Lets make fun of Obama while he is still relevant.

[Warren Dew]

(12-06-2016, 04:41 PM)Mikebert 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.

No I think you are confused. You are confusing with supply side policy as a political concept (cut taxes to incent work) with supply side as a economic concept (incent investment to boost productivity). The plumber's productivity is fixed.

The plumber's productivity, measured in output per year, is absolutely not fixed.  He can work overtime to increase it.  He can go to part time or retire early to decrease it.

Quote:What you are advocating for is a form of Keynesian stimulus expressed in terms that are political palatable to conservatives.

Now you're starting to get it.  That was exactly what Reagan was doing, too.  He sold it to high tax low spending austerity fans as cost free, because the reduced rates would increase tax receipts, but ultimately the objective was quasi Keynesian stimulus, operating on the supply curve rather than on the demand curve to make it actually effective.

That said, operating on the supply curve rather than on the demand curve was and is important; that makes the stimulus deflationary rather than inflationary, due to the opposite slopes of the two curves.  At the time the deflationary effect was directly beneficial; today it would be beneficial in that it would permit additional stimulus on the monetary side to supplement the supply side fiscal stimulus without excessive inflation.

[David Horn]

(12-07-2016, 02:30 AM)Warren Dew Wrote: The plumber's productivity, measured in output per year, is absolutely not fixed.  He can work overtime to increase it.  He can go to part time or retire early to decrease it.

The plumber has a lot more ability to cut his output than increase it.  To increase it, there has to be a demand for his services, which may not be the case.  More to the point, higher demand may encourage others to enter the field, which would be a true expansion of the GDP base.  But the demand has to be there first.

Warren Wrote:

Mikebert Wrote:What you are advocating for is a form of Keynesian stimulus expressed in terms that are political palatable to conservatives.

Now you're starting to get it.  That was exactly what Reagan was doing, too.  He sold it to high tax low spending austerity fans as cost free, because the reduced rates would increase tax receipts, but ultimately the objective was quasi Keynesian stimulus, operating on the supply curve rather than on the demand curve to make it actually effective.

I think you're giving Reagan a lot of credit for things he never did.  When he reduced rates, the deficit exploded as expected.  He restored some of the revenue by raising Payroll taxes, so he actually gave to the rich with one hand and took from working folks with the other.

At that, his economy produced lower rates of growth than Clinton's, and he raised taxes substantially.  So your conclusions stand on a poor platform of few facts and much conjecture.

Warren continued Wrote:That said, operating on the supply curve rather than on the demand curve was and is important; that makes the stimulus deflationary rather than inflationary, due to the opposite slopes of the two curves.  At the time the deflationary effect was directly beneficial; today it would be beneficial in that it would permit additional stimulus on the monetary side to supplement the supply side fiscal stimulus without excessive inflation.

There is quite literally no argument for stimulating supply, when we are already awash in under utilized physical and human assets.  No business person worth a tinker's damn will hire or add to physical plant without some underlying demand for more of the product or service he sells.[/quote]

[Mikebert]

(12-06-2016, 10:59 PM)Warren Dew Wrote:

(12-06-2016, 03:51 PM)Mikebert Wrote:

(12-06-2016, 12:59 AM)Warren Dew Wrote: I went to MIT; I do the equations and inequalities in my head.  But sure, I can write them down for you, if that helps you understand the point:

d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
 

[b]d(GDP)/dt / GDP  = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker[/b]

This seems right. I will write it as:
 
1/GDP GDP’ = 1/LF LF’ + 1/P P’ where LF is labor force and P is worker productivity (GDP/LF) or in English
 
GDP growth  = productivity growth + worker growth (all relative (%) rates)

All you are saying is that worker productivity rises slower than worker number falls.  That is, you are assuming GDP growth is negative. You then use this to show that GDP growth is negative. But you already assumed this, its tautological.

Reposting this to add the quote because another post intervened, making it unclear what I was responding to.

Well, I am saying that worker productivity rises slower than worker number falls, rather than rises, if that's what you meant.

That's not an assumption, though; I'm looking at statistics from Japan, that show that to be the case.

What I am assuming is that with the US doing the a similar demographic transition to a retiree heavy population that Japan did 2 decades ago, the effect on us is also going to be similar, unless we use different policies.

Correction noted. So is GDP growth negative?  If so why go through the derivation, why not just start with that fact?

[Mikebert]

(12-07-2016, 01:13 AM)Warren Dew Wrote:

(12-06-2016, 04:06 PM)Mikebert Wrote:

Warren Dew Wrote:d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)
 
d(GDP/population)/dt = population * d(GDP)/dt + GDP * d(population)/dt

Using more compact notation you are saying:
 
d(GDP/N)dt = N * dGDP/dt + GDP dN/dt
 
this is the differentiation of the product of GDP and N, done correctly you would have
 
d[GDP * (1/N)]/dt = (1/N) dGDP/dt - GDP (1/N)^2 (dN/dt)
 
I'm still confused

Sorry, yes, messed up on that intermediate line.  The conclusion is still the same, though.  Derivation with the corrected equation below.

d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
    = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker < 0 (GDP decreases)

d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)

d(GDP/population)/dt = d(GDP)/dt / population - GDP * d(population)/dt / population^2
    = (GDP/population) * (d(GDP)/dt / GDP - d(population)/dt / population) < 0
    (average living standard for the economy cannot keep up)

You already have negative  GDP growth (or at least assumed it).  Until population also falls per capita GDP then must also fall. There is no need for the math which only reiterate the initial assumptions.

So far per capita GDP appears to have been rising slowing (through 2013)
http://www.indexmundi.com/g/g.aspx?v=67&c=ja&l=en

So I looked t the GDP trend and so the same thing:

http://www.indexmundi.com/g/g.aspx?c=ja&v=65

So what is you point? You make and assertion that if true would predict both of these things would be going down.  You point out that your assertions are supported by the data.  But your own math shows that it this were so then it would also be supported by the data about trends in GDP and GDP per cap, which it is not.  So what is the problem. Its the productivity figure. You are making the same mistake Turchin did.  You are assuming that productivity is an independent measure that you can then manipulation to make a prediction abut GDP.  It's not.  What you are doing is going around in circles thinking there is something there when there is not.  I've been there.

[Warren Dew]

(12-07-2016, 06:31 PM)Mikebert Wrote:

(12-07-2016, 01:13 AM)Warren Dew Wrote:

(12-06-2016, 04:06 PM)Mikebert Wrote:

Warren Dew Wrote:d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)
 
d(GDP/population)/dt = population * d(GDP)/dt + GDP * d(population)/dt

Using more compact notation you are saying:
 
d(GDP/N)dt = N * dGDP/dt + GDP dN/dt
 
this is the differentiation of the product of GDP and N, done correctly you would have
 
d[GDP * (1/N)]/dt = (1/N) dGDP/dt - GDP (1/N)^2 (dN/dt)
 
I'm still confused

Sorry, yes, messed up on that intermediate line.  The conclusion is still the same, though.  Derivation with the corrected equation below.

d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
    = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker < 0 (GDP decreases)

d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)

d(GDP/population)/dt = d(GDP)/dt / population - GDP * d(population)/dt / population^2
    = (GDP/population) * (d(GDP)/dt / GDP - d(population)/dt / population) < 0
    (average living standard for the economy cannot keep up)

You already have negative  GDP growth (or at least assumed it).  Until population also falls per capita GDP then must also fall. There is no need for the math which only reiterate the initial assumptions.

So far per capita GDP appears to have been rising slowing (through 2013)
http://www.indexmundi.com/g/g.aspx?v=67&c=ja&l=en

So I looked t the GDP trend and so the same thing:

http://www.indexmundi.com/g/g.aspx?c=ja&v=65

So what is you point? You make and assertion that if true would predict both of these things would be going down.  You point out that your assertions are supported by the data.  But your own math shows that it this were so then it would also be supported by the data about trends in GDP and GDP per cap, which it is not.  So what is the problem. Its the productivity figure.

Let's get the productivity figure straight first.  I'm saying productivity is growing and will continue to grow.  Are you disagreeing with that?  If not, why are you discussing it?  It seems like bad faith for you to keep asserting that I'm saying something when I've explicitly said the opposite.

The GDP curves I'm looking at are considerably different from yours, for example:

https://fred.stlouisfed.org/series/JPNNGDP

[Warren Dew]

(12-07-2016, 05:52 PM)David Horn Wrote:

(12-07-2016, 02:30 AM)Warren Dew Wrote: The plumber's productivity, measured in output per year, is absolutely not fixed.  He can work overtime to increase it.  He can go to part time or retire early to decrease it.

The plumber has a lot more ability to cut his output than increase it.  To increase it, there has to be a demand for his services, which may not be the case.  More to the point, higher demand may encourage others to enter the field, which would be a true expansion of the GDP base.  But the demand has to be there first.

Warren Wrote:

Mikebert Wrote:What you are advocating for is a form of Keynesian stimulus expressed in terms that are political palatable to conservatives.

Now you're starting to get it.  That was exactly what Reagan was doing, too.  He sold it to high tax low spending austerity fans as cost free, because the reduced rates would increase tax receipts, but ultimately the objective was quasi Keynesian stimulus, operating on the supply curve rather than on the demand curve to make it actually effective.

I think you're giving Reagan a lot of credit for things he never did.  When he reduced rates, the deficit exploded as expected.  He restored some of the revenue by raising Payroll taxes, so he actually gave to the rich with one hand and took from working folks with the other.

Between 1980 and 1988, the inflation adjusted deficit grew by $84 billion.  Spending grew by $386 billion, more than four times as much.  It's quite clear that the deficit increase was due to spending, not to anything on the revenue side.

That said, the revenue effect is, as I pointed out, just the sales pitch.  The ultimate objective was supply side fiscal stimulus.

Quote:At that, his economy produced lower rates of growth than Clinton's, and he raised taxes substantially.

Clinton lucked out because Bush foolishly timed his recession to complete before Clinton took office, while Carter cleverly managed to time his recession to bite mostly in the subsequent term.  And Clinton lucked out further because Reagan/Bush defeated the Soviet Union, so Clinton could cut military spending as a percentage of GDP, reducing that drag on the economy as well.  Clinton can take credit with Gingrich for reductions in projected welfare spending, though - which incidentally is another example of supply side stimulus, since it incentivized working over staying on the dole.

As for taxes, weren't we just discussing how Reagan's tax rate cuts increased tax revenues?  So yes, tax revenues increased substantially, thanks to Reagan's tax rate cuts.

Quote:

Warren continued Wrote:That said, operating on the supply curve rather than on the demand curve was and is important; that makes the stimulus deflationary rather than inflationary, due to the opposite slopes of the two curves.  At the time the deflationary effect was directly beneficial; today it would be beneficial in that it would permit additional stimulus on the monetary side to supplement the supply side fiscal stimulus without excessive inflation.

There is quite literally no argument for stimulating supply, when we are already awash in under utilized physical and human assets.  No business person worth a tinker's damn will hire or add to physical plant without some underlying demand for more of the product or service he sells.

To the contrary:  the unemployment rate is below 5%, which is pretty close to full employment levels.  It's a tight labor market and an ideal time to stimulate labor supply.

[Ragnarök_62]

(12-07-2016, 10:30 PM)Warren Dew Wrote: To the contrary:  the unemployment rate is below 5%, which is pretty close to full employment levels.  It's a tight labor market and an ideal time to stimulate labor supply.

No it isn't.  That number is propaganda.  The real rate of unemployment is north of 20%.


We have loosey-goosey labor supply and thus we need to increase the supply of jobs which aren't party time shit-work like fastie foodie stuff.

http://www.shadowstats.com/alternate_dat...ent-charts

Supporting stat here: https://fred.stlouisfed.org/series/CIVPART

[Warren Dew]

(12-08-2016, 12:04 AM)Ragnarök_62 Wrote:

(12-07-2016, 10:30 PM)Warren Dew Wrote: To the contrary:  the unemployment rate is below 5%, which is pretty close to full employment levels.  It's a tight labor market and an ideal time to stimulate labor supply.

No it isn't.  That number is propaganda.  The real rate of unemployment is north of 20%.


We have loosey-goosey labor supply and thus we need to increase the supply of jobs which aren't party time shit-work like fastie foodie stuff.

http://www.shadowstats.com/alternate_dat...ent-charts

Supporting stat here: https://fred.stlouisfed.org/series/CIVPART

The 5% figure is relevant to the people in the labor market - that is, looking for jobs.  People who aren't looking for jobs are not part of the labor supply and bringing them back into the labor market is exactly what supply side policies are designed for.

Figures on job openings are extremely high, so the labor demand is there. It's just that the amount employers are willing to pay doesn't match the amount people are willing to work for. Supply side policies can help close that gap by removing extraneous costs that employers have to pay but employees don't consider to be worthwhile in terms of compensation. Reducing taxes would be part of that. Costs that act like taxes, such as the requirement for gold plated health care for fast food workers working more than 30 hours a week would be another part. A lot of workers would be happier working 40 hours a week, but getting the health care costs in the form of dollars of direct pay instead.

[David Horn]

(12-07-2016, 10:30 PM)Warren Dew Wrote: Between 1980 and 1988, the inflation adjusted deficit grew by $84 billion.  Spending grew by $386 billion, more than four times as much.  It's quite clear that the deficit increase was due to spending, not to anything on the revenue side.

That said, the revenue effect is, as I pointed out, just the sales pitch.  The ultimate objective was supply side fiscal stimulus.

1980 saw the end of stagflation, caused almost exclusively by the Saudis (1973 oil embargo) and the Iranians (1979 equivalent).  Once Paul Volker killed inflation, and the Iranians released our hostages, the economy turned a corner.  The bounce-back from the deep V recession, added to all the military spending, got the economy going strong, but neither of those are supply-side effects.  I don't see any evidence that the admittedly supply-side tax cutting had much influence at all.

[David Horn]

(12-08-2016, 09:01 AM)Warren Dew Wrote: The 5% <unemployment> figure is relevant to the people in the labor market - that is, looking for jobs.  People who aren't looking for jobs are not part of the labor supply and bringing them back into the labor market is exactly what supply side policies are designed for.

Figures on job openings are extremely high, so the labor demand is there.  It's just that the amount employers are willing to pay doesn't match the amount people are willing to work for.  Supply side policies can help close that gap by removing extraneous costs that employers have to pay but employees don't consider to be worthwhile in terms of compensation.  Reducing taxes would be part of that.  Costs that act like taxes, such as the requirement for gold plated health care for fast food workers working more than 30 hours a week would be another part.  A lot of workers would be happier working 40 hours a week, but getting the health care costs in the form of dollars of direct pay instead.

So your idea is this.  The taxpayers subsidize employers and/or give them dispensation to reduce benefits in return for hiring people they wouldn't hire unless they needed them.  I assume this is an end run around the ACA plus tax cuts for all.  I don't see it working, and, if it does, being anywhere near as effective as direct spending.

[Warren Dew]

(12-08-2016, 01:24 PM)X_4AD_84 Wrote:

(12-08-2016, 09:01 AM)Warren Dew Wrote:

(12-08-2016, 12:04 AM)Ragnarök_62 Wrote:

(12-07-2016, 10:30 PM)Warren Dew Wrote: To the contrary:  the unemployment rate is below 5%, which is pretty close to full employment levels.  It's a tight labor market and an ideal time to stimulate labor supply.

No it isn't.  That number is propaganda.  The real rate of unemployment is north of 20%.


We have loosey-goosey labor supply and thus we need to increase the supply of jobs which aren't party time shit-work like fastie foodie stuff.

http://www.shadowstats.com/alternate_dat...ent-charts

Supporting stat here: https://fred.stlouisfed.org/series/CIVPART

The 5% figure is relevant to the people in the labor market - that is, looking for jobs.  People who aren't looking for jobs are not part of the labor supply and bringing them back into the labor market is exactly what supply side policies are designed for.

Figures on job openings are extremely high, so the labor demand is there.  It's just that the amount employers are willing to pay doesn't match the amount people are willing to work for.  Supply side policies can help close that gap by removing extraneous costs that employers have to pay but employees don't consider to be worthwhile in terms of compensation.  Reducing taxes would be part of that.  Costs that act like taxes, such as the requirement for gold plated health care for fast food workers working more than 30 hours a week would be another part.  A lot of workers would be happier working 40 hours a week, but getting the health care costs in the form of dollars of direct pay instead.

He's also including underemployed. Underemployed can be extreme. For example, a person who lost a good paying job. They were looking and looking for something that could at least replace 50 - 60% of their former income. Then their unemployment ran out and they went to work in retail or fast food. That person's pay is less than their unemployment benefit was and way way less than their former income. That person is de facto unemployed from the stand point of their living situation.

That situation is indeed common and it's a good illustration of why the economy isn't in the good shape Obama's fans think it is.

However, the underemployed are obviously not taking any of the 5.5 million job openings out there, so they aren't part of the labor supply at the moment.

Look, from the standpoint of how bad the economy is, I agree that the 5.5% unemployment rate is not an indicator that the economy is good, from the standpoint of the average person.  It's not.  The headline unemployment rate just isn't a good indicator for how well off people are.

However, the 5.5% headline unemployment rate is a good indicator of two things.  One is the likelihood of civil unrest:  even if you're underemployed, the bad job you do have lets you eat and gives you a stake in the system, making you less likely to participate in armed revolution.  That's something the political elites really care about.  The other is the tightness of the labor market.  The number indicates that the supply of labor at current wages is tight, and thus that the situation is ripe for supply side stimulus of the economy.

[Warren Dew]

(12-08-2016, 02:07 PM)David Horn Wrote:

(12-08-2016, 09:01 AM)Warren Dew Wrote: The 5% <unemployment> figure is relevant to the people in the labor market - that is, looking for jobs.  People who aren't looking for jobs are not part of the labor supply and bringing them back into the labor market is exactly what supply side policies are designed for.

Figures on job openings are extremely high, so the labor demand is there.  It's just that the amount employers are willing to pay doesn't match the amount people are willing to work for.  Supply side policies can help close that gap by removing extraneous costs that employers have to pay but employees don't consider to be worthwhile in terms of compensation.  Reducing taxes would be part of that.  Costs that act like taxes, such as the requirement for gold plated health care for fast food workers working more than 30 hours a week would be another part.  A lot of workers would be happier working 40 hours a week, but getting the health care costs in the form of dollars of direct pay instead.

So your idea is this.  The taxpayers subsidize employers and/or give them dispensation to reduce benefits in return for hiring people they wouldn't hire unless they needed them.  I assume this is an end run around the ACA plus tax cuts for all.  I don't see it working, and, if it does, being anywhere near as effective as direct spending.

No, it's demand side stimulus that subsidizes employers, not supply side stimulus.

[Mikebert]

(12-07-2016, 09:19 PM)Warren Dew Wrote:

(12-07-2016, 06:31 PM)Mikebert Wrote:

(12-07-2016, 01:13 AM)Warren Dew Wrote:

(12-06-2016, 04:06 PM)Mikebert Wrote:

Warren Dew Wrote:d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)
 
d(GDP/population)/dt = population * d(GDP)/dt + GDP * d(population)/dt

Using more compact notation you are saying:
 
d(GDP/N)dt = N * dGDP/dt + GDP dN/dt
 
this is the differentiation of the product of GDP and N, done correctly you would have
 
d[GDP * (1/N)]/dt = (1/N) dGDP/dt - GDP (1/N)^2 (dN/dt)
 
I'm still confused

Sorry, yes, messed up on that intermediate line.  The conclusion is still the same, though.  Derivation with the corrected equation below.

d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
    = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker < 0 (GDP decreases)

d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)

d(GDP/population)/dt = d(GDP)/dt / population - GDP * d(population)/dt / population^2
    = (GDP/population) * (d(GDP)/dt / GDP - d(population)/dt / population) < 0
    (average living standard for the economy cannot keep up)

You already have negative  GDP growth (or at least assumed it).  Until population also falls per capita GDP then must also fall. There is no need for the math which only reiterate the initial assumptions.

So far per capita GDP appears to have been rising slowing (through 2013)
http://www.indexmundi.com/g/g.aspx?v=67&c=ja&l=en

So I looked t the GDP trend and so the same thing:

http://www.indexmundi.com/g/g.aspx?c=ja&v=65

So what is you point? You make and assertion that if true would predict both of these things would be going down.  You point out that your assertions are supported by the data.  But your own math shows that it this were so then it would also be supported by the data about trends in GDP and GDP per cap, which it is not.  So what is the problem. Its the productivity figure.

Let's get the productivity figure straight first.  I'm saying productivity is growing and will continue to grow.  Are you disagreeing with that?  If not, why are you discussing it?  It seems like bad faith for you to keep asserting that I'm saying something when I've explicitly said the opposite.

The GDP curves I'm looking at are considerably different from yours, for example:

https://fred.stlouisfed.org/series/JPNNGDP

You write a bunch of math that concludes with what you started with.  You started with the idea that productivity was growing slower than labor force was rising, from which immediately follows that GDP growth must then be negative.  GDP per capita would also be falling unless population was falling faster than GDP. OK so you are back with you initial assumptions.  

What is the case for more debt?  That's what I asked you about.

[Warren Dew]

(12-09-2016, 07:59 PM)Mikebert Wrote:

(12-07-2016, 09:19 PM)Warren Dew Wrote:

(12-07-2016, 06:31 PM)Mikebert Wrote:

(12-07-2016, 01:13 AM)Warren Dew Wrote: d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
    = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker < 0 (GDP decreases)

d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)

d(GDP/population)/dt = d(GDP)/dt / population - GDP * d(population)/dt / population^2
    = (GDP/population) * (d(GDP)/dt / GDP - d(population)/dt / population) < 0
    (average living standard for the economy cannot keep up)

You already have negative  GDP growth (or at least assumed it).  Until population also falls per capita GDP then must also fall. There is no need for the math which only reiterate the initial assumptions.

So far per capita GDP appears to have been rising slowing (through 2013)
http://www.indexmundi.com/g/g.aspx?v=67&c=ja&l=en

So I looked t the GDP trend and so the same thing:

http://www.indexmundi.com/g/g.aspx?c=ja&v=65

So what is you point? You make and assertion that if true would predict both of these things would be going down.  You point out that your assertions are supported by the data.  But your own math shows that it this were so then it would also be supported by the data about trends in GDP and GDP per cap, which it is not.  So what is the problem. Its the productivity figure.

Let's get the productivity figure straight first.  I'm saying productivity is growing and will continue to grow.  Are you disagreeing with that?  If not, why are you discussing it?  It seems like bad faith for you to keep asserting that I'm saying something when I've explicitly said the opposite.

The GDP curves I'm looking at are considerably different from yours, for example:

https://fred.stlouisfed.org/series/JPNNGDP

You write a bunch of math that concludes with what you started with.  You started with the idea that productivity was growing slower than labor force was rising, from which immediately follows that GDP growth must then be negative.  GDP per capita would also be falling unless population was falling faster than GDP. OK so you are back with you initial assumptions.

Is the bolded word "rising" supposed to be "falling", or is there still a misunderstanding I need to clear up?

If it is "falling", which is what my idea actually is:

Quote:What is the case for more debt?  That's what I asked you about.

Are we talking about "why is more debt sustainable?" or "why is more debt desirable?"

From the standpoint of sustainability, a lower GDP growth rate means a lower natural interest rate.  (If you disagree with that, let me know and we can discuss it.)  With a lower natural interest rate, a larger debt can be sustained on the same interest payments.  Therefore a larger debt is sustainable.

From the standpoint of desirability, as discussed at the links I provided, we need to start with the need to increase the labor force participation rate, or at least keep it from decreasing any faster than necessary, to maintain living standards.  As discussed at the links I provided, that involves either or both of increasing incentives to work or reducing subsidies for not working.

The obvious way to increase incentives to work is to reduce income tax rates.  Past a certain point, reductions in income tax rates will increase the deficit and thus the debt.  That's a reason increased debt would be desirable.

The question of decreasing subsidies for not working is stickier.  Subsidies for not working consist primarily of explicitly or implicitly means tested government benefits.  These can just be decreased, which would actually reduce the deficit and thus the necessary debt.  However, it's likely to be more politically palatable in many cases simply to remove the means testing.  This obviously increases the deficit and necessary debt.

On balance, the easiest and most realistic ways to increase or at least maintain the labor force participation rate in the face of growing retirements likely involve increases in debt.  Since maintaining labor force participation is necessary to sustaining living standards, that makes extra debt desirable.

[playwrite]

(12-06-2016, 04:13 PM)Warren Dew Wrote: I'm not assuming negative GDP growth; I'm looking at statistics from Japan, that show all the things I said.

What I am assuming is that with the US doing the same demographic transition to a retiree heavy population that Japan did 2 decades ago, the effect on us is going to be similar, unless we use different policies.

But the result of the declining population ISN'T a supply issue.  Do you really believe the Japanese are limited in how many Toyotas they can produce or sale?  Have you ever seen a Japanese robotic assembly plant?  I have, and I can tell you there's nothing holding back production other than someone there buying what comes out at the end.

It is a DEMAND issue, and their is a positive feedback element in that as people get freaked by the decline and they spend less and save more.  That savings goess into non-productive JGBs.  Then the interest-differential currency carry trade makes it even worse.  They're stuck because there is not enough economic demand.  Monetary policy or supply side fiscal policy isn't going to do jack.  They've done demand stimulus spending but if you look at the ACTUAL 30 year record, it has been half-ass with plenty of stops and starts for the usual political austerity horseshit reasons.

[playwrite]

(12-06-2016, 11:59 PM)Ragnarök_62 Wrote:

(12-06-2016, 12:59 AM)Warren Dew Wrote:

(12-05-2016, 06:38 PM)Mikebert Wrote:

(12-04-2016, 05:15 PM)Warren Dew Wrote:

(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.

Here’s the problem with your analysis:

"However, economic output is limited by the falling proportion of the population still working, so the average living standard the economy can sustain for the population as a whole cannot keep up."

This is nonsense. GDP per worker has been rising for 200 years in America and for more than a century in Japan.  It’s called the industrial revolution.  If there were a retiree population that was receiving a fixed output with a shrinking working population then this would constitute rising economic demand per worker, which translates to rising GDP per worker.  GDP is simply another term for the net sales of the collective firms in the economy.  This is why they call GDP construction “national accounting”.  You are a frickin’ engineer, do the mass balance! Didn’t they teach you in school to first write down the mass and energy balances, then solve the problem?

I went to MIT; I do the equations and inequalities in my head.  But sure, I can write them down for you, if that helps you understand the point:

d(GDP/worker)/dt / (GDP/worker) > 0 (percentage individual worker productivity increases)

d(workers)/dt / workers < - d(GDP/worker)/dt / (GDP/worker)
    (percentage worker population decreases faster than percentage worker productivity increases)

d(GDP)/dt / GDP = d(workers*GDP/worker)/dt / (workers*GDP/worker)
    = (GDP/worker * d(workers)/dt + workers * d(GDP/worker)/dt) / (workers*GDP/worker)
    = d(workers)dt / workers + d(GDP/worker)/dt / GDP/worker < 0 (GDP decreases)

d(population)/dt / population > 0 (percentage population increases as old people have retired but not died yet)

d(GDP/population)/dt = population * d(GDP)/dt + GDP * d(population)/dt
    = population * GDP * (d(GDP)/dt / GDP - d(population)/dt / population) < 0
    (average living standard for the economy cannot keep up)

Just remember from your calculus that d(a*b)/dt = b*da/dt + a*db/dt and you should be all right here.

This has been the macro situation in Japan since 1995: the employed population is falling proportionately faster than the productivity of those workers is rising, so GDP is falling, but still needs to support a rising population.

Their population now seems to have peaked out, so things should at least not continue to get worse for them.

Wow, look at all of that mathy stuff!  It's time for some more awards.  I have a double header here as well. Nothing like 2 male Boomers going at it.  Nothing like "strutting yer stuff, eh? "

Playwrite Wrote:Well, obviously, I'm a movie star!

It has been found watching the debate from the sidelines.

Whadda ya find? Moi? , like I  said, lots of mathy stuff which induces METHy stuff in Rag's mind!




* peacock award for Mikebert




* peacock award for Warren ... this specimen has obviously been smoking meth.

playwrite Wrote:Maybe put that in an MIT iterative equation and smoke it.

Uh, like I said that peacock is smoking meth, not MIT iterative equations!  Sheesh, get with the program man, just look at how fast that peacock is flapping his tail!

I think I just had an epilyptic fit!  

Frees the mind.  Thanks!

[Mikebert]

Warren Dew Wrote:From the standpoint of desirability, as discussed at the links I provided, we need to start with the need to increase the labor force participation rate, or at least keep it from decreasing any faster than necessary, to maintain living standards.  As discussed at the links I provided, that involves either or both of increasing incentives to work or reducing subsidies for not working.

The obvious way to increase incentives to work is to reduce income tax rates.  Past a certain point, reductions in income tax rates will increase the deficit and thus the debt.  That's a reason increased debt would be desirable.

This makes no sense. You give an example of a plumber who if you cut his taxes, we will be incented to lower his prices to drum up more business (i.e. more hours). That is if you subsidize the plumber so that he can maintain his standard of living while working for less money per hour, he will opt to do this. Why?  Why not just use the extra income from the tax cut to pay down debt, sock more away for retirement, pay for the kid’s college or increase his standard of living? Why would he choose to work more to less money (per hour)?  Would YOU do that?
 
You seem to think that a tax cut is somehow different from any other increase in income.  Suppose the plumber, instead of seeing an income increase from the tax cut, got it from an inherited annuity? How is getting a second check each month for X dollars functionally different from getting X dollars more per month on the job from a tax cut?  Seems the same to me. 
 
But how is receiving an inherited annuity or a tax cut any different from simply getting a check from the government each month (i.e. stimulus)? In any of these case the choices would remain the same (1) save it or pay down debt (2) spending it (3) pass along you good fortune to your customers in the form for lower prices.
 
Yet don’t conservatives agree that giving out handouts decreases the incentive to work?
 
It seems you don’t understand how supply side works.  Supply side is tax cuts for RICH people.  The fact that they include non-rich people in the actual tax cut policies is because it is good politics.  But the whole supply-side theory is critically dependent on most of the tax cuts going to high income individuals. That is key, and not because supply siders are greedy or hate the poor. Jack Kemp certainly did not and I cannot believe Paul Ryan feels that way either. Yet both wanted/want to give major tax cuts to high income folks and cut government payments to the indigent.

[Warren Dew]

(12-11-2016, 04:33 PM)Mikebert Wrote:

Warren Dew Wrote:From the standpoint of desirability, as discussed at the links I provided, we need to start with the need to increase the labor force participation rate, or at least keep it from decreasing any faster than necessary, to maintain living standards.  As discussed at the links I provided, that involves either or both of increasing incentives to work or reducing subsidies for not working.

The obvious way to increase incentives to work is to reduce income tax rates.  Past a certain point, reductions in income tax rates will increase the deficit and thus the debt.  That's a reason increased debt would be desirable.

This makes no sense. You give an example of a plumber who if you cut his taxes, we will be incented to lower his prices to drum up more business (i.e. more hours). That is if you subsidize the plumber so that he can maintain his standard of living while working for less money per hour, he will opt to do this. Why?  Why not just use the extra income from the tax cut to pay down debt, sock more away for retirement, pay for the kid’s college or increase his standard of living? Why would he choose to work more to less money (per hour)?  Would YOU do that?

Why in the world do you think he's making less money?  Do you understand the difference between cutting his taxes and cutting his tax rate?  They aren't synonymous.

Since words aren't working, let's use numbers.  Suppose the plumber is in a 35% marginal tax bracket, state plus federal.  He charges $100 per hour, and takes home $65 per hour.

Now reduce his marginal tax rate to 20%.  Now he can charge $90 per hour - less than before - while taking home $72 per hour - more than before.  With a 10% discount, I have an incentive finally to hire him to do the bathroom work I've been putting off.  With him making 11% more per hour, he has an incentive to schedule me in addition to his other work, working more hours.

Would I do that?  Absolutely I would do that.

Galen, if you are reading this, can I ask a question, since you know people here a lot better than I do?  Is there any chance of getting Mikebert to understand supply curves and demand curves and how they interact?  Obviously he's not going to understand supply side economics without understanding how the supply curve acts.

[playwrite]

OMG, this is like when an 8th grader comes home and gets frustrated trying to explain the Mendel genetics his class covers that day  to his PhD father who splices genes for a living - "Dad, you just don't get it!"

It's been hilarious reading your 'economics' , but maybe you should Google up a couple of Alexander's books and papers.

If you're relying on Galen and other Zero Hedge disciples, Ill just say thanks now for all the lunch money you'll b  sending my way.  Too funny!

I did notice, grasshopper, that you now got some of that tax cut going to the plumber's spending side.  Maybe a ray of hope, keep trying, maybe even pick up an Econ 101 book?  Just a thought.

[Warren Dew]

Economics isn't about making money for oneself, you know. It's about improving the economy so that other people can make money.