Lets make fun of Obama while he is still relevant.

[Bob Butler 54]

(12-05-2016, 11:29 AM)Warren Dew Wrote: Ah, Bob, back to ignoring the information you yourself provided that challenges your previous world view, I see.  Good job on denying reality.

I'm not one to play the blame game at the level you are going after.  I'd need to delve quite a bit more into economic history and academic theory.  I'm vaguely hoping Mikebert and others with a greater interest in economics will step back in to cover that.

I am more interested in the values and political aspect.  When the Republicans have the White House, regardless of the academic merits of what the Republicans may or may not be trying to do, political realities trump the academic theories.  We get disasters.  When the Democrats have the White House, the Republicans can't mess them up as badly, not that they don't try.  We get anemic inadequate recoveries.  The academic theories on what might be done in a non-partisan environment seem pretty irrelevant.  The question is what policies can survive in the real world.

[playwrite]

(12-04-2016, 11:30 AM)Bob Butler 54 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.  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.

From my viewpoint, you have everything right except for the current need for demand.  There's plenty of U6 "not seeking" and more improtantly wage growth is nowhere near being of inflationary concern.  There's still plenty of underemployment.

The real measure for suffienct/insufficent spending (private and public) is inflation/deflation.  Right now, inflation is no where near an issue and with energy trying to just stay afloat, increasing automation, and likely trickle down Trump idioacy sending more money into T-bills, it isn't going to be likely of real concern in our liftetimes.  Let's let technocrats at the FED hammer out inflation status and projections rather than let sheeple at truck stops weigh-in with usual horseshit memes fed to them by their elite masters.  In the interim of any harmful inflation becoming even a twinkle in the FED chair's eye, we can repair a lot of bridges before they fall down, do something about our 3rd world airports, get the lead of kids' drinking water, maybe catch up with the rest of the world with high speed trains that would actually make the midWest economically relevant in the future.

[playwrite]

(12-04-2016, 03:25 PM)Warren Dew Wrote:

(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.

Mulipliers - I think you're the one that is being blinded by ideology.  That's the only way to explain your fetish with the spending mulitpliers and your embracing deficit spending - that's cognitive dissonance. Give it some more thought.

Spending and improving lives - Try not having income and see how that improves your life.  Everyone's income is based on someone else's spending.  From an economic standpoint, the ones getting the income don't give a shXt who is spending it - money doesn't come with a memory; that's one of money's most important characteristics.  FBI agents paying hookers in Las Vegas with federal dolllars are going to add income to the local economy.  Those hookers are going to buy food, get their nails done, and lots of medical services.  That spending provides income to grocery stores, nail salons, and medical offices and the people that work there - that income does improve those people lives - if you doubt it, again, see how long you can go without some income and how much your life improves once you get the income back.

On the other hand, corporate giveaways such as  repratations returning overseas cash to corporations already swiming in corporate cash is just going to result in stock buybacks or dividend increases - the vast majority of stockholders are just going to "reinvest" that money into the secondary equity markets which is not real investment, it's just savings - all resulting in either just more "parking" it in nonproductive T-bills at best and financial asset inflation at worse.  That may improve wealth on paper for some but it doesn't do anything for the general economy and most people.  Moreover, that paper wealth will be fleeting if the economic growth doesn't eventually back it up.  If you're truly concerned about improving lives, you get money into the hands of people that will spend it.

Oversupply and prices - have you've been in a coma for the past 8 years?  That would explain alot.  Prices did fall, and haven't much gone anywhere outside of some asset inflation.  Life, let alone the economy, doesn't work like a light switch - lots of ups and downs.  We're muddling along after a big hit, and much of that muddling along is due to earlier government stimulus spending  Monetary policy has been of some help, but its pretty clear that even at historic ZIRP its been pretty much useless.  We could easily get tipped into another economic contraction; if you don't believe that, I'll be happy to take your lunch money in the markets when the time comes.

Supplyand plumbers - You have the same problem that Austrians do - if the terms and data don't support your viewpoint, you change basic definitions until they do - unfortunately, just changing definitions does not change reality.

Cutting payroll or income taxes on a laborer, like a plumber, is NOT supply economics - it's initial action is to put more money in the hands of the plumber who will then spend it - that increases aggregate demand.   If a plumber uses his tax cut to lowers his price, and nothing has increased demand for plumbing, all he does is gain market share from another plumber, and eventually depresses plumbing prices so that plumbers' contribution to demand decreases.  This is what is trickiing with payroll tax cuts - they're great initially in putting money into labor's pocket to spend and increase overall demand, but if it goes on too long, businesses adjust the pay to labor and we get a return back to their lower spending and demand.

More energy supply - so people are going to leave the lights on all night instead of turning them off at night?  Are people going to make three trips to grandmas house on Thanksgiving?  Sure, people might take extra trips or not wig out on the kids leaving the lights on when energy is cheaper, but how much cheaper does it have to get to overwhelm all other considerations?  There are limits no?  And while people are deciding to do something with cheaper energy, South Dakota and parts of Texas plumment into economic contraction and substantial job losses.  Have you seen CapEx spending in the energy field, it is putting a major drag on the economy right now.  There's a bubble bursting and no supply tax cuts are going to change that, unless someone gives us all private jets and maybe a couple of Hummers in the driveway.  Not going to happen.

Monetary policy - you don't have to parrot things back to me about the use of monetary policy in both inflationary and deflationary environments.  The issue is the usefulness of monetary policy in a deflationary environment where you are already at or near ZIRP.  It's only utility in an ongoing deflationary environment  is to stay at ZIRP.  Once spending, demand, economy, and inflation pick up to health levels, then you can raise rates in hopes of monetary policy offering something useful again.  This is not rocket science.

Monetarizing the debt - all that actually means is your moving people's savings from interest-bearing T-bills to non- interest bearing cash that people will just park somewhere else.

Medical offices as big corperations.  And here I thought we were having a serious discussion.  You sure you're not a former Austrian now some born-again deficits-don't-matter Trump Chump trying to rationalize tax cuts for the rich?  Changing defintions to fit your rationale is a sure giveway. Too funny.

Tump/Obama Infrastructure Spending -  If you think these are the same two things, then you have a reading comprehension problem.

Tax cuts for demand -  I didn't say all tax cuts are supply side, but that doesn't mean some tax cuts are nothing but supply side, and in a demand-limited economy, supply side tax cuts only put non-productive wealth in T-bill and secondary markets savings for the rich.  Yes, tax cuts, including rate cuts, across the board will have a mix of supply side and demand side elements, but not only do the supply side have no benefit to our current economic situation, they cause a political reaction that results in reduced federal spending to placate the deficit hawks - this can negate any benefit from the tax cuts.  

 Overall, you got some basic things correct, like federal deficit spending is a good thing, but your ideological blinders have got you a tad confused -- all twisted up to the point of even changing basic economic definitions.  Not good.  I suggest you do a little research on Modern Monetary Theory or better, Modern Monetary Reality.  A whole new world can open up for you - it's called reality.

[playwrite]

(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...

Look at Warren's example to me of cutting payroll/income taxes of a plumber.  He sees this as "supply side" because the plumber will reduce his price and a lot of people will hire more plumbers at that reduced price.  I guess there is currently a lot of clogged toilets that are going to stay that way until Trump gets in and cuts those taxes. Let's hope it's early spring, can you imagine the smell???

It's not just fuzzy defintions, its fuzzy thinking and that's a tad hard to get along with.

[Warren Dew]

People do remodel bathrooms based on whether they can afford it, you know.

[Bob Butler 54]

(12-05-2016, 04:50 PM)playwrite Wrote: Look at Warren's example to me of cutting payroll/income taxes of a plumber.  He sees this as "supply side" because the plumber will reduce his price and a lot of people will hire more plumbers at that reduced price.  I guess there is currently a lot of clogged toilets that are going to stay that way until Trump gets in and cuts those taxes. Let's hope it's early spring, can you imagine the smell???

It's not just fuzzy defintions, its fuzzy thinking and that's a tad hard to get along with.

How come, when we were debating the gun policy problem, movie star's bodyguards didn't come up?

[Mikebert]

(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?

[Warren Dew]

(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.

[playwrite]

(12-05-2016, 05:37 PM)Bob Butler 54 Wrote:

(12-05-2016, 04:50 PM)playwrite Wrote: Look at Warren's example to me of cutting payroll/income taxes of a plumber.  He sees this as "supply side" because the plumber will reduce his price and a lot of people will hire more plumbers at that reduced price.  I guess there is currently a lot of clogged toilets that are going to stay that way until Trump gets in and cuts those taxes. Let's hope it's early spring, can you imagine the smell???

It's not just fuzzy defintions, its fuzzy thinking and that's a tad hard to get along with.

How come, when we were debating the gun policy problem, movie star's bodyguards didn't come up?

Well, obviously, I'm a movie star!

It has been found watching the debate from the sidelines.

[playwrite]

(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.

This is the kind of horseshit math papering-over of pure conjecture that took neoClassical economics, particularly the Chicago School, into irrelevancy.  You, being from MIT, have been caution against this ad naseum but for some reason it obviously didn't take.

Your second equation is an assumption that, as Mike pointed out, goes against history, and that is a history that will be now compounded by automation.  psss, the Luddite Fallacy is situational.

[playwrite]

(12-05-2016, 04:52 PM)Warren Dew Wrote: People do remodel bathrooms based on whether they can afford it, you know.

Certainly not other plumbers, and anyone else, who used their tax cut to lower the price of their labor. Where does the increase in demand come from if it was all given away?

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

[Mikebert]

(12-04-2016, 10:21 AM)Warren Dew Wrote: Hey, it was your link.

Huh? No it wasn't. Where did you get that idea?

[Mikebert]

(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 rises.  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.

[Mikebert]

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

[Warren Dew]

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.

[Mikebert]

(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.

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.

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. Cutting his taxes may allow him to pass some of it along to customers in the form of lower prices, or he may decide to keep it.  Either way the net effect is to transfer some money that the government would spend to money that the plumber or you will spend.

It provides no net growth.  It simply replaces one spender (a Medicare health care provider in the first) with another a plumber or person doing bathroom remodeling.

The real meat of supply side stimulus is to cut taxes on the job creators, that is investors, who with lower taxes are incented to invest in new business opportunities that they would otherwise not invest in.

What you are advocating for is a form of Keynesian stimulus expressed in terms that are political palatable to conservatives. It sounds conservative and different from what Obama sought, but it is similar in effect, just mechanistically different in who get the stimulus.

[Warren Dew]

(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 rises.  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.

[Ragnarök_62]

(11-28-2016, 02:58 PM)Warren Dew Wrote: Actually building the B-21 sounds like it would be good.  No need to repeat the F-35 boondoggle fiasco, of course.

Yeah, no kidding.   Clusterfuck city big time.  It's hard to match the the size of that money pit.

I usually dish out this award to Eric, but in this case, the MIC gets its own

* Dodo award to the MIC, man.

[Ragnarök_62]

(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!

[Warren Dew]

(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)