(09-25-2017, 05:10 PM)Warren Dew Wrote:(09-25-2017, 01:46 PM)pbrower2a Wrote: OK, so what would a 'real' recovery be like? Would it be one that begins after American standards of living fell to those of the early 1930s? After people started to starve?
Never let the perfect be the enemy of the good.
A real recovery would be one that recovered the economic losses, returning to the previous trend line, instead of just picking up a new, lower trend line starting at the bottom of the recession. You know, like the 8% postrecession/tax cut real growth in 1983, or the 6% postrecession growth in 1961, or the 8% post tax cut growth in 1965.
As with the meltdown of 1929.4-1932.4, the year and a half of the meltdown of 2007.4-2009.2 started with the bursting of a bubble. Bubbles devout capital that accountants book but end up worthless. The Reagan tax cut put an end to stagflation which was not the problem of either the 1920s or the Double-Zero Decade. The "Reagan recovery" depended upon the lowering of expectations, with people settling for less than their dreams (like recent college graduates settling for jobs in retail and food service). The slow-growth 1950s was the result of government trying to pay off national debt from World War II.
Economic reality is very different late in a 1T (circa 1960), the 2T/3T cusp (early 1980s) and the start of a Crisis Era. The market crashes of 1930 and 2008 were very similar in severity and immediate effect. he last three Crisis Eras began with financial panics (1857, 1930 -- the real crash was in 1930, and 2008). In a 3T people enjoy the warmth of an active volcano. The 4T begins with the eruption of the volcano.
Tax cuts mean something when the economy is humming along. When revenues crash in an economic meltdown, tax cuts are practically meaningless. In an economic meltdown, businesses are rightly more concerned with sales revenue than with taxes paid. It's the bubble that devours capital that could be going into productive activities that does the damage; the panic shows how pointless the investments were. Americans were not investing in plant and equipment.
The meltdown that began the Great Depression began when FDR backed the banks. The Obama bull market began when the government backed the banks. The difference between the two meltdowns was when the meltdowns ended, and not their severity after a year and a half.
It is best that the worst actors, the ones who created the mess, go out of business. Government can promote the recovery of others. The auto industry was not particularly culpable in the real-estate fraud that was the illusion of wealth-creation in the Double-Zero decade.
Something else is happening this time: the end of scarcity in manufactured goods. There is no easy way in which to make money by simply making stuff. America got through the Great Depression by making more cars, appliances, and furniture that people did not have going into the Great Depression. By most accounts, life was better in the late 1930s than in the late 1920s. All that was down was stock prices. Consumer electronics are often dirt-cheap. You can buy a cell phone for about $20 bucks. Sure, it is a 'dumb phone' that won't give images or data... I have a reader and a camera, so I don't need data or photographic capacity on my cell phone.
Radio Shack is dead. J C Penney and Sears are dying. Toys 'R' Us is in a 'reorganization' intended to protect its suppliers. That's retail.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.