Presidential election, 2016

[Warren Dew]

(11-14-2016, 08:07 AM)Odin Wrote:

(11-13-2016, 11:45 PM)Warren Dew Wrote:

(11-13-2016, 10:11 PM)Kinser79 Wrote: In the case of borrowing and taxing the state is taking capital that could be put to work elsewhere and using it it for whatever.  I will grant that not all spending is equal.  A tax cut for the extremely wealthy (and I mean on their take home income, low corporate and capital gains taxes push money into investment and re-investment given a higher personal income tax rate) is a poor way to spend that capital.  The same would be true of a tax cut for the poor.  Or welfare.  Or subsidies for insurance.

Spending that same capital on public infrastructure, either new construction or refurbishing existing infrastructure, while not glamorous has a rate of return much much higher than a mere tax cut or a welfare check.

I agree with much of what you have to say, but I have to disagree on this.  The problem is that government spending is often extremely inefficient, because the government has no profit motive.  Refurbishing failing infrastructure may be done efficiently, but any extra money allocated is still spent, but almost entirely on gold plating or patronage.

Massachusetts is a good example of this.  When Obama passed his infrastructure spending bill, we had a Democrat governor and got more than our share of the money.  Lots of it was spent on unproductive things, like moving curbs in or out by a couple of feet in various places.  Yes, new curbing was involved, but the old curbing was also granite and in fine shape.

There were also bridges and interchanges that needed fixing, but the work was interminable; for six years the return on the investment was negative as traffic lanes remained closed to permit the "work".

Then we got a Republican governor, and the projects that had taken six years to fail to complete all started getting completed in a matter of months.  It's quite clear that they could have been completed with a tenth the money, and the extra money was just spent on unproductive patronage employment.

Tax cuts that would encourage investment in private infrastructure would be far more efficient, if you really wanted infrastructure.

Personally I think there is also, currently, a lot of excess capacity due to lack of consumption, so I think tax cuts for wage earners to boost consumption would also make sense at present.  As the following graph indicates, taking up the slack in the economy - which granted, might involve more than just tax cuts - would make everyone about 10% better off.



But even if you don't believe in keynesian deficits, massive government spending on infrastructure is not the way to go.

Increasing technologically-driven productivity has a depressing effect on both wages and the employment rate, which hurts demand, which depresses economic growth. This is technological unemployment, something noted as early as Marx, and it is only going to get worse over time as automation becomes even more widespread. This has been masked for a century by the increasingly dominance of white collar jobs, but now even many of these jobs are beginning to be automated away, eventually everyone who isn't a super-genius with a graduate degree, or someone who does a highly skilled trade that cannot be automated, will be left jobless.

We as a society have only 2 choices: a universal basic income or complete social breakdown, there are no other alternatives.

Unless you think the Singularity happened in 2008, technological productivity cannot have caused the GDP growth gap shown in the graph.

Technological productivity is a legitimate longer term issue, but the time scale for it is decades, not years.  Personally I think that if the labor is there, there will be things people want to use it for, but I'm not in principle opposed to a universal basic income if it's set at a level that's actually affordable, which is a fraction of the levels being bruited about.  Be that as it may, none of that is relevant on the time scale of Trump's first term, let alone the time before the 2018 elections.