Tuesday, April 19, 2016

The economic angle to electoral madness

== Economic Recovery ==

This economic recovery has lasted longer, without even a small recession, than all but one stretch since WWII, prompting some economics sages like John Mauldin to caution the next president - whoever - to expect a recession in his or her first term. 

Hm. Maybe but can one say "this time is different"? Those are famously fatal words. But there truly are some differences. In fact we never had a recovery this slow before, dragged by a Congress that refused to spend on badly needed infrastructure repairs, because that would create high-velocity money in worker pockets, and that in turn would have sped the recovery and helped democrats.

But this month's labor stats show it happened anyway.  Steady, steady job growth and now those long delayed wage increases.  Obstruction can only do so much.  And hence the question: might there be a silver lining to this slowness? Could it mean that the usual recession just got smeared into the more gradual slope of this slowly improving economy?

Certainly  psychological factors fit this model, with a US public deliberately talked into gloom, not just by Fox & pals but also sourpusses on the left.  And hence no "ebullience penalty" this time. Except for an equities bubble, there's been no overshoot for a recession to correct. Just hardworking folks pushing it all forward.

Well well.  Just a theory. No doubt there are forces trying to start that recession in time for the election... amid a myriad types of desperate cheating.  Stay wary. Nurse a little optimism.  Stay tuned.


== Psychological factors? Or reality? ==


In a different newsletter, John Mauldin shows - yet again - what U.S. conservatism could be, if it decided to argue for market enterprise from a position of, well, sanity.  The following figures that I clipped from that newsletter show what any sensible person has to understand... and the part of Bernie Sanders's riff that is blatantly and wholly and completely right...

... that wealth disparities in the United States have skyrocketed to a degree that no rationalization, no theory or incantation, can possibly justify anymore.


These charts - from a conservative capitalist economist - are clear, vivid and entirely self-explanatory.  They prove that not only America but flat-open-fair-competitive -creative capitalism has been betrayed, and both desperately need a refresh, lest we spiral toward the other possibility.  One that was well described by the famous historians Will and Ariel Durant, in The Lessons of History.

"…the unstable equilibrium generates a critical situation,

which history has diversely met by legislation redistributing wealth
or by revolution distributing poverty.” 

John Mauldin goes on to suggest solutions that are ... ahem... a bit to the right of center.  For example, replacing social security taxes with a European style Value Added (consumption) tax, or VAT. And eliminating all tax shelters/deductions in exchange for a lower, 20% income tax above $100,000. Um, interesting and I am willing to negotiate...

   ... but how about we start by returning to tax structures that brought us surpluses, in the late 1990s, before Supply Side Voodoo gifts to the oligarchy threw everything out of whack.

But the key thing is that he uses the word "negotiate." He calls for a return of American pragmatism. For sincere, moderate-liberals and moderate-conservatives to sit down, compare facts scientifically and trade wants toward optimum deals.

Charmingly, John assumes there are still sincere, moderate-conservatives in any substantial numbers to negotiate with. Just because he talks to a few members of that endangered species, and sees one in the mirror, when he shaves.

== Election nightmares ==

Are hackers stealing elections? Read about a fellow who claims to have “made” more Latin American presidents than voting majorities have.  Do not dismiss this as purely a south of the border thing.  Many of the techniques he reveals are used in North America.  Moreover we have a hackable cheat that most other countries still don’t… electronic voting machines.  How any of you can look at one, and deem it trustworthy, is beyond me.  In some states, precincts can be random audited with paper records, and that should keep the cheating down.  Some other states -- alas too many -- are run by the cheaters, though, and they will get any vote count that they order-up, this fall. 

There were signs of recent electoral cheating by computer in Arizona.  And you ain’t seen nothing yet.  We need a millionaire…not a billionaire but a mere millionaire… to offer a whistleblower prize for henchmen from the voting machine companies, who bring forth proof.  Heck, I personally promise to make it worth any whistleblower's while. After the proof makes a difference.

Want to understand what a contested or brokered convention might be like?  Read this fascinating account of the squeaker when FDR got the democratic nomination in 1932.  

…aaaaaand the Koch boys had a Nazi Party member as their governess.  Sure. Just as irrelevant as  their dad's... oy... colorful political arc, helping both 1930s Berlin and 1950s Moscow. 

What's more interesting is their not so subtle efforts, along with Steve Forbes and the wholly-owned Cato Institute to control not just the GOP but the Libertarian Party. Um, preparing a lifeboat, guys?  Hey, I never said they wasn't smart.

== Billionaire Wealth ==

This interesting article on the Evonomics site is part of a trend I've noticed lately... a surge of rediscovery interest in Adam Smith. A surge I helped to nurture (as many of you know) for the last decade. 

Do see: "How Adam Smith’s Invisible Hand Was Corrupted by Laissez-Faire Economics If read correctly, Smith’s theory proposes the opposite of laissez-faire."


It's a hopeful sign that ever more folks appear to be reading or referring to Smith, who today would be a democrat.  Looking back across thousands of years of grinding feudalism - something too few of us shallow Americans seem inclined to do - Smith knew that some incentive wealth disparities are needed, in order to encourage creative enterprise, but that overly-concentrated wealth turns toxic, leading to cheating, inherited oligarchy...

...and especially "rent-seeking" in which lords and moguls "invest" not in productive, job-making industry but in jiggering the rules so that they get even richer by parasitism. 


To be clear, that is exactly opposite to what we were promised from Supply Side "economics." But it is what Smith and nearly all economists predicted would happen with gigantic, budget busting tax gifts to the rich.  (No wonder Fox wages war on economics, and science and every other knowledge profession.)

Now the proof - an analysis shows that 74% of billionaire wealth in America was acquired not through competitive goods and/or services, but by Rent Seeking and rigging the economy.  And, as Smith predicted, this especially harms the wealth-creating middle class.

What about that 26% of billionaire wealth derived from actual enterprise? That certainly includes our modern tech moguls, who have propelled good things from SpaceX to Google.  And guess what? Some of them are libertarians. Most are democrats. Very few are republicans. Because these folks know they owe everything to a middle class that most of them came from, to the middle class engineers they work with, and to the civilization and nation that made it all possible.


Subscribe to the Evonomics site -- fast becoming one of the top places to find sober-serious - yet entertaining and lively - explorations of economics and politics.  That is, if you have an appetite for more of a meal than than a sound bite and a dogma biscuit.   

   

70 comments:

Paul451 said...

Repeating from the last thread:

Apparently Ontario is going to experiment with a Universal Basic Income, starting later this year. Huffpo Canada, eh.

Last time Canada tried this: The town with no poverty.

--

And since the the last thread ended with comics, of a sort, here's a gift (or curse, since it's early in the run, so hard to binge): Mare Internum.

Duncan Cairncross said...

Hi
Re- inherited wealth and billionaires

All of the analysis that I have read MASSIVELY underestimate the effect of parental wealth
A "small" gift of a couple of hundred thousand back in the 70's if just dropped into the bank would be several million by now

Instead when people report on "where the rich got their money" they seem to assume that the only "inheritance" that needs to be looked at is the money that is inherited when the parents die
Ignoring the much more common transfers while the parents are still alive

The vast majority of our current billionaires "made" their money by the careful selection of their parents

Paul451 said...

Looking at the share-of-wealth graph and you can see that even the benefits gained by the 1% since Reaganomics pretty much ended within a decade. And the benefits for everyone in the 1% except the very top 0.1% have now also ended. Only that 0.1% continues to gain, at the expense of the bottom 90%. And IIRC, even within that 0.1%, it's the 0.01% (1% of 1%) that took most of the gains. One person in ten thousand benefits from the current system.

Any such graph that splits at 90/10 is going to misrepresent the true situation.

Anabelle said...

Would this return to the tax structures of the late 1990s also involve a return to the spending levels of the late 1990s?

David Brin said...

Anabelle you never cease to crack me up. You actually, actually think that wild-eyed discretionary spending is responsible for the deficits! Really? How quaint. Only... across the last 22 years, Republicans dominated Congress for 18. That is 18 out of 22 years.

Yes, the laziest-ass congresses in the nation's history. Even when it comes to things desperately wanted by the GOP's base, they have done nothing, except strip us naked to Wall Street bigshots and give several trillion dollars to the top 0.01%

The WAS an Entitlements Reform package deal on the table, since 1996. It almost passed after Gingrich's one year of actually negotiating with dems, like an adult. But your side's role model and ideal man Dennis Hastert fire Gingrich for that willingness to negotiate, coined the Hastert Rule to punish any republican who ever mentioned the "N" word... and Entitlement reform vanished from the agenda.

Your politicians are criminals and traitors. And perverts.

Anabelle said...

> You actually, actually think that wild-eyed discretionary spending is responsible for the deficits!

If we spent the same amount as a proportion of GDP as we did in 1999 we would have no deficit.

LarryHart said...

Anabelle:

Would this return to the tax structures of the late 1990s also involve a return to the spending levels of the late 1990s?


The late 1990s was a boom time. If anything, the economy was in danger of overheating (Don't ask me--ask Alan Greenspan who raised interest rates something like 15 times). The best thing to do in such an economy is to slow down the velocity of money, which means pay down debt and yes, let the wealthy keep more of their money.

Obama's entire presidency has been in a recession or very weakly recovering from one. That sort of economy calls for government stimulus to get money circulating as quickly as possible and to increase demand. That requires either raising the deficit or raising taxes or both.

The demands of the two periods are almost diametric opposites. It makes little sense to suggest that the remedies for one fit the other.

locumranch said...



In regards to the reported 'Economic Recovery', it is still unclear as to whether or not such an event has actually occurred:

https://www.bostonglobe.com/business/2015/03/01/was-best-way-boost-economy/2A3u8T6lWLzPpPRmssRd4K/story.html

Through the process known as Quantitative Easing, the central banks of most advanced countries have been pumping money into their economies at an astounding rate, as evidenced by a five-fold increase in the US Federal Reserve Bank balance sheet -- $700 billion at the outset of the financial crisis to peak at more than $4 trillion -- leading some to believe that the so-called recovery is artifice, an inflationary devaluation deferred or 'a giant bubble waiting to pop'.

Similarly, purported recession-ending Job Growth could be an illusion as part-time minimum wage jobs (lacking in benefits) proliferate & the once plentiful blue-collar industrial jobs that made the US Middle Class "are going boys and they ain't coming back".

That, and Rent-Seeking is a defining characteristic of Capitalism wherein (1) privately-owned 'capital' serves as the impetus for the accumulation, rent collection & creation of additional capital and (2) evil millionaires, billionaires & one-percenters attempt to pass on their privately-owned capital to their children & children's children.

Finally, the Nazi affiliation smear should only be invoked with trepidation, especially since FDR expressed frank admiration for Mussolini and many top US political families & industries are implicated, including the Bush, Rockefeller & Kennedy clans, GE, IBM, Kodak, Ford, Chase Bank, Coca Cola and Random House (Bertelsmann) Publishing.

http://news.bbc.co.uk/2/hi/business/2308415.stm

Did I say Random House Publishing was owned by Nazis? Gasp!! That would mean our host DB (with 11 works published by Random House) could be said to be guilty by association -- just like those nasty nanny-sympathizing Koch Brothers.


Best

Anabelle said...

Throwing stuff back to the way they were in the 1990s was David's idea. I'm just pointing out that demanding reversion changes you don't like without offering to revert changes the other side doesn't like is a bad way to start negotiations.

donzelion said...

@Paul - for all the wealth aggregation statistics, it's worth a pause to think about how the wealthy got there - almost always through careful leverage plays. In the statistical references, a person with $1 billion in 'assets' and $1 billion in 'liabilities' has 0 wealth.

However, if that same person has $1 billion in 'proven assets' in America, and $1 billion in hidden liabilities offshore, then for a time they will LOOK like they have $1 billion. Sometimes, that time horizon is long enough for these folks to secure sweetheart terms on deals that enable them to actually build 'real' wealth.

Most people think that offshore accounts are about hiding assets. That's an error: you need to disclose assets to use them for leverage (e.g., most folks cannot mortgage the house they claim to own in the Bahamas to raise cash in California). More often, they're used initially for aggressive tax planning to manufacture liabilities (e.g., the 'business venture' in the Bahamas cost you the same amount as it earned - thus, your taxable income from that venture is zero - but the assets held by that offshore entity gained significant value). Eventually, very rich people (moving toward billionaire status) learn to shift real liabilities offshore.

For that story, the only really important types of taxes are those linked to dividends and capital gains (which Bush Sr. increased in exchange for a balanced budget commitment, and which Bush. Jr repealed).

The only other way of doing that is building a product that people love. Much harder. In that world, you care more about your product/company succeeding than about dividends and leverage games. Again, that's why the billionaires are largely Republicans, but the tech moguls are not. I've seen other numbers that suggested that within the 'rich,' for every 1 super-successful entrepreneur, there are 3 super-successful leverage gamers.

donzelion said...

Dr. Brin - on elections fraud...it's an interesting thing that one of the first major uses of the computers was to count votes through a purely mathematical system that could mitigate fears of fraud (or operate social insurance systems to alleviate fraud). But there's no technological silver bullet to cure fraud: to the extent the voting system works, it's a contentious game of watchers being watched in turn, and a good one for us to volunteer to support.

Very few [of the tech moguls] are republicans. Because these folks know they owe everything to a middle class that most of them came from, to the middle class engineers they work with, and to the civilization and nation that made it all possible.

Even the ones who are Republicans (e.g., Bloomberg was a sort of tech mogul originally, and PayPal itself was closely linked with Republican benefactors), aren't Republicans like Cruz & Murdoch (e.g., PayPal's actions re North Carolina).

David Brin said...

"If we spent the same amount as a proportion of GDP as we did in 1999 we would have no deficit."

Screeching incoherent nonsense! They simply say things in order to have a "truthy" sound.

Notice not even a figleaf effort to distinguish between discretionary spending... entirely controlled by Congress and hence by the GOP... vs entitlement... which have had a reform on the table for TWENTY YEARS awaiting Republicans to come to the table and finalize the already-negotiated deal. That's TWENTY YEARS. Two decades. During which dems controlled congress for just two years.

Dunces. All intellects have fled. See this article about it!
https://www.washingtonpost.com/posteverything/wp/2016/04/19/could-the-gop-be-facing-an-intellectual-exodus/

Dunces.

David Brin said...

Oh, Bertelsman bought RH just a few years ago. But the rest is just silly. Yes-Massa stuff. Feudalism killed freedom and progress for 6000 years. But the reflex of romantics is always "I luuuuv d massa lords! Bring back feudalism!"

Anabelle said...

What is this reform? I haven't heard about it. And an obvious google search turns up nothing.

https://www.washingtonpost.com/posteverything/wp/2016/04/19/could-the-gop-be-facing-an-intellectual-exodus/
Betteridge's law

David Brin said...

And I should waste time addressing just one of your ignorances, whn you raise your head once out of dogmatic incuriosity?

An earlier era of less-insane republicans actually negotiated:
http://www.thefiscaltimes.com/Articles/2010/06/25/A-Budget-Deal-That-Did-Reduce-the-Deficit

The bipartisan Kerry Danforth commission proposed compromises that would have kept Social Security solvent for 100 years. Scotched by the republican leadership.
https://books.google.com/books?id=u77gzMxH4dUC&pg=PA80&lpg=PA80&dq=entitlement+reform+1990s+compromise&source=bl&ots=jn-dB2GFvy&sig=ZvrGjEX_Wch7OY8pQAzdKjjGP0E&hl=en&sa=X&ved=0ahUKEwiCxNzI-pvMAhUQ_mMKHYlfCwYQ6AEIVDAI#v=onepage&q=entitlement%20reform%201990s%20compromise&f=false

David Brin said...

Compromises on the table during the Clinton Admin, " Senator
Kerrey (DP) and commission member Senator Alan Simpson (GOP) went on to introduce Social Security
reform legislation based on the commission’s work.
12
The Kerrey-Simpson bills gradually raised
the early retirement age from 62 to 65 and the age of eligibility for full benefits to 70, reduced
cost of living adjustments for Social Security, and shrank benefits for spouses. The legislation
also permitted 25 percent of the Social Security trust fund to be invested in private-sector stocks
and bonds, and gave workers the option of diverting 2 percentage points of their payroll tax
payments to individual investment accounts in exchange for lower Social Security benefits.

Torpedoed by guess who?

Anabelle said...

That book link also notes that the Clinton administration was against the reform as well. In fact, it says Clinton's Chief of staff said any spending cuts to social security were off the table.

I've said repeatedly that I like the 1990 compromises. But any modern repetion is going to require undoing some of the bipartisan spending increase since then. C'mon, where's the Democratic Tea party?

David Brin said...

You keep acting as if you have sane things to say, it's hilarious Anabelle! Your side hypocritically set fire to the budget, declared "deficits don't matter," punished every republican who negotiated, hurled us into $3trillions of wars that were kept off the books for 6 years(!), "lost" 12 $billions in raw cash in Baghdad then did not investigate.

To maintain that the "tea party" actually stands for anything except being slavish yes-massa troops for Rupert Murdoch is guffaw-worthy! An anti-science, anti all people who know stuff mob... and I am done responding to you. The confederacy will fail in this latest campaign to destroy the nation that I love.

LarryHart said...

Anabelle:

I've said repeatedly that I like the 1990 compromises. But any modern repetion is going to require undoing some of the bipartisan spending increase since then. C'mon, where's the Democratic Tea party?


Cutting spending during a recession just isn't a good idea. Not that it wasn't tried anyway--remember the sequester?

The Tea Party is Grandpa on "The Simpsons" whining that "The president is a Demmy-crat!" and demanding that the government keep its hands off their Medicare. They didn't care about deficits for eight years under George W Bush (Dick Cheney: "Reagan taught us that deficits don't matter"), in fact Alan Greenspan pushed for W's tax cuts in order to preserve the deficit--he was terrified that a national surplus would result in government ownership of business. But as soon as President Obama was inaugurated, these people suddenly were "shocked--shocked to discover" that the government ran a deficit, and rioted to slash government spending at exactly the wrong time--during the Great Recession.

Where is the Democratic Tea Party? You might as well ask where are the Republicans fighting for immigrant amnesty. Or the Jewish Nazi Party. Or the black KKK.

Anabelle said...

>where are the Republicans fighting for immigrant amnesty

http://www.ontheissues.org/2016/John_Kasich_Immigration.htm

W was able to keep the party vaguely united because the Demcrats were not willing to be the party of low spending. There were a lot of republicans who didn't like all the spending.

Anabelle said...

As the Democrats are so fond of boasting we are currently at the top of the longest recovery ever. Even at slow velocity of money we should have fully recovered demand. By Keynesian standards we should be saving up for the next depression.

Duncan Cairncross said...

Hi Anabelle

"Even at slow velocity of money we should have fully recovered demand. By Keynesian standards we should be saving up for the next depression."

Why do you think so?
If you look at growth since the Bush disaster we are still well below where we should be
If we do fall into a recession it won't be because of a "boom" overshooting!
But just a continuation of the Bush demand limited recession

David Brin said...

Stunning drivel. Endless insipid and deeply stupid drivel. Dig this. Focus. The GOP owned Congress from 1995 to 2007. TWELVE years! During that time they pushed forward nothing on the teaparty agenda. Not... one... thing. They did nothing except push bills to favor oligarchy and make worse both the deficit and wealth disparity. But there were two phases. During `1995 to 2001 we entered a period of vanishing deficits and even surpluses. From 2001 to 2007 we saw spectacular explosions of red ink.

What were the differences between those two periods? The biggest one... like a light switch ... was the vanishing of Bill Clinton's veto pen, allowing the Bush tax cuts for the rich to plunge ahead without any plan to pay for them. Clinton's end also led then Bush's off the books orgy of death and theft in Iraq, plus Medicare Part D, an entirely GOP entitlement and the ONLY entitlement ever passed without arranging a cent of income to pay for it.

1995-2001 president clinton with a GOP Congress -- surpluses.

2001-2007 president bush with a GOP Congress -- nuclear melt-down levels of red ink.

And $$##@ hypocrite-dunce teaparty fools have the nerve to lecture us... to lecture us (!!!)... that they are prudent while democrats are spendthrift?

You are monsters who have not only betrayed science and reason and enlightenment and prudence and courtesy and our country and our children and the planet and our future... you also are utter traitors to sensible conservatism, having taken that proud component of our national conversation and turned into yeehaw confed lunacy.

When I was a kid, Republicans used to brag that they had higher average education levels than democrats. Now, despite the DP representing the poor and immigrants, you no longer hear this. Because even with the averages skewed by the poor and immigrants, dems score on average much higher, because Fox etc have driven off all the scientists, teachers, doctors and every other knowledge profession. The GOP has plummeted into a party of proud know-nothings, eagerly obedient to their feudal lords.

And hell yes. I am still a registered Republican. Keeping that average score up almost by my lonesome! And I am gonna have to decide soon who to ... urgh... gurgle... vote for.

Tony Fisk said...

The Empire State Building was bathed in bloody light to commemorate Trump's Primary win.
What was with that? Was the idea to have a faint whitewash for Kasich? Icky Cthulhu green for Cruz, maybe?

Good luck with the voting, David. Get yourself some industrial strength nose plugs.
At least 'Harold Saxon' won't be on the ballot.

Jumper said...

Is betteridge's law of headlines correct?
http://calmerthanyouare.org/2015/03/19/betteridges-law.html

LarryHart said...

Anabelle:

W was able to keep the party vaguely united because the Demcrats were not willing to be the party of low spending. There were a lot of republicans who didn't like all the spending.


They didn't stop doing it though. Or make a big stink about the deficit until a Democrat took office, at which point, the deficit was suddenly an emergency.

Remember, the United States went from being the worlds biggest creditor nation to the world's biggest debtor nation under Reagan. But somehow, "deficits" and "Obama" have become synonymous.


As the Democrats are so fond of boasting we are currently at the top of the longest recovery ever. Even at slow velocity of money we should have fully recovered demand. By Keynesian standards we should be saving up for the next depression.


The billionaires are. No one else has any spare cash.

Anabelle said...

>The biggest one... like a light switch

And the dot com crash. And the war on terror.

Tim H. said...

Anabelle, the GOP looks from here like it could use some time out of power to regroup and rethink, lest in it's complacency it becomes too ridiculous to be electable, even by dittoheads. Besides, some of the possible "Stuff" that's liable to encounter the rotary air circulator in the near future, wouldn't you really rather spare team GOP from those uncomfortably hot potatoes?

Robert said...

Wait. Anabelle. You're complaining about the dot.com crash.

You are complaining about unregulated private industry running to excess and overheating the government, resulting in an economic correction (recession).

And it was Bush, a Republican, who STARTED the whole "War on Terror" shtick.

In short, you are arguing against Republicans!

Mind you, I'm a social libertarian so I'm against Republicans as well, but that's not what you're arguing for. You are so against Clinton you are complaining about one thing that happened under the REpublicans... and your second argument is anti-business - Republicans would be pointing at you and screaming like the pod people in the less-well-made Invasion of the Body Snatchers movie from the 70s.

Rob H.

Robert said...

Overheating the economy. *sigh* Shows me not to have had my third cup of coffee before posting...

Rob H.

Creigh Gordon said...

"how about we start by returning to the tax structures that brought us surpluses in the late 1990s"

The surpluses of the 90s meant that the Federal government taxed more dollars (out of the private sector) than it spent (into the private sector). In other words, during the period that Clinton ran surpluses, the Federal Government drew about a half a trillion dollars out of private sector savings. What I'm wondering is why would drawing down private sector savings by running Government surpluses be expected to help our current economic situation?

Robert said...

Here's the thing.

When the majority of net profits are taxed, then companies seek to reduce their tax footprint by investing in the company. Thus you see businesses buying new equipment, buying new vehicles, and doing other investments that improve the overall value and health of the company.

When net profits go down, investors want more money which is not taxed and companies allow equipment to age, maintenance goes up, people are let go to compensate for higher management, and executives are given lavish bonuses for cutting costs which in the end results in no net gain of profit.

You need a reason for public companies to invest in themselves.

Rob H.

David Brin said...

Creigh thanks for illustrating the power of Heritage Foundation narratives. When a democrat runs a deficit, deficits matter! When Reagan started the modern flood of red ink and Bushes accelerated it: "Deficits don't matter."

When a democrat runs a surplus, even in a dotcom bubble, and uses it to pay down debt... horrors! It's pulling money out of private enterprise!!!!!!! Even though that is malarkey, since the govt pulling out of the bond market eases access of businesses to credit, duh?

And buying down debt in good times - which is what every economist including Keynsians recommend and what Clinton and Jerry Brown have done and NOT ONE republican has done - is exactly how to prepare for the next round of bad times.

Face it. All you have is incantations that sound "truthy" to you, sir. Name for us - right now - one predication made by Supply Side (voodoo) "economics" that has ever come true. Even once. At all. Ever. (See what's happening in Kansas, as we speak.) Scientists see evidence as a reason to change their theories.

Which is why Fox & pals wage war on science.

Jumper said...

Sounds like Annabel has danced into the corner of "we need to raise some taxes." I agree. The demolishing of the capital gains tax on inheritances is insanity. So is carried interest, and the ceiling on long term capital gains. General corporate taxes are a mess, and need straightening out before anyone can decide what to do about them, and with the middle class slipping down as are the poor, they need no tax increase. If some of the people are in a depression, and the others are booming, tax each group accordingly.
p.s. Since the U.S. tax to GDP ratio is not extreme, I don't give a hoot about it.

LarryHart said...

Anabelle:

>The biggest one... like a light switch

And the dot com crash. And the war on terror.


Isn't the war on terror--or any war--reason to raise taxes? Or at the very least, reason not to cut taxes?

Under GOP control of three branches of government, they ran up the national credit card. As soon as Democrats came into office, the argument became "Those democrats want to pay the bills we already rang up! We can't have that!"

LarryHart said...

Robert:

Mind you, I'm a social libertarian so I'm against Republicans as well, but that's not what you're arguing for. You are so against Clinton you are complaining about one thing that happened under the REpublicans..


@Anabelle, you've just caused the #1 Clinton hater on this list to call you on Clinton hate.

Interesting times. :)

LarryHart said...

Creigh Gordon:

In other words, during the period that Clinton ran surpluses, the Federal Government drew about a half a trillion dollars out of private sector savings. What I'm wondering is why would drawing down private sector savings by running Government surpluses be expected to help our current economic situation?


It wouldn't. If taxes are raised during a recession, that money should be immediately spent, if nothing else, on needed infrastructure maintenance. The idea is to get some high velocity money circulating, thereby increasing demand.

If taxes are not raised, then the deficit has to be increased for the same purpose.

The late 1990s was an entirely different situation, where the slowing down of money velocity was desirable.

Humorously enough, I just recently saw an old Disney film that came out in 1968, called "The One and Only Genuine Original Family Band". It takes place during the 1888 election between then-President Grover Cleveland (Democrat) and Benjamin Harrison (Republican). The Republican argument against Cleveland was that he was running too much of a surplus and (paraphrasing) that that money belonged to the people, not to the government. In some ways, both sides were consistent with their modern-day equivalents, but it was funny to hear the arguments over a surplus rather than a deficit.

LarryHart said...

Robert:

Wait. Anabelle. You're complaining about the dot.com crash.

You are complaining about unregulated private industry running to excess and overheating the government, resulting in an economic correction (recession).


Ok, since today is Opposite Day, I will now translate for Anabelle.

She's not complaining about the dot com crash or the war on terror. She's asserting that those are mitigating factors as to why Republicans ran deficits at that particular time.

Of course, I myself argue that the Great Recession is a reason for President Obama to run deficits at the particular time that the Tea Party began screeching about it, so...you know...

LarryHart said...

Dr Brin said to Creigh Gordon:

Face it. All you have is incantations that sound "truthy" to you, sir.


???

I thought Creigh was on our side. Did I read something wrong, or didn't he pose a rhetorical question meant to highlight the folly of complaining about deficits during a recession?

David Brin said...

LarryHart: “Isn't the war on terror--or any war--reason to raise taxes?”

The War on Terror is the only time in US history that the aristocracy refused to even help pay for a war or crisis, in which other peoples’ sons would have to fight. Not all rich people are so vile. I promote fair capitalism! But the GOP donor caste are.

“I thought Creigh was on our side.” I dislike having a “side”… though that’s what it boils down to, I guess. How I wish “tea Partiers could meet the Founders, who seized and redistributed about a third of the land in the former colonies, after rebelling against oligarchy. It is the confederates who rebelled in FAVOR of oligarchy.
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LarryHart said...

Dr Brin:

“I thought Creigh was on our side.” I dislike having a “side”


Ok, then, I thought he was taking the same position that you are.

You responded as if he had said "The government shouldn't take money from the private sector", whereas I thought he was saying "Anabelle says the government should run a surplus, but I don't see how that helps during a recession."


How I wish “tea Partiers could meet the Founders, who seized and redistributed about a third of the land in the former colonies, after rebelling against oligarchy. It is the confederates who rebelled in FAVOR of oligarchy.


You don't have to convince me that the name "Tea Party" is unintentionally ironic in so many ways. The real 1774 tea partiers were protesting the fact that a big corporation (the East India Tea Company) received an unfair tax break that was not given to small operations. The modern-day Tea Partiers rant in favor of tax breaks for big corporations. And that's just the start.

Alfred Differ said...

@LarryHart: (From last thread:) As I understand it, inflation is about the value of the currency we use in exchanges. One used to be able to buy bubblegum from a machine for a penny. Now it takes 25 of them. The wage increases we associate with inflation are responses to price increases and they are not guaranteed. Inflation eats into wealth AND income if wage increase (COLA’s) does not happen reliably, but only for exchanges denominated in the inflating currency. The richest among us can hedge against inflation in ways the poorest cannot, so any planned inflationary path should be treated as the outrage it is.

What it boils down to is the richest among us effectively own the process that determines the value of the currency. As long as we tolerate a monopoly that issues currency, the process used by the monopolists becomes a target for politics and the poorest among us are at a disadvantage. That is how the process becomes owned.

@David: I’ve long felt that Hayek’s Nobel speech could be better written if it was translated by a skilled author who wanted to reach people with a Smith-ian message. Hayek usual wrote for academics, so it is an understatement to say his material is obscure. I think the Nobel speech and his 1945 essay regarding the use of knowledge in society are the two top candidates for best bang for the buck. I know you need a kiln (we all do), but those are the ones I think are most supportive of Adam Smith’s broader goals.

I don’t know if you’ve ready Russ Roberts’ book, but it is quick if you are tempted. It is also worth it. I finished it about a month ago. Be aware it focuses on the Moral Sentiments book, so it provides context for The Wealth of Nations.

Alfred Differ said...

@donzelion: Looming death gets many male mammals to think about reproduction. I got a quick lesson in this when I was hospitalized 30 months ago when my inner running dialog took an interesting turn. Heh. 8)

The Ptolemaic model is a wonderful bit of fudge work where they force a fit. It is a wonderful example of how to do science and NOT to do science. Studying it is well worth the effort if one intends to write theories because one can see both the power and inherent limitations in the science enterprise. James Burke used a different story involving continental drift in the last episode of The Day The Universe Changed, but the lesson is the same. The model we assume determines how we think and the questions we ask. A Ptolemaic model is vulnerable if one takes too many measurements, so the early adopters didn’t. Tycho Brahe did, though. In Kepler’s hands the modern and historical planetary information demonstrated the fudging going on.

Good theory construction is both an exercise in ego and humility. I wish more people were less sold on certain economic theories, but I’m all for them helping people. Where humility comes into play is in recognizing the possibility that the help we offer might actually harm. It is worth some effort to learn if this is true. Take minimum wage increases as an example. Many people clearly intend to help minimum wage earners. Will they succeed? Different models say different things and not all of us are guilty of rationalizing our methods through model cherry-picking.

Alfred Differ said...

@Paul451: I’m with you on the need to push back on capitalists who accumulate wealth and then use it to become feudalists. It IS the common failure mode, but it is not an ensured failure mode. Only some of the people who accumulate wealth choose to do that.

I’m not sure I’ve ever referred to anything as ‘natural’ behavior for any person or group, though. Have I? Arguing something is ‘natural’ suggests one knows the thing well enough to model it accurately. I’m doubtful I know governments, unions, and other institutions well enough to know what is natural for them. What I DO know is how some of them have behaved when I’ve been involved. First hand experiences are a form of evidence and useful for eliminating certain models, but they aren’t enough to make valid universal statements. On top of this, I’m not sure the notion of ‘natural’ makes a lot of sense. Real communities tend to be diverse, so the behaviors of one might not appear in another. With such a weak foundation, I’m uninclined to connect ‘natural’ and ‘moral’.

When I object to the ‘necessary pressure’ you would apply to ‘capitalism’ (Who exactly are you pressing against?) it is because what I think you are doing lacks at least one of the two conditions I demand for my support. Show me that the immoral behavior exists and that you have the consensus to treat it as immoral behavior. If your support is weak, I won’t necessarily try to block YOU from acting, but I will get upset if you try to use the power of government to enforce YOUR moral views. Push all you want, but don’t use the government until you can demonstrate both points.

You do mean "me" (yourself). You define your position, your morality, as the default, requiring little support for it as long there isn't a unified 90% opposition. While a position you don't like requires unified 90% support.

You define your own beliefs as more than nine-times more important than anyone else's.


I insert myself in the phrasing because I am the only person I can speak about with any authority. I shall not claim that YOU should support a 90% consensus position. I say only that I shall and that I’ll respect your choices if you do the same. You are completely whacko arguing that I place my beliefs above others in any kind of proportion. What I DO is defend my beliefs and state clearly the conditions under which I will surrender. If you believe a certain behavior is immoral and can demonstrate a 70% consensus, I’ll defend my position and argue against you having the government enforce your position. If your consensus climbs above 90%, I’ll surrender. All along the way I’ll consider the possibility that I’m wrong and you are right, but past 90% I’ll surrender the moral argument. I’ll let you define moral law and enforce it through government action. I might even switch my vote at that point, though it would be entirely unnecessary.

My views do not require a consensus. They are mine as yours are yours. Where I demand a consensus is when one of us wants to enforce those views through government. That’s all.

locumranch said...



Those of you who argue in favour of "the need to push back on capitalists who accumulate wealth (property; capital) and then use it (rent collection from property & wealth) to become feudalists" demonstrate an amazing amount of hypocritical double-think, especially when we analogize the same argument to intellectual property ownership & copyright.

As noted by Rob_H above, "You need a reason for public companies to invest in themselves" & for private monies to invest in a greater public, that reason being self-enrichment, rent collection & profit taking, the problem being that you cannot eliminate the feudal impulse toward self-enrichment & rent collection without eliminating the beneficial/stimulating aspects of the Capitalism itself.

Prior to the general acceptance of private wealth accumulation & intellectual copyright, we all know what happened to private & public reinvestment rates: They approached nil, zip & zero as every would-be wealth creator hoarded & hid every potential sense & cent in the hopes of eventual self-profit (as in the secretive history of the obstetrical forceps).

Yet, the very same intellectual feudalists (who seek to self-righteously strip evil capitalists of the feudal 'rent-taking' impulse) use copyright law to justify an eternity of self-enrichment & 'rent-taking', as evidenced by the published author who seeks ROYALTIES (aka 'Rent') from the near identical act of capital introduction into the public domain.

Since those who depend on 'Royalties' are (by definition) Feudalists, the time has come for all of those hypocrites to admit & acknowledge their capitalist complicity.



Best

Alfred Differ said...

I just tried an unintended word association game with some of the Marines I know. I mentioned David's "General Gambit" notion with a white knight emerging from the GOP convention that wasn't one of their three remaining candidates. I barely got the description out of my mouth before they had all settled on Mattis. One went so far as to point out that he thought every Marine would vote for him. Another quibbled and said there might be a few who wouldn't, but I think the number she had in mind could be counted on the fingers of a few people.

I'm not advocating for him since I don't have a clue about him, but I'm going to rethink the gambit idea.

Carl M. said...

Methinks the people who run the CATO Institute might be surprised to learn that they are "wholly owned" by the Koch brothers.

As for the Libertarian Party, do you have any evidence? The Kochs were heavily involved back in the 1970s, yes. David was the VP candidate, after all.

So whom do you think the Kochs are "secretely" backing? Austin Peterson? John McAfee? Enquiring minds want to know.

---
And a bit of Nazi propaganda from the Koch controlled CATO Institute -- from a year ago. And today, the government has yielded to Koch demands. Bwahahahaha! http://www.cato.org/publications/commentary/put-harriet-tubman-20-bill

Alfred Differ said...

@locumranch: The feudal impulse isn’t about self-enrichment, rent collecting, and profit taking. You too are guilty of mixing capitalism and feudalism. What the feudalists do is #$@% with the rule system that determines what coercive authorities DO in such a way that they are favored in a market in which they participate. EVERYONE in a market seeks self-enrichment and takes rents and profits where they can. The feudalists tweak the market rules so government actions favor their personal actions in a market. When they do it right, their babies benefit.

The rest of your argument falls apart once the initial error is corrected. David isn’t being hypocritical. Your confusion is the result of confusing two distinct concepts.

Paul451 said...

Alfred,
Re: Mattis.

Apparently the idea has been floated recently, including by Bill Kristol, that Mattis run as a third party candidate. In response to that idea, Mattis has ruled out "running for President", but that doesn't exclude him reluctantly accepting the offer at a brokered Republican Con.

"I'm with you on the need to push back on capitalists who accumulate wealth and then use it to become feudalists."

Not really. You argue against every such measure, because "we can't know", "you're assuming the model", etc etc.

For eg,

"Who exactly are you pressing against?"

Against the tendency for wealth to concentrate. I said it repeatedly. You turn it into a personal and moral judgement.

For eg,

"Show me that the immoral behavior exists"

I never called it "immoral behaviour". It's you who always try to twist the argument into one of morality, in which your view is the higher morality.

For eg,

"If your consensus climbs above 90%, I'll surrender."

Because you consider your beliefs at least 9 times superior to anyone else. Hence the double standard you proffer.

Paul451 said...

Aside:

"If your consensus climbs above 90%, I'll surrender."

Actually you won't. You've already created your "out". Any decision by a clear consensus is just "Keynesians" being fed their "addiction". Therefore you can dismiss any consensus and continue to favour your own beliefs over the vast majority of your neighbours.

David Brin said...

"Because you consider your beliefs at least 9 times superior to anyone else. Hence the double standard you proffer."

Paul I believe that is unfair. He is merely balancing the normal human "I'm sure I am right!" versus the later, more scientific "I might be wrong." Also balancing between normal righteousness and normal willingness to bow to the wishes of your tribe.

Play these off each other and it is only natural to have a weighting factor that says you'll not knuckle under to a 51% majority opinion! In fact, there are times with 99% is not enough! e.g. me versus Star Wars!

===

L says some wise things, e.g. “ Prior to the general acceptance of private wealth accumulation & intellectual copyright, we all know what happened to private & public reinvestment rates: They approached nil, zip & zero as every would-be wealth creator hoarded & hid every potential sense & cent in the hopes of eventual self-profit (as in the secretive history of the obstetrical forceps).”

Then, alas, as usual, he leaps to strawman others and cast an absurd zero sum dichotomy: “ Yet, the very same intellectual feudalists (who seek to self-righteously strip evil capitalists of the feudal 'rent-taking' impulse) use copyright law to justify an eternity of self-enrichment & 'rent-taking', as evidenced by the published author who seeks ROYALTIES (aka 'Rent') from the near identical act of capital introduction into the public domain.”

Absolute and complete bull. My royalties are earned over a limited period, as a lure to get me to share my genuine creativity. What Adam Smith derided as rent-seeking is the use of rules that are biased in favor of elites, by elites to forge systems that will transfer wealth to them endlessly without their having to provide any value in creativity, management, investment or risk.

Moreover. As in most things in life, it is not a dichotomy on-off switch. By making passive investment slightly less remunerative than active investment, via tax policy, one can sway the incentives and make the latter more common. e.g. with R&D and depreciation deductions.

The most telling thing is that those billionaires who have developed goods and services are fine with regulations the disincentive rent-seeking and political warping and cheating. It is the parasites and extractors of resources royalty-free from public lands who are vigorous donors to the GOP.

Duncan Cairncross said...

So Alfred - as you do not believe anybody should take any action and you do believe that a vast majority is required to take action you are effectively stopping people who can see the obvious that "the natural failure mode" needs to be addressed BECAUSE it's the "natural failure mode"

You need to re-read Piketty - we used to think there was an inbuilt mechanism that limited capital accumulation
One of the most important things that Piketty found was that there isn't one!!

David Brin said...

The prediction biz just gets better. In EARTH I foresaw a “Swiss Navy” might enforce the rights of a Sea State - flotillas of ships bearing displaced populations. In EXISTENCE the wealthiest bought rights to distant reefs and island nations drowning under rising oceans, in order to perch new “seastead” enclaves upon them, according to plans hatched in the Alps. Now see how Swiss submarine-maker Migaloo is offering a 100,000 sq.ft yacht-island that would be at home in either near-future… a custom-built multistory mega-yacht that comes complete with a penthouse, submarine bays, a beach club, and a shark elevator.

http://www.popsci.com/an-island-fit-for-bond-villain

And yes, I portrayed Chinese forces contesting over these reefs. (Calling that Prediction wiki, Tony!)

Only… wait a minute. “Swiss submarine-maker”? In real life? Wow, man.

Donald Gisselbeck said...

Any chance we can stop saying "1%" or "fuedalist" and call them the predator class?

donzelion said...

@Donald - the term "oligarch" is appropriate. A feudalist is a proper term for an oligarch who has structured the arrangements so as to pass on wealth across generations, regardless of the merit of the children.

Not all are 'predators' - too many are lazy sloths squandering rents set up by their forebears, and any real predator eats what it kills, where that lot lives off carcasses others killed for them. (Lion prides aren't totally different - the alpha of the pride still has to fight off rival males, even if his harem brings home his supper.)

David Brin said...

Perhaps the term you seek is "parasites."

Donald Gisselbeck said...
This comment has been removed by the author.
Donald Gisselbeck said...

Sorry about the repeat. Mobile phone problems.

Donald Gisselbeck said...

The problem with "parasite" is that it is too passive. "Predator" has more force. It implies people actively stealing other people's livelyhoods. I'm also thinking that it is time the rest of us used the oligarch's language tactics against them, e. g. "Death taxes" refering to the legitimate right of the people's government to limit dynasties and ensure that people work for a living.

donzelion said...

@Locum - "you cannot eliminate the feudal impulse toward self-enrichment & rent collection without eliminating the beneficial/stimulating aspects of the Capitalism itself."

No need to eliminate the feudal impulse - just to refrain from incentivizing it. When ordinary income tax goes to 39%, but rental income taxes (collected through capital gains and dividends) are taxed at 20%, you've greatly increased the value of rents (and vehicles for rent transmission) over other income sources. Simply eliminate that subsidy, and then, rent seekers will have significantly less motive for their preferred tactics.

Of course, reducing the tax subsidy doesn't eliminate rent-seeking. It's always easier to collect rents than to build productive enterprises, so idiots and fools will still fixate upon the types of conduct that enable wealthy to extract money from the poor.

locumranch said...


When David cites "those billionaires who have developed goods and services (that) are fine with regulations (and) disincentive rent-seeking and political warping and cheating", I have no idea to whom he may be referring, as many of those 'Good Billionaires' like Microsoft's Gates & Apple's Jobs demonstrate such egregiously predatory rent-seeking "user agreement" behaviours (so to make endless ownership claims on those licensed products which they have already sold) as to run afoul a multitude of EU & international anti-trust laws, Lord forbid that any us dare to alter or modify any of those Apple & Microsoft products that we already own outright.

Again, too many of you praise 'Capitalism' while denying its defining nature which requires 'Private Ownership', defines (Intellectual; Proprietary; Monetary) Investments as 'Capital' and allows for 'Rent-Seeking', 'Profit-Taking' & ongoing Ownership/Control of all-of-the-above, while simultaneously defending your aristocratic (?) right to inheritance & ROYALTY collection.

Yes, indeed.

In the attempt to consolidate & protect their wealth & power 'ownership', some would-be feudal oligarchs do attempt to 'cheat the system' by gifting their wealth & power to undeserving offspring (gasp!), yet (most often) such 'cheating' is quite lawful under capitalism and those pretentious 'yous' who would attempt to forbid these 'gifts' (inheritances) operate under the implied assumption that that which is 'privately owned & controlled' cannot be privately owned or controlled.

Like most of you, all of my labours have been geared to supporting, feeding, educating & enriching MY children (so they may 'Be fruitful and multiply'), and who the Hell are you to tell me (or any random feudal oligarch) differently?

Molon labe, sucker. Molon labe.


Best

David Brin said...

Mah massa is jes 'supporting, feeding, educating & enriching' HIS chillum.... jes like I is supporting, feeding, educating & enriching MY chillun!

Sure, Marse Rupert is cheatin'! Sure he takin' more n' more n' makin' sure no one can compete with him! who the Hell are you to tell me (or any random feudal oligarch) differently?

STOP tellin' me to look at 6000 years! I won't. An' you can't make me!

Alfred Differ said...

@Paul451: You describe WHAT you are pressing against, but avoid describing WHO. Wealth concentration is a serious problem if we are playing a zero-sum game and many feudalists try to rig the rules such that we are. If we are playing a positive-sum game, then wealth concentration isn’t such a serious problem. I focus on WHO because that way we can decide whether to lynch the wealthy or the people who are fixing the rules of the game. They might be the same people, of course, but I’d rather see it demonstrated than assume it before I act to strip someone of their property.

If you aren’t able to demonstrate that a behavior is immoral, I’m very unlikely to support coercive action against the people doing it. Government efforts to prevent wealth concentration are coercive. I do not believe we should do that to each other except to correct immoral behaviors.

Regarding the proportion you continue to argue exists between my beliefs and others, you are off in wacky land. I use a 90%/80% split to create hysteresis and avoid dramatic rule changes regarding what is and isn’t moral behavior. I have actually been tested in this way. I live in California and in 2008 our people decided to strip the liberty of same-sex couples to marry using a simple majority vote. I’m quite opposed to this denial of equality and fought it. However, I could see a large consensus opinion that involved an alliance of people who opposed same-sex marriage and people who preferred it be segregated as a different type of marriage. That consensus used to be well over 90%, so I surrendered when it came to the political fight. In 2008, though, it seemed to have fallen to something near my hysteresis cut-off. I began to argue against Prop 8 on those grounds. I targeted people who wanted segregation by pointing out that we had already tried separate-but-equal in other social arenas and proven that it wasn’t… equal. I asked them if they REALLY wanted to try this experiment again with the obvious implication of failure left hanging most of the time. When the votes were tallied in 2008 I was embarrassed to be a Californian, but retreated to a position that involved suggestions for civil disobedience. My friends and I were ignored at best and court cases were arranged. Nowadays that alliance is well below the 80% (as far as I can tell), so I cheerfully argue for getting government out of the business of giving a damn about any of this.

Regarding my outs, I WILL surrender, but I might choose not to drink the koolaide. What I’ll do is let you all be without becoming what I am not. I do something similar in faith discussions. I’m certainly an atheist, but most people aren’t and I won’t rub their noses in what I regard to be silly nonsense at best. Such nose rubbing involves a behavior I happen to consider to be immoral.

David Brin said...

onward

onward

Alfred Differ said...

@Duncan: You are putting words in my mouth. Please allow me, this once, an edit to your words that would make them fit what I’m describing.

as you do not believe anybody should take any action and you do believe that a vast majority is required to take action you are effectively stopping people who can see the obvious that "the natural failure mode" needs to be addressed BECAUSE it's the "natural failure mode"

becomes

as you DO tolerate people taking personal (non-coercive) action at any time; and you DO believe that a vast majority is required to support coercive, governmental action regarding moral law; you are suggesting people (who think they can see the obvious "natural failure mode") address it first by personal action BECAUSE it's the "natural failure mode" and shift to coercive, government action when a large consensus regarding the immoral behavior exists.

I know this isn’t what you believe I think. My hope is that using something close to your wording helps you see what is going on inside my head. Try it on (like a shirt) for a time. You will find it scratchy and annoying, no doubt. If so, you’ll know you’ve got it right. I find it annoying too, but it helps me cope with annoying neighbors.

LarryHart said...

Alfred Differ:

If we are playing a positive-sum game, then wealth concentration isn’t such a serious problem.


Again, the devil is in the details.

Ayn Rand insists that (for example) Hank Rearden deserves his wealth becuase he earned it by fair exchange with the product of his genius. The world gets Rearden Metal, and Hank gets lots of money. Neither owes anyone anything else.

But she also seems to assert that others owe Rearden for any benefit that Rearden Metal brings to their lives. To phrase it simplistically, if I am $1000 happier because Rearden Metal make my life better, then I owe $1000 to Rearden. After all, I didn't do anything to earn the benefit--it accrued to me because of Hank Rearden. So what right do I have to any benefit?

This is the essence of zero-sum thinking--any benefit that grows from Rearden's creation belongs to him alone. If anyone else undeservingly derives benefit to their lives that "trickles down" from the existence of Rearden metal, those people owe the equivalent in money to Hank Rearden.

This turns on its ear the notion that "A rising tide raises all boats." Instead, we get the perversion that the tide is the private property of individuals, and the owners of the boats owe rent to the owners of the tide.



LarryHart said...

Oops...didn't see the "onward" until I had posted.

So yeah, onward!

onward!

Creigh Gordon said...

Larry Hart, late reply here but yes, I'm saying that when the Government levies taxes, they are taking money out of people's savings. There is simply no other place for the money to come from. When the Government runs a surplus, it is taking more dollars out of savings than it injects into private savings through Government spending. People wind up with fewer dollars in savings. All this is just a point of accounting neccesity.

But certainly, deficits and surpluses have consequences. Government spending adds to aggregate demand, taxation removes money (and demand) from the private sector and therefore reduces aggregate demand. This is Keynesianism. Deficit/surplus just alters the balance between those things.

The objective for economic policy-makers needs to be full employment and stable inflation. If that can be achieved with a balanced budget, fine. If it can be achieved with a deficit or surplus, that's fine too. Budget balance in and of itself is a red herring.

Supply side economics is really about distribution, not deficits or surpluses. It's about stimulating production through tax breaks and removing regulatory barriers. It fails because without sufficient demand, attempts to stimulate production are just pushing on a string.

bigsteve said...

Hearing about Adam Smith and his"The Wealth of Nations" for years I finally bought a copy in 2008 and started reading it. It was an eye opener. I started to read books on economics and investing since I wanted to know why we had that crack up called the Great Recession. Knowledge is power. I realized that the GOP was not really conservative by historic standards and it's policies were not really based on capitalism as Adam Smith understood it. I realize we are drifting towards Feudalism. My ancestors came here fleeing that. I do not think their descendants will meekly submit to that now. These things tend to get settled by ballots or bullets. Lets hope that we again can use ballots.

I also subscribe to the Big Picture blog. A few days ago a graph was published on it. It shows real income inflation adjusted over the last 50 years for the different income percent brackets. Except for the upper 10% and most of that gain went to the 1% all income groups have less income now than 50 years ago.
That explains Trump and Sanders. The 1% rhetoric is not hype. I think many other people are also figuring it out.
We are at the beginnings of social unrest if the ruling class does not finally address the concerns of the majority of us.

cosmicaug said...

From the Evonomics article:
«There is no need for labor unions to offset the power of business, as John Kenneth Galbraith had claimed in his concept of “countervailing power”; unions will only keep wages too high by interfering with the Invisible Hand.»

Why is it assumed that unions are not part of a "natural order of things" within which the Invisible Hand acts? If viewed in this way, trying to eliminate unions becomes an interference with the Invisible Hand.