimulus benefit, but the resulting debt has its dangers too as I mentioned. It's the same with interest rate cuts as stimulus. There's nothing left in the tank now. When Trump causes another recession after 2018, there will be no tools left to help us out of it.

The tax cuts didn't work because they were focused on the wealthy, who don't work but only push papers and fire people. The rich don't need more motivation.

Quote:But perhaps the most important issue is that government spending is generally in the form of payments to large corporations, so it adds to wealth inequality.  Across the board tax rate cuts, in contrast, benefit the workers, and thus tend to decrease inequality.

Except that the times when inequality vastly rose, were the years leading up to 1929, and the period from 1980 to today, when tax cuts were the policy.

Hoover tried to increase government spending to large corporations. That didn't work. Spending needs to be focused on direct benefits to the people and for the infrastructure the economy depends on. Government spending that puts money in peoples' pockets that way gets the economy moving.

[Warren Dew]

(12-02-2016, 03:18 PM)Eric the Green Wrote:

(12-02-2016, 02:05 AM)Warren Dew Wrote: Actually government spending is the least effective way to try to stimulate the economy.  The problem is that spending stimulus is inflationary, which means that you have to cut back on monetary stimulus to avoid excessive inflation.

Why is monetary stimulus not inflationary, and spending stimulus is?

We're looking at three categories of stimulus here, not just two:  monetary stimulus, demand side fiscal stimulus (spending), and supply side fiscal stimulus (like tax rate cuts).  Monetary stimulus and demand side fiscal stimulus are both inflationary; supply side fiscal stimulus is deflationary.  For that reason, supply side fiscal stimulus and monetary stimulus are complementary and the best combination for stimulating the economy.

Quote:Tax cuts to the non-wealthy might have some stimulus benefit, but the resulting debt has its dangers too as I mentioned.

I agree that ideally, tax rate cuts should be targeted at wage earners and not capital owners.  For me, that's the "non-wealthy" since there aren't any billionaire wage earners; you may have a different definition.

Bush's early tax rate cuts combined with rebates were the perfect way to handle supply side stimulus, and managed to nip in the bud a 2002 recession that otherwise could have been as bad as the 2008 recession.

As for debt, we disagree, but I notice you never worry about the debt from demand side spending stimulus.

Quote:Except that the times when inequality vastly rose, were the years leading up to 1929, and the period from 1980 to today, when tax cuts were the policy.

Hoover tried to increase government spending to large corporations. That didn't work. Spending needs to be focused on direct benefits to the people and for the infrastructure the economy depends on.

The rise in inequality from 1980 to today, which included periods of tax increases as well as tax decreases, had nothing to do with taxes.  They had to do with two factors:  (1) High growth naturally results in inequality increases, because among players that were equal before the growth, there are winners and losers, and (2) massive immigration drove the price for labor - wages - down relative to capital.

Agreed regarding Hoover.  The same critique applies to Obama's stimulus spending.  "Infrastructure" spending is just an excuse for Hoover style giveaways to rich construction companies - a moment's thought about how real estate developers benefit from "infrastructure" spending should let you know all you need to know about why Trump supports infrastructure spending.  The best way to put money in peoples' pockets is tax rate decreases for wage earners, not spending.

[Eric the Green]

(12-02-2016, 04:20 PM)Warren Dew Wrote:

(12-02-2016, 03:18 PM)Eric the Green Wrote:

(12-02-2016, 02:05 AM)Warren Dew Wrote: Actually government spending is the least effective way to try to stimulate the economy.  The problem is that spending stimulus is inflationary, which means that you have to cut back on monetary stimulus to avoid excessive inflation.

Why is monetary stimulus not inflationary, and spending stimulus is?

We're looking at three categories of stimulus here, not just two:  monetary stimulus, demand side fiscal stimulus (spending), and supply side fiscal stimulus (like tax rate cuts).  Monetary stimulus and demand side fiscal stimulus are both inflationary; supply side fiscal stimulus is deflationary.  For that reason, supply side fiscal stimulus and monetary stimulus are complementary and the best combination for stimulating the economy.

Quote:Tax cuts to the non-wealthy might have some stimulus benefit, but the resulting debt has its dangers too as I mentioned.

I agree that ideally, tax rate cuts should be targeted at wage earners and not capital owners.  For me, that's the "non-wealthy" since there aren't any billionaire wage earners; you may have a different definition.

Bush's early tax rate cuts combined with rebates were the perfect way to handle supply side stimulus, and managed to nip in the bud a 2002 recession that otherwise could have been as bad as the 2008 recession.

As for debt, we disagree, but I notice you never worry about the debt from demand side spending stimulus.

Quote:Except that the times when inequality vastly rose, were the years leading up to 1929, and the period from 1980 to today, when tax cuts were the policy.

Hoover tried to increase government spending to large corporations. That didn't work. Spending needs to be focused on direct benefits to the people and for the infrastructure the economy depends on.

The rise in inequality from 1980 to today, which included periods of tax increases as well as tax decreases, had nothing to do with taxes.  They had to do with two factors:  (1) High growth naturally results in inequality increases, because among players that were equal before the growth, there are winners and losers, and (2) massive immigration drove the price for labor - wages - down relative to capital.

Agreed regarding Hoover.  The same critique applies to Obama's stimulus spending.  "Infrastructure" spending is just an excuse for Hoover style giveaways to rich construction companies - a moment's thought about how real estate developers benefit from "infrastructure" spending should let you know all you need to know about why Trump supports infrastructure spending.  The best way to put money in peoples' pockets is tax rate decreases for wage earners, not spending.

Supply side is not inflationary, because it does not stimulate. If it stimulated, inflation would rise.

The non-wealthy is not limited to non-billionaires; millionaires are wealthy too, and those who earn $250,000 a year need to be taxed more than they are now. We agree that tax cuts should be targeted at wage earners. I disagree that it's the cure all. Lowering taxes on middle-income earners is part of a healthy mix of fiscal policy, and so is spending increases. But at all times the government needs money. You can't just keep lowering taxes and increasing the debt. The government provides the long-term foundation for society; without it we decline and we don't get the highways and bi-ways, the education, the new industries we need. For example, the space program was a government spending program that directly resulted in the high tech industries we have today.

I am concerned about the debt, but not when spending is needed for stimulus. During boom times restraint on the debt is needed.

The rise in inequality since 1980 had everything to do with tax decreases. That meant no correction for CEOs who raised their pay to 300 times more than their employees who did their work. These CEOs do not earn their money; they extort it. This gave the rich unparalleled power in our society, and they kept wages low for everyone. Their huge income should be redistributed, but that was against Republican trickle-down ideology. That's the biggest factor in the rise in inequality and poverty since 1980, but there are several other huge factors you didn't mention, but I have over and over: automation, cheap labor abroad, and the decline in unions fostered by GOP policy. The demand for labor is shrinking, so wages are falling. Since Reagan, Republicans have kept the minimum wage flat, which means it is far lower in adjusted dollars than in the 1970s. These are huge factors. Social conservatives can point to more women in the labor force too.

But NOT immigration! That's the clue that a conservative such as yourself is relying on the dog-whistle to blame other ethnic groups for their own troubles, and make political hay out of resentment toward people who are different or outside. Now Trump has put down the dog-whistle, and picked up the TRUMPet. Same idea, though. Stimulate the racism that's been at the heart of American society since the beginning, goes the plan. The USA was a slave society, and to a large degree has never stopped being one. Most immigration has come from poor folks; that does not drive down wages. They do work that doesn't pay well to begin with, and that wealthier people don't do anyway. Immigration stimulates the economy, and that's a net plus for wages, not a minus.

Real growth helps everyone, not a few winners. Gains vary, but it does not result in more losers. Only Reaganomics results in THAT. Reagan/Bush did not provide any growth for the economy, except for the rich. Remember what Rachel Maddow said so well: "The rich did GREAT! Everybody else? Still waiting for the trickle........"

[Warren Dew]

(12-03-2016, 12:30 AM)Eric the Green Wrote: The non-wealthy is not limited to non-billionaires; millionaires are wealthy too, and those who earn $250,000 a year need to be taxed more than they are now. We agree that tax cuts should be targeted at wage earners.

The average doctor in the U.S. makes $160,000 per year, and is a wage earner.  You seriously think two doctors who happen to be married to each other - that's $320,000 on their joint tax return - are in the same category as billionaires who make $10,000,000,000 a year as far as inequality goes?

[Eric the Green]

No, not in the same category, and I think Hillary's proposal was $250,000 per person, not jointly. Or should have been, if not. Unless libertarians get their way, we still have a progressive tax system, with various levels of taxation. As long as CEOs make 300 or 500 times more than their employees, and refuse to lower their pay and raise pay for workers, taxes on them should be much higher. When they come back to Earth, then they won't be in such a high tax bracket, or it can be lower again. Taxes should be based on needs of the country and ability to pay.

[Warren Dew]

Clinton's proposals should have been a lot of things that they weren't.

[Eric the Green]

But they were good. As far as I can see, the $250,000 a year income figure applies to those who inherit a big estate. Income taxes themselves would only increase under her plan for those who make $415,000 or more.

http://money.cnn.com/2016/08/11/pf/taxes...ton-taxes/

http://www.fool.com/investing/general/20...-woul.aspx

[playwrite]

(12-02-2016, 02:05 AM)Warren Dew Wrote:

(12-01-2016, 08:30 PM)Eric the Green Wrote: Lowering taxes does not work; printing more money or government spending are better (especially the latter). That would mean interest on the debt would also rise, so in that case high debt would come back to bite us.

Actually government spending is the least effective way to try to stimulate the economy.  The problem is that spending stimulus is inflationary, which means that you have to cut back on monetary stimulus to avoid excessive inflation.  In addition, the multiplier on federal spending is less than 1 under all economic conditions, varying between 0.7 and 0.9:

http://www.aeaweb.org/aea/2013conference...?pdfid=373

Supply side stimulus such as cutting tax rates in concert with monetization of the debt is the best form of stimulus; supply side stimulus is deflationary, permitting application of additional monetary stimulus.  Tax rate cuts are especially good as they increase the incentive to work and thus increase the labor market participation rate, which is particularly critical when the economy has a lot of retirees to provide for.

But perhaps the most important issue is that government spending is generally in the form of payments to large corporations, so it adds to wealth inequality.  Across the board tax rate cuts, in contrast, benefit the workers, and thus tend to decrease inequality.

Whether govt spending mulitpilier is 1.0 or 1.5 (and its going to be different for transfers than it is for infrastructure; for bomb making than for school lunches, etc.) has credible economists on both sides of the issue; the ones who claim its less than 1.0 always have some weird political agenda they're trying to sell.  And if it's just 1.0, who cares from a standpoint of stimulating the economy?  That is if you're not one of those confused and believe that federal debt is ever paid back.  Spending a federal dollar is going to make the economy react just like it would for any non-federal dollar spending.

From both a stimulus and an inflation standpoint, spending is spending, whether it be government or non-government - unless you can show us how one decides a dollar is a non-government dollar rather than a government dollar- how would the economy know?

And how does stimulating supply in an oversupply world create economic stimulation rather than just bubbles?  Do you really think businesses are dying to invest in more supply but taxes are holding them back???  If so, explain this -



 They're swimming in cash.  They and every 0.1%er puts their cash, one way or another,eventually,  into T-bills which is essentially parking that money in completely non-productive interest-baring savings accounts, not investments.  And what the "eventually" means is a lot of scurrying around in stockand bond markets which are SECONDARY markets and have absolutely nothing to do with real investment.  That's why supply-side stimulus is deflationary for the real economy while causing financial asset inflation (see 2000 dot.com crisis and 2008 housing crisis).

And monetary policy does work when the concern is inflation that you want to moderate but it doesn't work when the concern is deflation from a lack of demand.  A bank can have zero interest rates but why would a businessman go get a loan (he still has to pay it back) when he has nothing to spend it on?

And no, the biggest federal government spending isn't on corporations, it is on Social Security, Medicare and Medicaid and other safety net expenditures and that money gets spent in the economy, it doesn't go into T-bills and secondary equity markets.  And even the next biggest expenditure, defense, a lot of that goes to wages for the people working in those industries.  Pure federal government spending, not some Trump giveaway for cherry-picked infrastructure asset privatization tax credits, IS the best way to stimulate the economy because that spending does not have to actually be paid for - it's called deficit spending.  And federal deficit spending's only non-political limitation is demand-based inflation at a level considered harmful (which would at least be above 5%  - something that you and I will never see in our lifetimes.

You could get effective federal deficit spending by cutting taxes if you cut taxes on lower incomes.  Obama did this perfectly by cutting payroll taxes.  That is the right strategy, not some horseshit supply-side tax cut for the top 1% so they can fatten up their T-bill holdings.

"Trickle down" use to be called "horse and sparrows" policy - the horese gets the oats and after the oats passed through, the sparrows got to pick through the road apples for the few seeds.

[Mikebert]

Warren Dew Wrote:Did you read your link before you posted it?  It shows that the U.S. has a higher top income tax rate, even excluding self-employment tax, than any of Germany, the UK, or France, the big three in western Europe, which are all at 45%.

That link presents kind of a bogus comparison, but it comes from Heritage, so that figures  Note they report the state tax rate as 13.2%.  This is for one state.  A population-weighted average of the 50 rates shows the average state income paid by Americans (we are comparing nations here) is 5.8%.  (The median of the 50 state rates is 5.9, and a straight unweighted average is 5.7%, so you can get this same sort of value a number of different ways).  

Thus, a top bracket American pays an average income tax of 45.4% which puts our income taxes are about the same level as the China and the European big three.

[Warren Dew]

Hey, it was your link. If you don't think your own source is correct, maybe you should find a source that you think is correct - or correct what you think to what the sources say.

[Mikebert]

Warren, I do not understand why you seem to want a much bigger federal debt/GDP ratio.  It appears you think if top tax rates are cut there will be an investment boom and strong economic growth--what I call the "Field of Dreams" school of economics (if you build it (invest) they (jobs) will come).  Why do you think cutting taxes will incent people to put their cash at risk.  Do you think I am sitting in cash because I don't want to have to pay taxes on the potential profits I could reap if this finally comes true?  Or is it because of the scary high market, with a much greater probability of much lower prices before Dow 36,000 becomes reality?

Do you think businesses need to be incented in order to invest in profitable opportunities?  Think about it, a 10% ROI from a good investment taxed at 50% still gives 2.5 times the gain from a 2% Treasury return taxes at 0%.  If tax cuts only incent investment when the supply of investable funds is limiting.  If funds were limited companies would not have the large amounts of cash they have on hand, nor would they doing this.

No tax rate will incent companies to take money safely stashed in Treasuries to put them into bad investment (i.e. those that will likely lose money).

[Bob Butler 54]

(12-04-2016, 10:27 AM)Mikebert Wrote: Warren, I do not understand why you seem to want a much bigger federal debt/GDP ratio.  It appears you think if top tax rates are cut there will be an investment boom and strong economic growth--what I call the "Field of Dreams" school of economics (if you build it (invest) they (jobs) will come).  Why do you think cutting taxes will incent people to put their cash at risk.  Do you think I am sitting in cash because I don't want to have to pay taxes on the potential profits I could reap if this finally comes true?  Or is it because of the scary high market, with a much greater probability of much lower prices before Dow 36,000 becomes reality?

Do you think businesses need to be incented in order to invest in profitable opportunities?  Think about it, a 10% ROI from a good investment taxed at 50% still gives 2.5 times the gain from a 2% Treasury return taxes at 0%.  If tax cuts only incent investment when the supply of investable funds is limiting.  If funds were limited companies would not have the large amounts of cash they have on hand, nor would they doing this.

No tax rate will incent companies to take money safely stashed in Treasuries to put them into bad investment (i.e. those that will likely lose money).

I also see the risk of blowing bubbles.  If one moves money from Main Street to Easy Street, if Easy Street runs out of good investments, they typically decide that something like dot com stocks or housing debt is a neat investment.  You've got to put the money somewhere, and Treasuries just don't give sufficient return these days to seem sexy.  Thus, various pieces of paper are given high value due to the laws of supply and demand, not due to the value of what they represent.  Eventually common sense hits the markets and the bottom falls out.

To me, supply side can be helpful if there is a lack of money available for investment.  Currently, interest rates are low, the division of wealth is large, and it isn't particularly difficult to float a new stock.  It isn't a question of whether supply side is better than demand side, it is a question if the economy is in a place where either type of stimulus would be helpful.  At the moment, there is no lack of funds available for investment.  With unemployment as low as it currently is, I'm not pushing for demand side either.

Economic policy ought not to be ideological, where one sort of policy is considered standard by a given party regardless of the state of the economy.  Folk ought to respond to reality rather than double down on ideology.

[Warren Dew]

(12-03-2016, 11:57 PM)playwrite Wrote:

(12-02-2016, 02:05 AM)Warren Dew Wrote:

(12-01-2016, 08:30 PM)Eric the Green Wrote: Lowering taxes does not work; printing more money or government spending are better (especially the latter). That would mean interest on the debt would also rise, so in that case high debt would come back to bite us.

Actually government spending is the least effective way to try to stimulate the economy.  The problem is that spending stimulus is inflationary, which means that you have to cut back on monetary stimulus to avoid excessive inflation.  In addition, the multiplier on federal spending is less than 1 under all economic conditions, varying between 0.7 and 0.9:

http://www.aeaweb.org/aea/2013conference...?pdfid=373

Supply side stimulus such as cutting tax rates in concert with monetization of the debt is the best form of stimulus; supply side stimulus is deflationary, permitting application of additional monetary stimulus.  Tax rate cuts are especially good as they increase the incentive to work and thus increase the labor market participation rate, which is particularly critical when the economy has a lot of retirees to provide for.

But perhaps the most important issue is that government spending is generally in the form of payments to large corporations, so it adds to wealth inequality.  Across the board tax rate cuts, in contrast, benefit the workers, and thus tend to decrease inequality.

Whether govt spending mulitpilier is 1.0 or 1.5 (and its going to be different for transfers than it is for infrastructure; for bomb making than for school lunches, etc.) has credible economists on both sides of the issue; the ones who claim its less than 1.0 always have some weird political agenda they're trying to sell.

When the facts are against you, ignore them and stick to your prejudices, there's the ticket!

The truth is, it's the ones who claim the multiple is greater than 1.0 who have a political agenda - and it's always the same agenda, increasing the size and power of the government.

Quote:And if it's just 1.0, who cares from a standpoint of stimulating the economy?  That is if you're not one of those confused and believe that federal debt is ever paid back.  Spending a federal dollar is going to make the economy react just like it would for any non-federal dollar spending.

From both a stimulus and an inflation standpoint, spending is spending, whether it be government or non-government - unless you can show us how one decides a dollar is a non-government dollar rather than a government dollar- how would the economy know?

That's an easy one.  Private money is spent by the people who pay the money.  They have an incentive to get the most out of their money.  Government spending is spent by politicians who aren't the ones paying.  Their only incentive is to direct the money so as to enrich themselves and their cronies, no matter how inefficiently that money is spent.  As a result, much of that money is wasted from the standpoint of actually improving peoples' lives.

Quote:And how does stimulating supply in an oversupply world create economic stimulation rather than just bubbles?  Do you really think businesses are dying to invest in more supply but taxes are holding them back???  If so, explain this -



 They're swimming in cash.  They and every 0.1%er puts their cash, one way or another,eventually,  into T-bills which is essentially parking that money in completely non-productive interest-baring savings accounts, not investments.  And what the "eventually" means is a lot of scurrying around in stockand bond markets which are SECONDARY markets and have absolutely nothing to do with real investment.  That's why supply-side stimulus is deflationary for the real economy while causing financial asset inflation (see 2000 dot.com crisis and 2008 housing crisis).

If we were living in an "oversupply world" prices would be plummeting.  They're not.  There are plenty of things I would like to spend money on but that I can't afford.  Can't you say the same?

But you misunderstand supply side economics completely.  It's not about capital.  It's about the supply of goods and services.  It's about the supply of labor, so you can get a more competent plumber more quickly for less money, because he gets to keep more of that money instead of giving it to the government.  It's about the supply of energy, so people don't have to choose between paying for the gas for a vacation or buying their kids Christmas presents.  It's about the supply of food, of housing, of a myriad other things so ordinary people can afford to improve their lives.

Quote:And monetary policy does work when the concern is inflation that you want to moderate but it doesn't work when the concern is deflation from a lack of demand.  A bank can have zero interest rates but why would a businessman go get a loan (he still has to pay it back) when he has nothing to spend it on?

Monetary policy works fine against both inflation and deflation.  That's why we don't have deflation right now.  The only problem is that the fed is too enamored of their unemployment target - which monetary policy does not directly affect - that they haven't been willing to take the action needed to meet their inflation target.

Granted it would help if the government would cut taxes and increase the debt, so they could just monetize the government debt instead of having to chase after mortgage backed securities and other targeted instruments where fed purchases distort the economy.

Quote:And no, the biggest federal government spending isn't on corporations, it is on Social Security, Medicare and Medicaid and other safety net expenditures and that money gets spent in the economy, it doesn't go into T-bills and secondary equity markets.  And even the next biggest expenditure, defense, a lot of that goes to wages for the people working in those industries.

None of which is stimulus spending.  And Medicare and Medicaid is still spend largely on corporations:  corporate pharmaceutical companies, corporate hospitals, heck, even most doctors' offices are incorporated.  Give the money directly to the recipient, and it might not be spent on health care at all, so it's still the politicians deciding how it's spent.

Quote:Pure federal government spending, not some Trump giveaway for cherry-picked infrastructure asset privatization tax credits ...

It's amazing how the left thought "infrastructure spending" was such a great thing when Obama did it, but now that Trump wants to do it, it has all these problem.  Truth is, it had all these problems and was a bad policy all along.  The only difference is that Obama and Trump have different cronies to cherry pick the money for.

If we actually have public infrastructure that needs fixing, sure, fix it, but fix it as inexpensively as possible, don't just spend money for the sake of spending.

Quote:... IS the best way to stimulate the economy because that spending does not have to actually be paid for - it's called deficit spending.  And federal deficit spending's only non-political limitation is demand-based inflation at a level considered harmful (which would at least be above 5%  - something that you and I will never see in our lifetimes.

You could get effective federal deficit spending by cutting taxes if you cut taxes on lower incomes.  Obama did this perfectly by cutting payroll taxes.  That is the right strategy, not some horseshit supply-side tax cut for the top 1% so they can fatten up their T-bill holdings.

Don't assume that all tax cuts are supply side.  Tax cuts in the form of deductions, or worse, credits for specific forms of spending are closer to demand side, because it's the government making the decisions, directing the money toward favored interests.

It's only marginal tax rate cuts - cuts to tax rates, not just to taxes - that are supply side.  Payroll tax rate cuts are not bad, though their problem is that they aren't marginal tax rates for some recipients.  Getting rid of most or all deductions and cutting rates in all brackets would be the best  approach, especially if the structure could be simplified to very large personal and dependent exemptions and a flat rate on all income above that amount.

Quote:"Trickle down" use to be called "horse and sparrows" policy - the horese gets the oats and after the oats passed through, the sparrows got to pick through the road apples for the few seeds.

Exactly why Hoover style trickle down demand side government spending stimulus should never be used.

[Warren Dew]

(12-04-2016, 10:27 AM)Mikebert Wrote: Warren, I do not understand why you seem to want a much bigger federal debt/GDP ratio. 

If you want to understand, please first reread my post on how it has worked in Japan, including the two links to my livejournal.

Additional evidence is that the Federal Reserve currently holds about $2,000,000,000,000 of nongovernmental debt with inflation still below targets.  The government just isn't issuing enough debt for the Fed to buy, a sure sign it should issue more.

Japan's ratio is over 2:1.  We don't have as bad a demographic crisis, but we could easily go to 1.5:1.

Quote:It appears you think if top tax rates are cut there will be an investment boom and strong economic growth--what I call the "Field of Dreams" school of economics (if you build it (invest) they (jobs) will come).  Why do you think cutting taxes will incent people to put their cash at risk.  Do you think I am sitting in cash because I don't want to have to pay taxes on the potential profits I could reap if this finally comes true?  Or is it because of the scary high market, with a much greater probability of much lower prices before Dow 36,000 becomes reality?

Do you think businesses need to be incented in order to invest in profitable opportunities?  Think about it, a 10% ROI from a good investment taxed at 50% still gives 2.5 times the gain from a 2% Treasury return taxes at 0%.  If tax cuts only incent investment when the supply of investable funds is limiting.  If funds were limited companies would not have the large amounts of cash they have on hand, nor would they doing this.

No tax rate will incent companies to take money safely stashed in Treasuries to put them into bad investment (i.e. those that will likely lose money).

You're confused about what supply side economics is.  See my to playwrite for an explanation.  It's not about investment at all.

[Bob Butler 54]

(12-04-2016, 05:15 PM)Warren Dew Wrote: You're confused about what supply side economics is.  See my to playwrite for an explanation.  It's not about investment at all.

As I see it, Mikebert is using the Reagan era's original meaning for 'supply side', but like 'neocon' the phrase 'supply side' has come to take on new meanings. You probably shouldn't argue about which use of the phrase is the correct one, but rather each might try to understand what the other is trying to say.

Radical thought, I know...

[Warren Dew]

(12-04-2016, 07:39 PM)Bob Butler 54 Wrote:

(12-04-2016, 05:15 PM)Warren Dew Wrote: You're confused about what supply side economics is.  See my to playwrite for an explanation.  It's not about investment at all.

As I see it, Mikebert is using the Reagan era's original meaning for 'supply side', but like 'neocon' the phrase 'supply side' has come to take on new meanings.  You probably shouldn't argue about which use of the phrase is the correct one, but rather each might try to understand what the other is trying to say.

Radical thought, I know...

Actually, I'm the one using Reagan's original meaning.  Mikebert is using the leftist propaganda version, though he may not realize it.  Apparently you've bought in to the leftist propaganda version too.

Granted Reagan played up the Laffer curve, which is a rather minor aspect of supply side economics, to sell it to the Republicans who preferred austerity.  His job was to fix the economy, after all, not to turn everyone into economists.  That said, it should be obvious that supply side economics is primarily about the supply curve and the supply of goods and services, and not primarily about the laffer curve.

[Bob Butler 54]

(12-04-2016, 08:47 PM)Warren Dew Wrote:

(12-04-2016, 07:39 PM)Bob Butler 54 Wrote:

(12-04-2016, 05:15 PM)Warren Dew Wrote: You're confused about what supply side economics is.  See my to playwrite for an explanation.  It's not about investment at all.

As I see it, Mikebert is using the Reagan era's original meaning for 'supply side', but like 'neocon' the phrase 'supply side' has come to take on new meanings.  You probably shouldn't argue about which use of the phrase is the correct one, but rather each might try to understand what the other is trying to say.

Radical thought, I know...

Actually, I'm the one using Reagan's original meaning.  Mikebert is using the leftist propaganda version, though he may not realize it.  Apparently you've bought in to the leftist propaganda version too.

Granted Reagan played up the Laffer curve, which is a rather minor aspect of supply side economics, to sell it to the Republicans who preferred austerity.  His job was to fix the economy, after all, not to turn everyone into economists.  That said, it should be obvious that supply side economics is primarily about the supply curve and the supply of goods and services, and not primarily about the laffer curve.

The University of California at Santa Barbara has an American Presidency Project, featuring notable speeches and documents from various presidencies.  Reagan's entries include "White House Report on the Program for Economic Recovery" from February 18, 1981.  Four key paragraphs provide the summary.

Quote:The leading edge of our program is the comprehensive reduction in the rapid growth of Federal spending. As shown in detail below, our budget restraint is more than "cosmetic" changes in the estimates of Federal expenditures. But we have not adopted a simple-minded "meat ax" approach to budget reductions. Rather, a careful set of guidelines has been used to identify lower-priority programs in virtually every department and agency that can be eliminated, reduced, or postponed.

No doubt or question that small government is a key element of Reaganomics.  While the cuts might arguably have started as 'careful', as time passed, deficits grew and confrontation between parties escalated, one might argue that a meat axe came into play.

Quote:The second element of the program, which is equally important and urgent, is the reduction in Federal personal income tax rates by 10 percent a year for 3 years in a row. Closely related to this is an incentive to greater investment in production and job creation via faster tax write-offs of new factories and production equipment.

This is where I am coming from, and likely Mikebert.  Cut taxes and tweak tax codes to increase investments is one of the four pillars of Reaganomics.

Quote:The third key element of our economic expansion program is an ambitious reform of regulations that will reduce the government-imposed barriers to investment, production, and employment. We have suspended for 2 months the unprecedented flood of last-minute rulemaking on the part of the previous Administration. We have eliminated the ineffective and counterproductive wage and price standards of the Council on Wage and Price Stability, and we have taken other steps to eliminate government interference in the marketplace.

The following has nothing to do with prior posts, and goes on at length, but I'm in a mood to ramble a bit.

I worked as a software engineer servicing the military industrial complex.  I know about government procurement, documentation and procedural requirements.  At one point there were two projects being worked in my building.  One Navy project developed under full military standards kept eighty engineers busy for five years.  Another project for an intelligence agency who was more interested in getting the work done than paperwork kept five of us busy for three years.  The two projects produced roughly the same number of lines of code.

So I know all about excessive bureaucracy and paperwork.  I was very pleased to be one of the five rather than one of the eighty.  

The favorite project of my career was one so late in starting that we invoked the phrase 'rapid prototyping' and threw all paperwork to the wind.  There was one programmer...  me.  No requirements document.  All I had was a set of operator interface screen images.  I had to deduce what the new hardware was supposed to do from what the operator could tell it to do.  No need to document interfaces so the other programmers could make their stuff coexist.  I just commented the code heavily.  I didn't write a single test plan, but that doesn't mean every routine wasn't thoroughly tested.  No hardware interface documents, not until the last minute.  I made up dummy subroutine calls that I hoped would tell the hardware what it needed to be told.  I couldn't write out said routines for real until all the rest of the code was written as the hardware people hadn't designed the target machine yet.

Perhaps the highlight of my career was loading it all into the real hardware for the first time after eight months of coding and watching it come up and run the first time out.

I've only read about the F 35 fiasco, but I can pretty much understand how it happened.

A few times a year I chat with my financial advisor, an employee of a 'too big to fail' Wall Street firm.  Her opinion of Obama's recent regulations echo my opinions of the Pentagon's approach.

But I couldn't begin to judge what is necessary and what is not necessary in a profession other than my own.  As one who has been on the receiving end of government bureaucratic (expletive deleted), I have a lot of sympathy with the desire to get rid of it.

Still, I think Bush 43 cut the banking and Wall Street regulations too much, resulting in the 2008 economic collapse.  Cut the bureaucracy, yes.  Definitely.  A lot.  Still, I'd balance the careful with the meat axe.

Quote:The fourth aspect of this comprehensive economic program is a monetary policy to provide the financial environment consistent with a steady return to sustained growth and price stability. During the first week of this Administration its commitment to the historic independence of the Federal Reserve System was underscored. It is clear, of course, that monetary and fiscal policy are closely interrelated. Success in one area can be made more difficult—or can be reinforced—by the other. Thus, a predictable and steady growth in the money supply at more modest levels than often experienced in the past will be a vital contribution to the achievement of the economic goals described in this Report. The planned reduction and subsequent elimination of Federal deficit financing will help the Federal Reserve System perform its important role in achieving economic growth and stability.

As we know, the "planned reduction and subsequent elimination of the Federal deficit" didn't happen.  There is no mention of the Laffer Curve in the above document.  It obviously didn't work as hoped for.  Is anyone promoting use of the Laffer Curve anymore?  Is there anyone out there who remembers that elimination of the deficit is part of Reaganomics?

Anyway, thats my idea of what Reaganomics was originally.  I can admire a lot of the intent.  It obviously didn't work as intended.  There is much need for back to the drawing board.

[Warren Dew]

(12-05-2016, 12:38 AM)Bob Butler 54 Wrote:

(12-04-2016, 08:47 PM)Warren Dew Wrote:

(12-04-2016, 07:39 PM)Bob Butler 54 Wrote:

(12-04-2016, 05:15 PM)Warren Dew Wrote: You're confused about what supply side economics is.  See my to playwrite for an explanation.  It's not about investment at all.

As I see it, Mikebert is using the Reagan era's original meaning for 'supply side', but like 'neocon' the phrase 'supply side' has come to take on new meanings.  You probably shouldn't argue about which use of the phrase is the correct one, but rather each might try to understand what the other is trying to say.

Radical thought, I know...

Actually, I'm the one using Reagan's original meaning.  Mikebert is using the leftist propaganda version, though he may not realize it.  Apparently you've bought in to the leftist propaganda version too.

Granted Reagan played up the Laffer curve, which is a rather minor aspect of supply side economics, to sell it to the Republicans who preferred austerity.  His job was to fix the economy, after all, not to turn everyone into economists.  That said, it should be obvious that supply side economics is primarily about the supply curve and the supply of goods and services, and not primarily about the laffer curve.

The University of California at Santa Barbara has an American Presidency Project, featuring notable speeches and documents from various presidencies.  Reagan's entries include "White House Report on the Program for Economic Recovery" from February 18, 1981.  Four key paragraphs provide the summary.

Quote:The leading edge of our program is the comprehensive reduction in the rapid growth of Federal spending. As shown in detail below, our budget restraint is more than "cosmetic" changes in the estimates of Federal expenditures. But we have not adopted a simple-minded "meat ax" approach to budget reductions. Rather, a careful set of guidelines has been used to identify lower-priority programs in virtually every department and agency that can be eliminated, reduced, or postponed.

No doubt or question that small government is a key element of Reaganomics.  While the cuts might arguably have started as 'careful', as time passed, deficits grew and confrontation between parties escalated, one might argue that a meat axe came into play.

How does this jive with the claim by you on the left that Reagan ran up spending and deficits?

In fact, few of Reagan's proposed cuts ever happened at all, because the Democrats in Congress insisted on retaining the pork.  We're just lucky the rest of Reagan's economic plan performed so spectacularly that continued growth in spending was sustainable.

Cuts in spending, while a nice idea and one that I would have approved of, were never part of Reaganomics as implemented.  Nor did they ever have anything to do with supply side economics; rather, they stemmed from Reagan's libertarian views.

Quote:

Quote:The second element of the program, which is equally important and urgent, is the reduction in Federal personal income tax rates by 10 percent a year for 3 years in a row. Closely related to this is an incentive to greater investment in production and job creation via faster tax write-offs of new factories and production equipment.

This is where I am coming from, and likely Mikebert.  Cut taxes and tweak tax codes to increase investments is one of the four pillars of Reaganomics.

The first part of this, across the board income tax cuts for all individual income tax brackets, supports my view and not yours.  Those are cuts for wage earners to increase the incentive to work.  They have nothing to do with investment, and everything to do with putting more money into workers' pockets.

The second part, accelerated depreciation, does have to do with investment, but are only indirectly connected with supply side economics.

And of the two, which is considered more characteristic of Reaganomics today?  I'd say it's the tax rate cuts on individual income taxes, which support my view.  Depreciation rates are an obscure technicality that few remember, with limited application today - and it's to be noted that to the limited extent they have current applicability, Obama further accelerated depreciation, and he's not exactly considered a fan of Reaganomics or supply side economics.

Quote:

Quote:The third key element of our economic expansion program is an ambitious reform of regulations that will reduce the government-imposed barriers to investment, production, and employment. We have suspended for 2 months the unprecedented flood of last-minute rulemaking on the part of the previous Administration. We have eliminated the ineffective and counterproductive wage and price standards of the Council on Wage and Price Stability, and we have taken other steps to eliminate government interference in the marketplace.

The following has nothing to do with prior posts, and goes on at length, but I'm in a mood to ramble a bit.

I worked as a software engineer servicing the military industrial complex.  I know about government procurement, documentation and procedural requirements.  At one point there were two projects being worked in my building.  One Navy project developed under full military standards kept eighty engineers busy for five years.  Another project for an intelligence agency who was more interested in getting the work done than paperwork kept five of us busy for three years.  The two projects produced roughly the same number of lines of code.

So I know all about excessive bureaucracy and paperwork.  I was very pleased to be one of the five rather than one of the eighty. 

This has more to do with rescinding Carter's counterproductive restrictions on the free market than with Reagan's own initiatives.  Reagan did continue to reduce regulation throughout his term, which further improved the functioning of the market.  However, these policies were general economic good sense, and not especially supply side initiatives.

Nor do the goals especially have to do with corporate investment as opposed to individual employment.  Both are mentioned equally, along with "production", which is applicable to both.

Quote:Still, I think Bush 43 cut the banking and Wall Street regulations too much, resulting in the 2008 economic collapse.  Cut the bureaucracy, yes.  Definitely.  A lot.  Still, I'd balance the careful with the meat axe.

Bush 43 was not the one who made the changes that facilitated the 2008 crisis.  The critical reduction in regulation was the repeal of the Glass Steagall prohibition on mixing investment banking with commercial banking; that was repealed in 1999 under Clinton, and is a key part of why the Clintons are viewed as in bed with the banks by portions of the left.  The other critical factor was the change to the Community Reinvestment Act which, together with case law, effectively required banks to start making bad  housing loans.  Those changes also happened under Clinton.  It just took a few years for the resultant housing bubble to inflate and then burst.

In any event, that's relevant to neither Reaganomics in general, nor to supply side economics, as those regulation changes happened long after Reagan.

Quote:

Quote:The fourth aspect of this comprehensive economic program is a monetary policy to provide the financial environment consistent with a steady return to sustained growth and price stability. During the first week of this Administration its commitment to the historic independence of the Federal Reserve System was underscored. It is clear, of course, that monetary and fiscal policy are closely interrelated. Success in one area can be made more difficult—or can be reinforced—by the other. Thus, a predictable and steady growth in the money supply at more modest levels than often experienced in the past will be a vital contribution to the achievement of the economic goals described in this Report. The planned reduction and subsequent elimination of Federal deficit financing will help the Federal Reserve System perform its important role in achieving economic growth and stability.

As we know, the "planned reduction and subsequent elimination of the Federal deficit" didn't happen. 

As noted, the planned budget cuts didn't happen due to congressional opposition, so of course the deficit wasn't eliminated.

The fact they didn't happen does suggest they weren't Reagan's first priority.  And that make perfect sense, since deficits are part and parcel of supply side economics.  Remember "deficits don't matter"?  I bet Eric does.

Quote:There is no mention of the Laffer Curve in the above document.  It obviously didn't work as hoped for.  Is anyone promoting use of the Laffer Curve anymore?  Is there anyone out there who remembers that elimination of the deficit is part of Reaganomics?

Anyway, thats my idea of what Reaganomics was originally.  I can admire a lot of the intent.  It obviously didn't work as intended.  There is much need for back to the drawing board.

Please note that I was discussing supply side economics with Mikebert, not "Reaganomics".  "Reaganomics" depended heavily on supply side economics, but included other policy initiatives as well.

While there is no mention of the laffer curve in your paragraphs, neither is there mention of supply side economics, so it can't be taken as indicative of what supply side economics is.  But it's unsurprising that a left wing university would choose an unrepresentative document for Reagan's economic plan.

If you were following coverage of DC at the time, surely you remember discussion of the laffer curve.  And the basic idea, that on the right side of the laffer curve, tax rate cuts increase revenues, is most certainly still ingrained in the discussion - I'm sure Eric has noticed, even if you haven't.

The laffer curve was in fact spectacularly successful, with Reagan's tax rate cuts resulting in a doubling of inflation adjusted revenue from the end of the recession in the early 1980s through 2000.  They didn't eliminate the deficit during Reagan's term because he didn't get the spending cuts he wanted, and because he did get the defense spending increases he wanted.  The deficit was eliminated - briefly - when the defense spending increases were rolled back after we won the Cold War.

But, as I said, the laffer curve was even then a sales technique, and not a fundamental part of supply side economics.  Supply side economics was about the supply of goods and labor, through cuts in individual income tax rates to increase the incentive to work in the case of labor, then as now.

[Bob Butler 54]

(12-05-2016, 02:41 AM)Warren Dew Wrote: While there is no mention of the laffer curve in your paragraphs, neither is there mention of supply side economics, so it can't be taken as indicative of what supply side economics is.  But it's unsurprising that a left wing university would choose an unrepresentative document for Reagan's economic plan.

The paper in question popped up as the first item in my first google search.  It served the purpose well enough that I didn't look further.  I didn't consider how partisans will reject information based purely on its source.  I'll still say the Reagan White House is a better source on the policies of the Reagan White House than you.

The gist of Republican financial policy through the unravelling is still stated well in the first three paragraphs.  Cut the budget.  Alter tax codes to give the investing class the funds to produce jobs.  Cut regulations.  These will stand as the basic bread and butter of how Reagan, Bush, Bush and their heirs are perceived, in great part because that is the core of the promises they made.  This is what the politicians are feeding the public.

I won't deny that academics and economists might well have a deeper understanding, and that you are trying to bring this understanding to the boards.  Go for it.  Great.  I just wouldn't put on a Reagan hand puppet while you are doing so.  The Republican politicians seldom go into that depth.  Simple easy answers win more votes than well thought out academic presentations.  I wouldn't assume the typical reader of the board has dug into the academics either.  Altering your presentation somewhat to reflect this might be prudent.  You are coming across as reality challenged, even if the impression is misleading in this case.

While the first three paragraphs are well remembered, the fourth is not.  Eliminate the deficit?  Limit the money supply?  All four pillars were originally presented as a coherent whole, even if the fourth has long since suffered critical impact damage from an encounter with political realities.  Bush 41 lost his second term on "It's the economy, stupid."  Bush 43 collapsed the economy.  However sound the Reagan approach might have seemed in theory, the theory couldn't be implemented.  Playing the blame game for why it couldn't be implemented doesn't change the fact that attempts to make it work failed the country badly.  I am not seeing any indication to suggest the upcoming Congress will be any more cooperative, that another attempt will turn out differently.  What was it that Einstein said about trying the same thing and expecting a different result?

Yes, Democrats in Congress made it impossible for Reagan and the Bushes to do what they wanted to do.  Republicans in Congress made it impossible for Obama to do what he wanted to do.  Huston, we have a problem.  The difference is in Republicans producing collapses while Democrats produce anemic unsatisfactory recoveries from said collapses.  I'm wistfully wishing that somehow we might manage to do better.  No, my plan doesn't include holding my breath until it happens.

[Warren Dew]

Ah, Bob, back to ignoring the information you yourself provided that challenges your previous world view, I see.  Good job on denying reality.