Author Topic: Political Economics  (Read 614886 times)

ccp

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Re: Political Economics
« Reply #1700 on: August 18, 2017, 06:40:58 PM »
I have no problem with enacting Zuckerberg's idea to push for a mandatory salary for all Americans replaced by robots

My difference from him - is he is not going to get away with me paying for this - he is going to pay for it!

F Z!

G M

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Re: Political Economics, Scandinavian Envy, Fantasy
« Reply #1701 on: September 18, 2017, 12:06:26 PM »
https://www.washingtonpost.com/news/wonk/wp/2015/11/03/why-denmark-isnt-the-utopian-fantasy-bernie-sanders-describes/?utm_term=.934c441c28cd

Why Denmark isn’t the utopian fantasy Bernie Sanders describes
By Ana Swanson November 3, 2015
 
Miss Denmark Mette Riis Sorensen visits a shopping mall in Tokyo on Oct. 23. (Toru Yamanaka/AFP/Getty Images)
There's one country that keeps popping up in the debate among the Democratic candidates for president. It's not China, or Russia, or Iran. It's a little country of 5.6 million people that — beyond a vague image of tall, blond, egalitarian people who like pickled fish and minimalist design — few Americans probably know much about.

Denmark, and to a lesser extent the other Nordic countries, are surfacing in the Democratic debates as examples of relatively equal societies that provide generous benefits for their citizens, including affordable education, health care for all, and subsidized child care. This is mostly due to Bernie Sanders, who likes to use Denmark to explain his vision of democratic socialism. "I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people," Sanders said in the first Democratic debate on Oct. 13. ("But we are not Denmark. I love Denmark. We are the United States of America," Hillary Clinton responded.)

 Play Video 1:32
Clinton: 'It’s our job to rein in the excesses of capitalism'
 
0:00

Democratic presidential candidate Hillary Clinton responds to opponent Bernie Sanders's suggestion that the United States can learn from countries like Denmark. (CNN)
Sanders joins a long tradition of liberal politicians around the world who laud Denmark, Sweden and Norway (and sometimes Finland and Iceland, which aren't technically part of Scandinavia) for their equality and prosperity. These northern European countries enjoy a reputation for being peaceful, egalitarian, progressive, liberal and educated, and having excellent furniture and crime novels, too. For whatever reason, Scandinavia countries just seem to do it better — an idea that supporters and critics label "Nordic exceptionalism."

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 Michael Booth, photo courtesy of author. Michael Booth, photo courtesy of author.
But how much truth is there in the popular idea of Nordic exceptionalism? Michael Booth, a British journalist, examines this question in detail in a recent book, "The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia." Booth, a U.K. native who has lived in Scandinavia for over a decade, plays the part of a cultural interpreter, examining, poking and prodding the reality of life in Nordic countries from every angle. Booth finds plenty to question in the rest of the world's assumptions about the Nordic miracle, but also lots that we can learn from them.


You say that many people around the world believe in Nordic exceptionalism without knowing very much at all about Nordic life. They can more easily picture the lives of some remote Amazonian tribe than the typical Swede or Dane. Why is it that the Nordic model has attracted so many fans, but relatively few visitors?

Denmark is a pretty good place to live but it is by no stretch of the imagination the utopia many in politics and the media in the U.S. claim it to be.

We all like to have a "happy place" — somewhere over the rainbow where we imagine life to be perfect - don’t we? For many, that place used to be the Mediterranean: we all dreamed of a stone house among the vines. After the economic crash, I think a lot of people started to look towards Scandinavia for what they believed to be a less rampantly capitalistic form of society.

The difference is, few actually actively seek to move to Scandinavia, for obvious reasons: the weather is appalling, the taxes are the highest in the world, the cost of living is similarly ridiculous, the languages are impenetrable, the food is (still) awful for the most part and, increasingly, these countries are making it very clear they would prefer foreigners to stay away.


What are some of the biggest misconceptions that you find in how the rest of the world understands the Nordic countries?

Again, I think we've all been guilty of projecting some kind of utopian fantasy on them. The Nordic countries are, for example, depicted as paragons of political correctness, yet you still see racial stereotypes in the media here — the kind of thing which would be unthinkable in the U.S. Meanwhile, though it is true that these are the most gender-equal societies in the world, they also record the highest rates of violence towards women — only part of which can be explained by high levels of reporting of crime.

Denmark, meanwhile, promotes itself as a "green pioneer" and finger wags at the world about CO2 emissions, and yet it regularly beats the U.S. and virtually every other country on earth in terms of its per capita ecological footprint. For all their wind turbines, the Danes still burn a lot of coal and drive a lot of cars, their country is home to the world’s largest shipping company (Mærsk), and the region’s largest air hub.


Sweden is supposedly "neutral" (it’s not, and has not been for decades), yet since the days when it sold iron ore to Hitler, its economy has always benefited from its arms industry, which is one of the world’s largest.

The Norwegians have fallen prey to precisely the same kind of problems as other oil-rich states: their economy depends far too much on one industry (oil), they’ve taken their foot off the gas in terms of their work ethic, and now all young Norwegians want to do is be "something in the media" or open a cupcake place.

[The surprisingly fiery debate over whether Denmark is heaven on earth]

Politicians in the U.S. like Bernie Sanders praise Denmark for its relative income equality, its free universities, parental leave, subsidized childcare, and national health system. That all sounds pretty good, right?

It is fantastic in theory, except that, in Denmark, the quality of the free education and health care is substandard: They are way down on the PISA [Programme for International Student Assessment] educational rankings, have the lowest life expectancy in the region, and the highest rates of death from cancer. And there is broad consensus that the economic model of a public sector and welfare state on this scale is unsustainable. The Danes’ dirty secret is that its public sector has been propped up by — now dwindling — oil revenues. In Norway’s case, of course, it’s no secret.


You describe the Danes as having a strong sense of work-life balance – specifically, being much more focused on life than work. What are the positives and negatives of that attitude?

Positives: Danes spend more time with their families. Negatives: Danes spend more times with their families. Plus, they have run up huge private debt levels, and no one answers the phone on a Friday afternoon.

Danes are also experiencing a rising debt level, and a lower proportion of people working. Are these worrying signs for its economy or the country’s model?

Yes, many economists have specifically warned of the Danes’ private debt levels. Perhaps more seriously, productivity has been somewhat stagnant and there is a dire skills shortage.

 Participants of the World Congress of Santa Clauses 2015 take part in the annual swim at Bellevue beach, north of Copenhagen, Denmark, July 21, 2015. REUTERS/Scanpix Denmark/Erik Refner The World Congress of Santa Clauses 2015 take their annual swim north of Copenhagen, Denmark. REUTERS/Scanpix Denmark/Erik Refner
One thing that’s often glossed over among outsiders is the extraordinarily high tax level, which is high for the middle class as well as the wealthy. Do Danes think that they get their money’s worth in social services? Do you?

Denmark has the highest direct and indirect taxes in the world, and you don’t need to be a high earner to make it into the top tax bracket of 56% (to which you must add 25% value-added tax, the highest energy taxes in the world, car import duty of 180%, and so on). How the money is spent is kept deliberately opaque by the authorities. Danes do tend to feel that they get value for money, but we should not overlook the fact that the majority of Danes either work for, or receive benefits from, the welfare state.

Greater numbers of immigrants have been leading to rising xenophobia in some Nordic countries, as well as higher income inequality. Do you think these trends say anything about the strength of the Nordic model?

All of Europe is dealing with this issue, but of course smaller populations feel more threatened, and cynical right wing politicians (if you’ll forgive the tautology) take advantage of that fear. Also, there is no "Nordic model" when it comes to immigration and integration: there is the Swedish model (open door) and the Danish model (close the door and put up a "Go Away" sign), which the Norwegians and Finns are copying.

Denmark has won almost every happiness survey since 1973, but you describe them in the book as a “frosty, solemn bunch” who take a lot of anti-depressants. Do they really deserve to be consistently ranked as the world’s happiest country?

No, it’s a nonsense and, in fact, they have dropped from the top spot in recent surveys, mostly because they are not as rich as they once were. The sad take-away from that is, money does, in fact, make you happy. I don’t think they ever were the "happiest" people in the world, but you could argue they have been the most "satisfied." They are good at appreciating the small things in life and making the most of what they have — a legacy, I think, of experiencing the rough hand of geopolitics in the 18th and 19th centuries.

You emphasize, in the end, that there is a lot that we can learn from the Nordic countries. What is one of the best lessons?

At least aim for economic and gender equality. Everyone benefits, so it’s worth a shot, no?






Why Denmark isn’t the utopian fantasy Bernie Sanders describes
By Ana Swanson November 3, 2015
 
Miss Denmark Mette Riis Sorensen visits a shopping mall in Tokyo on Oct. 23. (Toru Yamanaka/AFP/Getty Images)
There's one country that keeps popping up in the debate among the Democratic candidates for president. It's not China, or Russia, or Iran. It's a little country of 5.6 million people that — beyond a vague image of tall, blond, egalitarian people who like pickled fish and minimalist design — few Americans probably know much about.

Denmark, and to a lesser extent the other Nordic countries, are surfacing in the Democratic debates as examples of relatively equal societies that provide generous benefits for their citizens, including affordable education, health care for all, and subsidized child care. This is mostly due to Bernie Sanders, who likes to use Denmark to explain his vision of democratic socialism. "I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people," Sanders said in the first Democratic debate on Oct. 13. ("But we are not Denmark. I love Denmark. We are the United States of America," Hillary Clinton responded.)

 Play Video 1:32
Clinton: 'It’s our job to rein in the excesses of capitalism'
 
0:00

Democratic presidential candidate Hillary Clinton responds to opponent Bernie Sanders's suggestion that the United States can learn from countries like Denmark. (CNN)
Sanders joins a long tradition of liberal politicians around the world who laud Denmark, Sweden and Norway (and sometimes Finland and Iceland, which aren't technically part of Scandinavia) for their equality and prosperity. These northern European countries enjoy a reputation for being peaceful, egalitarian, progressive, liberal and educated, and having excellent furniture and crime novels, too. For whatever reason, Scandinavia countries just seem to do it better — an idea that supporters and critics label "Nordic exceptionalism."

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Breaking news about economic and business issues.
Sign up
 Michael Booth, photo courtesy of author. Michael Booth, photo courtesy of author.
But how much truth is there in the popular idea of Nordic exceptionalism? Michael Booth, a British journalist, examines this question in detail in a recent book, "The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia." Booth, a U.K. native who has lived in Scandinavia for over a decade, plays the part of a cultural interpreter, examining, poking and prodding the reality of life in Nordic countries from every angle. Booth finds plenty to question in the rest of the world's assumptions about the Nordic miracle, but also lots that we can learn from them.


You say that many people around the world believe in Nordic exceptionalism without knowing very much at all about Nordic life. They can more easily picture the lives of some remote Amazonian tribe than the typical Swede or Dane. Why is it that the Nordic model has attracted so many fans, but relatively few visitors?

Denmark is a pretty good place to live but it is by no stretch of the imagination the utopia many in politics and the media in the U.S. claim it to be.

We all like to have a "happy place" — somewhere over the rainbow where we imagine life to be perfect - don’t we? For many, that place used to be the Mediterranean: we all dreamed of a stone house among the vines. After the economic crash, I think a lot of people started to look towards Scandinavia for what they believed to be a less rampantly capitalistic form of society.

The difference is, few actually actively seek to move to Scandinavia, for obvious reasons: the weather is appalling, the taxes are the highest in the world, the cost of living is similarly ridiculous, the languages are impenetrable, the food is (still) awful for the most part and, increasingly, these countries are making it very clear they would prefer foreigners to stay away.


What are some of the biggest misconceptions that you find in how the rest of the world understands the Nordic countries?

Again, I think we've all been guilty of projecting some kind of utopian fantasy on them. The Nordic countries are, for example, depicted as paragons of political correctness, yet you still see racial stereotypes in the media here — the kind of thing which would be unthinkable in the U.S. Meanwhile, though it is true that these are the most gender-equal societies in the world, they also record the highest rates of violence towards women — only part of which can be explained by high levels of reporting of crime.

Denmark, meanwhile, promotes itself as a "green pioneer" and finger wags at the world about CO2 emissions, and yet it regularly beats the U.S. and virtually every other country on earth in terms of its per capita ecological footprint. For all their wind turbines, the Danes still burn a lot of coal and drive a lot of cars, their country is home to the world’s largest shipping company (Mærsk), and the region’s largest air hub.


Sweden is supposedly "neutral" (it’s not, and has not been for decades), yet since the days when it sold iron ore to Hitler, its economy has always benefited from its arms industry, which is one of the world’s largest.

The Norwegians have fallen prey to precisely the same kind of problems as other oil-rich states: their economy depends far too much on one industry (oil), they’ve taken their foot off the gas in terms of their work ethic, and now all young Norwegians want to do is be "something in the media" or open a cupcake place.

[The surprisingly fiery debate over whether Denmark is heaven on earth]

Politicians in the U.S. like Bernie Sanders praise Denmark for its relative income equality, its free universities, parental leave, subsidized childcare, and national health system. That all sounds pretty good, right?

It is fantastic in theory, except that, in Denmark, the quality of the free education and health care is substandard: They are way down on the PISA [Programme for International Student Assessment] educational rankings, have the lowest life expectancy in the region, and the highest rates of death from cancer. And there is broad consensus that the economic model of a public sector and welfare state on this scale is unsustainable. The Danes’ dirty secret is that its public sector has been propped up by — now dwindling — oil revenues. In Norway’s case, of course, it’s no secret.


You describe the Danes as having a strong sense of work-life balance – specifically, being much more focused on life than work. What are the positives and negatives of that attitude?

Positives: Danes spend more time with their families. Negatives: Danes spend more times with their families. Plus, they have run up huge private debt levels, and no one answers the phone on a Friday afternoon.

Danes are also experiencing a rising debt level, and a lower proportion of people working. Are these worrying signs for its economy or the country’s model?

Yes, many economists have specifically warned of the Danes’ private debt levels. Perhaps more seriously, productivity has been somewhat stagnant and there is a dire skills shortage.

 Participants of the World Congress of Santa Clauses 2015 take part in the annual swim at Bellevue beach, north of Copenhagen, Denmark, July 21, 2015. REUTERS/Scanpix Denmark/Erik Refner The World Congress of Santa Clauses 2015 take their annual swim north of Copenhagen, Denmark. REUTERS/Scanpix Denmark/Erik Refner
One thing that’s often glossed over among outsiders is the extraordinarily high tax level, which is high for the middle class as well as the wealthy. Do Danes think that they get their money’s worth in social services? Do you?

Denmark has the highest direct and indirect taxes in the world, and you don’t need to be a high earner to make it into the top tax bracket of 56% (to which you must add 25% value-added tax, the highest energy taxes in the world, car import duty of 180%, and so on). How the money is spent is kept deliberately opaque by the authorities. Danes do tend to feel that they get value for money, but we should not overlook the fact that the majority of Danes either work for, or receive benefits from, the welfare state.

Greater numbers of immigrants have been leading to rising xenophobia in some Nordic countries, as well as higher income inequality. Do you think these trends say anything about the strength of the Nordic model?

All of Europe is dealing with this issue, but of course smaller populations feel more threatened, and cynical right wing politicians (if you’ll forgive the tautology) take advantage of that fear. Also, there is no "Nordic model" when it comes to immigration and integration: there is the Swedish model (open door) and the Danish model (close the door and put up a "Go Away" sign), which the Norwegians and Finns are copying.

Denmark has won almost every happiness survey since 1973, but you describe them in the book as a “frosty, solemn bunch” who take a lot of anti-depressants. Do they really deserve to be consistently ranked as the world’s happiest country?

No, it’s a nonsense and, in fact, they have dropped from the top spot in recent surveys, mostly because they are not as rich as they once were. The sad take-away from that is, money does, in fact, make you happy. I don’t think they ever were the "happiest" people in the world, but you could argue they have been the most "satisfied." They are good at appreciating the small things in life and making the most of what they have — a legacy, I think, of experiencing the rough hand of geopolitics in the 18th and 19th centuries.

You emphasize, in the end, that there is a lot that we can learn from the Nordic countries. What is one of the best lessons?

At least aim for economic and gender equality. Everyone benefits, so it’s worth a shot, no?
Denmark Isn't MagicWhy Denmark isn’t the utopian fantasy Bernie Sanders describes
By Ana Swanson November 3, 2015
 
Miss Denmark Mette Riis Sorensen visits a shopping mall in Tokyo on Oct. 23. (Toru Yamanaka/AFP/Getty Images)
There's one country that keeps popping up in the debate among the Democratic candidates for president. It's not China, or Russia, or Iran. It's a little country of 5.6 million people that — beyond a vague image of tall, blond, egalitarian people who like pickled fish and minimalist design — few Americans probably know much about.

Denmark, and to a lesser extent the other Nordic countries, are surfacing in the Democratic debates as examples of relatively equal societies that provide generous benefits for their citizens, including affordable education, health care for all, and subsidized child care. This is mostly due to Bernie Sanders, who likes to use Denmark to explain his vision of democratic socialism. "I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people," Sanders said in the first Democratic debate on Oct. 13. ("But we are not Denmark. I love Denmark. We are the United States of America," Hillary Clinton responded.)

 Play Video 1:32
Clinton: 'It’s our job to rein in the excesses of capitalism'
 
0:00

Democratic presidential candidate Hillary Clinton responds to opponent Bernie Sanders's suggestion that the United States can learn from countries like Denmark. (CNN)
Sanders joins a long tradition of liberal politicians around the world who laud Denmark, Sweden and Norway (and sometimes Finland and Iceland, which aren't technically part of Scandinavia) for their equality and prosperity. These northern European countries enjoy a reputation for being peaceful, egalitarian, progressive, liberal and educated, and having excellent furniture and crime novels, too. For whatever reason, Scandinavia countries just seem to do it better — an idea that supporters and critics label "Nordic exceptionalism."

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Breaking news about economic and business issues.
Sign up
 Michael Booth, photo courtesy of author. Michael Booth, photo courtesy of author.
But how much truth is there in the popular idea of Nordic exceptionalism? Michael Booth, a British journalist, examines this question in detail in a recent book, "The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia." Booth, a U.K. native who has lived in Scandinavia for over a decade, plays the part of a cultural interpreter, examining, poking and prodding the reality of life in Nordic countries from every angle. Booth finds plenty to question in the rest of the world's assumptions about the Nordic miracle, but also lots that we can learn from them.


You say that many people around the world believe in Nordic exceptionalism without knowing very much at all about Nordic life. They can more easily picture the lives of some remote Amazonian tribe than the typical Swede or Dane. Why is it that the Nordic model has attracted so many fans, but relatively few visitors?

Denmark is a pretty good place to live but it is by no stretch of the imagination the utopia many in politics and the media in the U.S. claim it to be.

We all like to have a "happy place" — somewhere over the rainbow where we imagine life to be perfect - don’t we? For many, that place used to be the Mediterranean: we all dreamed of a stone house among the vines. After the economic crash, I think a lot of people started to look towards Scandinavia for what they believed to be a less rampantly capitalistic form of society.

The difference is, few actually actively seek to move to Scandinavia, for obvious reasons: the weather is appalling, the taxes are the highest in the world, the cost of living is similarly ridiculous, the languages are impenetrable, the food is (still) awful for the most part and, increasingly, these countries are making it very clear they would prefer foreigners to stay away.


What are some of the biggest misconceptions that you find in how the rest of the world understands the Nordic countries?

Again, I think we've all been guilty of projecting some kind of utopian fantasy on them. The Nordic countries are, for example, depicted as paragons of political correctness, yet you still see racial stereotypes in the media here — the kind of thing which would be unthinkable in the U.S. Meanwhile, though it is true that these are the most gender-equal societies in the world, they also record the highest rates of violence towards women — only part of which can be explained by high levels of reporting of crime.

Denmark, meanwhile, promotes itself as a "green pioneer" and finger wags at the world about CO2 emissions, and yet it regularly beats the U.S. and virtually every other country on earth in terms of its per capita ecological footprint. For all their wind turbines, the Danes still burn a lot of coal and drive a lot of cars, their country is home to the world’s largest shipping company (Mærsk), and the region’s largest air hub.


Sweden is supposedly "neutral" (it’s not, and has not been for decades), yet since the days when it sold iron ore to Hitler, its economy has always benefited from its arms industry, which is one of the world’s largest.

The Norwegians have fallen prey to precisely the same kind of problems as other oil-rich states: their economy depends far too much on one industry (oil), they’ve taken their foot off the gas in terms of their work ethic, and now all young Norwegians want to do is be "something in the media" or open a cupcake place.

[The surprisingly fiery debate over whether Denmark is heaven on earth]

Politicians in the U.S. like Bernie Sanders praise Denmark for its relative income equality, its free universities, parental leave, subsidized childcare, and national health system. That all sounds pretty good, right?

It is fantastic in theory, except that, in Denmark, the quality of the free education and health care is substandard: They are way down on the PISA [Programme for International Student Assessment] educational rankings, have the lowest life expectancy in the region, and the highest rates of death from cancer. And there is broad consensus that the economic model of a public sector and welfare state on this scale is unsustainable. The Danes’ dirty secret is that its public sector has been propped up by — now dwindling — oil revenues. In Norway’s case, of course, it’s no secret.


You describe the Danes as having a strong sense of work-life balance – specifically, being much more focused on life than work. What are the positives and negatives of that attitude?

Positives: Danes spend more time with their families. Negatives: Danes spend more times with their families. Plus, they have run up huge private debt levels, and no one answers the phone on a Friday afternoon.

Danes are also experiencing a rising debt level, and a lower proportion of people working. Are these worrying signs for its economy or the country’s model?

Yes, many economists have specifically warned of the Danes’ private debt levels. Perhaps more seriously, productivity has been somewhat stagnant and there is a dire skills shortage.

 Participants of the World Congress of Santa Clauses 2015 take part in the annual swim at Bellevue beach, north of Copenhagen, Denmark, July 21, 2015. REUTERS/Scanpix Denmark/Erik Refner The World Congress of Santa Clauses 2015 take their annual swim north of Copenhagen, Denmark. REUTERS/Scanpix Denmark/Erik Refner
One thing that’s often glossed over among outsiders is the extraordinarily high tax level, which is high for the middle class as well as the wealthy. Do Danes think that they get their money’s worth in social services? Do you?

Denmark has the highest direct and indirect taxes in the world, and you don’t need to be a high earner to make it into the top tax bracket of 56% (to which you must add 25% value-added tax, the highest energy taxes in the world, car import duty of 180%, and so on). How the money is spent is kept deliberately opaque by the authorities. Danes do tend to feel that they get value for money, but we should not overlook the fact that the majority of Danes either work for, or receive benefits from, the welfare state.

Greater numbers of immigrants have been leading to rising xenophobia in some Nordic countries, as well as higher income inequality. Do you think these trends say anything about the strength of the Nordic model?

All of Europe is dealing with this issue, but of course smaller populations feel more threatened, and cynical right wing politicians (if you’ll forgive the tautology) take advantage of that fear. Also, there is no "Nordic model" when it comes to immigration and integration: there is the Swedish model (open door) and the Danish model (close the door and put up a "Go Away" sign), which the Norwegians and Finns are copying.

Denmark has won almost every happiness survey since 1973, but you describe them in the book as a “frosty, solemn bunch” who take a lot of anti-depressants. Do they really deserve to be consistently ranked as the world’s happiest country?

No, it’s a nonsense and, in fact, they have dropped from the top spot in recent surveys, mostly because they are not as rich as they once were. The sad take-away from that is, money does, in fact, make you happy. I don’t think they ever were the "happiest" people in the world, but you could argue they have been the most "satisfied." They are good at appreciating the small things in life and making the most of what they have — a legacy, I think, of experiencing the rough hand of geopolitics in the 18th and 19th centuries.

You emphasize, in the end, that there is a lot that we can learn from the Nordic countries. What is one of the best lessons?

At least aim for economic and gender equality. Everyone benefits, so it’s worth a shot, no?
New research suggests that the American dream isn’t alive in Scandinavia

Despite liberal arguments that Denmark is so much better than the U.S. at social mobility, its poor kids are no more likely to go to college.
http://www.theatlantic.com/business/archive/2016/08/the-american-dream-isnt-alive-in-denmark/494141/

Danish-Americans have a measured living standard about 55 percent higher than the Danes in Denmark. Swedish-Americans have a living standard 53 percent higher than the Swedes, and Finnish-Americans have a living standard 59 percent higher than those back in Finland.
https://www.bloomberg.com/view/articles/2016-08-16/denmark-s-nice-yes-but-danes-live-better-in-u-s

this Danish Dream is a “Scandinavian Fantasy,” according to a new paper by Rasmus Landersø at the Rockwool Foundation Research Unit in Copenhagen and James J. Heckman at the University of Chicago. Low-income Danish kids are not much more likely to earn a middle-class wage than their American counterparts. What’s more, the children of non-college graduates in Denmark are about as unlikely to attend college as their American counterparts.
http://www.nber.org/papers/w22465
http://www.nber.org/papers/w22465.pdf

DougMacG

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Scandinavian envy (Sweden, Denmark)
« Reply #1702 on: September 18, 2017, 02:36:05 PM »
Between 1950 and 2000, despite a population increase from 7 million to 9 million, Sweden’s net job creation in the private sector was close to zero.  Social democracy running wild...
http://dailysignal.com/2015/08/06/why-scandinavia-is-unexceptional/

In truth, the Swedish economy's best years are long gone. Between 1870 and 1950, average growth in Swedish GDP and productivity was, by some measures, the fastest in the world. In 1970 Sweden was the fourth-richest member of the OECD club of industrial countries. But for most of the past 50 years the story has been one of relative decline, including a deep recession in the early 1990s (see chart 1). By 1998 Sweden had fallen to 16th in the OECD rankings. It has since climbed back a bit, but the relatively strong growth of the past decade should be seen mainly as a rebound from the 1990s trough.
http://www.economist.com/node/7880173


Danish-Americans have a measured living standard about 55 percent higher than the Danes in Denmark. Swedish-Americans have a living standard 53 percent higher than the Swedes.
Finnish-Americans have a living standard 59 percent higher than those back in Finland.
https://www.bloomberg.com/view/articles/2016-08-16/denmark-s-nice-yes-but-danes-live-better-in-u-s
Who knew?  (readers here)

For every thing we are doing wrong with our economy, they are doing 53-59% worse.

Why have poverty rates in Denmark doubled in the last 20 years from 3% to 6% and will this trend continue or be reversed?
https://www.quora.com/Why-have-poverty-rates-in-Denmark-doubled-in-the-last-20-years-from-3-to-6-and-will-this-trend-continue-or-be-reversed
http://money.cnn.com/2015/10/23/news/economy/denmark-inequality/
« Last Edit: September 18, 2017, 05:46:45 PM by Crafty_Dog »

DougMacG

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Re: Political Economics, 10 years of Plowhorse and we are still worse off!
« Reply #1703 on: October 09, 2017, 10:45:04 AM »
What say Wesbury to this?

80% of U.S. reported less income in 2016 survey than in 2007.

Net-worth midpoint is $42,400 below pre-crisis level.

(What is your net worth AFTER you subtract your share of the federal debt, and how has THAT changed?)

https://www.bloomberg.com//news/articles/2017-09-27/most-americans-still-worse-off-than-before-recession-fed-finds

Newly released income and wealth data from the Federal Reserve Board’s triennial Survey of Consumer Finances show that America’s richest families enjoyed gains in income and net worth over the last decade. Not part of the top 10 percent? Then your income probably fell.
------------------
Readers of this thread know:  For ten years we chased the policies of equality over growth.  While we destroyed growth and inequality widened.

Lessons learned:  NOTHING.

DougMacG

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Political Economics, Janet Yellen: This economy still sucks.
« Reply #1704 on: October 09, 2017, 10:50:14 AM »
“My colleagues and I may have misjudged the strength of the labor market,”
    - Janet Yellen  Sept 26, 2017
http://www.latimes.com/business/la-fi-yellen-in-ohio-20170926-story.html

So let's oppose all reforms that would energize growth and help labor...

DougMacG

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Nudge Economics? Don't Nudge Me There! James Taranto, WSJ
« Reply #1705 on: October 11, 2017, 11:54:27 AM »
From Crafty's post on the cyber war thread:
Cass Sunstein, (Marc:  shocked shocked shocked) who co-wrote a book titled “Nudge” with Thaler, which helped to popularize his ideas on behavioral economics, ...

Nudge economics is to blame for Obamacare's tax on the poor, the mandate penalty:  https://www.wsj.com/articles/obamacares-tax-on-the-poor-1506118414

Speaking of the memory hole and posted previously, a few years ago I sent a column idea on that book and topic to (friend of the forum?) James Taranto, then online editor of the WSJ opinion page.  He hit it out of the park and put yours truly in the credits.  )

https://www.wsj.com/articles/SB10001424127887324105204578382572446778866

Don't Nudge Me There
If government may dictate soda size, why not sexual behavior?
March 25, 2013
If you want to get published on the op-ed page of a major newspaper, a good way to go about it is to make a reasonable, or at least reasonable-sounding, case for an unpopular and outlandish position. It's important that the issue be trivial, so that readers will get riled up but no one will really feel offended or threatened.

Philosopher Sarah Conly, author of a new book called "Against Autonomy: Justifying Coercive Paternalism," has discovered the formula. In a New York Times op-ed titled "Three Cheers for the Nanny State," she defends Mayor Michael Bloomberg's almost universally ridiculed (and judicially enjoined) ban on large sodas and other sugary beverages.

Conly's argument doesn't seem unreasonable, though it is incoherent in places. In a parenthetical aside, for example, she mocks opponents for objecting over such a trivial matter: "Large cups of soda as symbols of human dignity? Really?" (Note to the editors: That "Really?" is lazy writing. Why not let a rhetorical question stand on its own? See what we mean?) But of course she wants us to take her defense of this silly policy as a serious philosophical argument.

Then there's this priceless passage: "Do we care so much about our health that we want to be forced to go to aerobics every day and give up all meat, sugar and salt? No. But in this case, it's some extra soda. Banning a law on the grounds that it might lead to worse laws would mean we could have no laws whatsoever."

Oddly, Conly bases her reductio ad absurdum on false empirical premises. The benefits and risks of exercise, and of particular forms of exercise, vary from individual to individual. And giving up all meat and salt, unlike sugar, is likely to harm your health.

The best part is that conclusion. Essentially she's saying that if you accept one slippery-slope argument, you have to accept all slippery-slope arguments. Therefore, slippery-slope arguments are unsound.

But wait, that's a slippery-slope argument! You've heard of the liar's paradox? Its simplest form is the statement "This statement is false." Conly's greatest contribution to philosophy may be the slippery-slope argument against slippery-slope arguments. Call it the slipper's paradox.

We're less impressed with Conly's argument in favor of the soda ban and measures like it. She rebuts John Stuart Mill, the 19th-century liberal philosopher who established the "harm principle"--the idea that coercion is generally justified only to prevent individuals from harming others. Mill also allowed that there were unusual cases in which government would be justified in restricting an individual's behavior for his own good--"when we are acting out of ignorance and doing something we'll pretty definitely regret." Since it's common knowledge that large quantities of refined sugar are bad for you, that wouldn't justify the soda ban.

Conly thinks Mill didn't go far enough in justifying coercion. Science has shown "that we often don't think very clearly when it comes to choosing the best means to attain our ends," she writes. "We make errors. . . . We are all prone to identifiable and predictable miscalculations." Thus we should surrender a measure of autonomy and yield to rules promulgated by experts, who presumably know what's good for us: "Giving up a little liberty is something we agree to when we agree to live in a democratic society that is governed by laws."

Again she brings up the slippery slope: "What people fear is that this is just the beginning: today it's soda, tomorrow it's the guy standing behind you making you eat your broccoli, floss your teeth, and watch 'PBS NewsHour' every day."

Crazy, right? Maybe not. Conly's op-ed never mentions smoking, but in a sympathetic review in the New York Review of Books, Cass Sunstein reports that in "Against Autonomy" she argues "that because the health risks of smoking are so serious, the government should ban it." (Sunstein, a legal scholar and former Obama administration official, is coauthor of the 2008 book "Nudge: Improving Decisions About Health, Wealth, and Happiness," which makes an argument similar to Conly's.)

What's interesting about the smoking-ban proposal is that while it is culturally radical, it is not philosophically radical. Is there any doubt that if cigarettes were a new invention, lawmakers would quickly ban them? Libertarians would object, on the same ground that they argue for the legalization of other drugs. But their point of view would command little public support, at least unless and until illicit cigarette smoking became as widespread as illicit marijuana use is today.

That is to say that a moderate form of Conly's philosophy has long prevailed, even in as freedom-loving a country as America. While we may bridle at being told we can't do something we are used to doing or didn't realize we weren't supposed to do, generally we don't do so as a matter of principle. (Libertarians, you're off the hook on that observation.) Generally speaking, Americans accept a wide variety of regulations on their personal behavior that are designed to be in their own good.

So what does Conly have to say that is original? Well, her book is called "Against Autonomy" and subtitled "Justifying Coercive Paternalism." That makes it sound as if she is advocating aggressive and thoroughgoing government intrusion into individual decision-making. Her positions on the soda ban and tobacco prohibition seem to bolster that. But those take her only slightly beyond the views that today prevail among the left-liberal elite.

Similarly, according to Sunstein, she endorses Bloomberg's ban on trans fats as well as "regulations designed to reduce portion sizes"--presumably of solid food as well as dissolved sugar. But in areas in which her philosophy would seem to conflict with prevailing left-liberal views, she's less adventurous than Bloomberg:

She is far more ambivalent about Mayor Bloomberg's effort to convince the US Department of Agriculture to authorize a ban on the use of food stamps to buy soda. She is not convinced that the health benefits would be significant, and she emphasizes that people really do enjoy drinking soda.
You'd think the logic of "coercive paternalism"--of government-imposed restrictions designed to promote individual welfare--would apply more strongly when individuals are dependent on government for financial support of their welfare. To put it another way, someone who is financially autonomous has a stronger argument that he ought to be personally autonomous. We're not sure what Conly thinks of that argument--the $95 cover price (0% off at Amazon) has nudged us away from acquiring her book--but we suspect she adheres less strongly to "coercive paternalism" than to the orthodoxies of contemporary left-liberalism.

An even better example is this observation from Sunstein's review: "Because hers is a paternalism of means rather than ends, she would not authorize government to stamp out sin (as, for example, by forbidding certain forms of sexual behavior)."

What a staggering cop-out. The past 50 years or so have seen a massive deregulation of personal behavior in the sexual sphere, a revolution of law, technology, custom and economics, all in the name of personal autonomy. Never mind "sin"--this has had bad consequences for public health (AIDS and other new sexually transmitted diseases), for children (far more of whom are born out of wedlock and reared without fathers), and even for the future of the welfare state (since declining fertility makes old-age entitlements unsustainable).

It may be that the sexual revolution is irreversible and the concomitant problems are intractable. If Conly lacks the imagination to come up with policy solutions, so do we. But if she dismisses this enormous question as a matter of "sin" and focuses instead on trivia like soda-size regulations, why should we take her philosophy seriously?

 James Taranto

DougMacG

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Re: Political Economics - unequal pay hypocrisy
« Reply #1706 on: October 19, 2017, 08:56:38 AM »
Does LeBron James’s concern about ‘equality’ extend to the 98.9% very unequal ‘gender pay gap’ for the WNBA vs. NBA?

http://www.aei.org/publication/does-lebron-jamess-concern-about-equality-extend-to-the-98-8-very-unequal-gender-pay-gap-for-the-wnba-vs-nba/

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Re: Political Economics
« Reply #1707 on: October 19, 2017, 10:44:38 AM »
Well, that's a wickedly made point  :-D :-D :-D

G M

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Re: Political Economics
« Reply #1708 on: October 19, 2017, 11:43:01 AM »
Well, that's a wickedly made point  :-D :-D :-D

I think some law that redistributes the money equally, so that every player gets exactly the same pay is required! EQUALITY!


I'm sure LeBron would be happy with that.

DougMacG

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Re: Political Economics
« Reply #1709 on: October 19, 2017, 12:11:33 PM »
quote author=G M

I think some law that redistributes the money equally, so that every player gets exactly the same pay is required! EQUALITY!
------------------

Yes and some people vote like that makes sense, need it pointed out that not all work has the same value, or even near the same value. 

Since equality runs against the natural state of things, it requires coercion.  Oppression and tyranny are features, not bugs, of a socialist system. 

The nice thing about discovering an economic ladder in a free society is that you can climb up it, not to LeBron's spot, but to your own potential.

Crafty_Dog

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Re: Political Economics
« Reply #1710 on: October 19, 2017, 12:53:42 PM »

"Since equality runs against the natural state of things, it requires coercion.  Oppression and tyranny are features, not bugs, of a socialist system."

ccp

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this industry is absolutely booming
« Reply #1711 on: October 24, 2017, 03:33:54 PM »
can anyone guess what I am referring to?

If only I could invest .  Legitimate yes, but also an element of being a racket: 

https://www.yahoo.com/entertainment/former-weinstein-production-assistant-shares-192736022.html

DougMacG

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Re: Political Economics, The Obama-continued GDP Gap => $20T Federal Debt
« Reply #1712 on: November 09, 2017, 03:45:52 PM »
While we were experimenting  with socialism and still have the Pelosi-Obama healthcare system and tax plan as the law of the land:

[Chart from Scott Grannis]

Economic decline and stagnation are policy mix choices.  So is growth.

Grannis says the 'gap' is $3T, meaning our economy is running 3 trillion/yr. behind where we would be if we simply continued to grow at the 1965-2007 average trend line of about 3.1%/year.  This is a human tragedy of governmental negligence.  We have foregone more than $20 Trillion (area under the curve, 2-3T X 9 years and counting) because of misdirected government policies of anti-growth.  That is roughly $100,000 per working person or an amount at least  EQUAL TO THE FEDERAL DEBT!

Oh well.  We were busy pursuing other things, gender diversity, gay marriage, pot, importing terror, soda containment law, medical device taxes, healthcare cadillac taxes, Obama phones, free sh*t, in a word...  fairness.

As Prof Krugman and leftists would have you believe, there is no room to grow the economy; this is the new normal.

Half right, under their policies, this IS the new normal.

Or as Collins, Murkowski and the R's seem to think,  let's do the same thing and expect a different result.
« Last Edit: November 11, 2017, 12:45:29 PM by DougMacG »

DougMacG

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Political Economics: Size of the ($15T) Gap equals roughly the Federal Debt
« Reply #1713 on: November 11, 2017, 12:50:58 PM »
I posted a version of my previous post on Scott Grannis' website as a question and he responded:

"My very rough calculation says the amount of "lost output" is somewhere in the neighborhood of $13-15 trillion. That's roughly the current size of the national debt, which is $14.8 trillion. (https://www.treasurydirect.gov/NP/debt/current)

Note: the $20.5 trillion [federal debt] figure is misleading, since it includes $5.7 trillion the government owes itself. $14.8 trillion is the total amount owed to the public, and that is the relevant measure of the national debt."
http://scottgrannis.blogspot.com/2017/10/key-charts-updated.html

That is still more than $100,000 of lost national income for every person who holds a private sector full time job in this country.
« Last Edit: November 11, 2017, 12:52:39 PM by DougMacG »

DougMacG

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Re: Political Economics
« Reply #1714 on: November 26, 2017, 04:58:15 AM »
Theresa May’s Warning for the Republican Party
If the main political task is divvying up an unchanging pie, the left will always win.
The Tories forgot how to talk about economic growth, its causes and benefits.
Wsj.com opinion

Crafty_Dog

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The Aramco IPO presents problems
« Reply #1715 on: November 26, 2017, 09:50:32 AM »
A New York IPO for Saudi Aramco Forces Americans to Collude with a Cartel
by Gal Luft
CNBC
November 17, 2017
http://www.meforum.org/7031/nyse-ipo-for-saudi-aramco-collusion-with-cartel

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Black jobless rate lowest ever recorded
« Reply #1717 on: January 07, 2018, 12:43:31 PM »

By
The Editorial Board











 
Jan. 5, 2018 7:09 p.m. ET

 201 COMMENTS   
















































































Friday’s Labor Department report on the December jobs market was mostly ho-hum, with the economy creating 148,000 net new jobs and the unemployment rate staying flat at a low 4.1%. But one more hopeful figure leapt out at us and a few others: The unemployment rate for black Americans fell to its lowest rate ever at 6.8%.


That’s right. The jobless rate for African-Americans hasn’t been lower since 1972, the earliest date we could find in the Bureau of Labor Statistics data tables. The jobless rate for blacks has always been substantially higher than for whites, and it tends to fall faster later in the economic cycle as growth picks up steam. The black jobless rate fell into the 7%-8% range in 1999-2000, before the dot-com bubble burst, and briefly in 2007 before the financial panic. But it climbed back to as high as 16.8% in 2010 before a long, slow decline as the economy recovered.

The rate has fallen especially fast the last couple of years, and in December fell another 0.4 percentage points. That big a fall might be a statistical anomaly that bounces back up in future months, but the downward trend is as clear as the political and economic message: Get the economy growing faster, and everyone will benefit.


Appeared in the January 6, 2018, print edition.

DougMacG

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Political Economics: America’s Booming Economy Will Smash Democrats in 2018
« Reply #1718 on: January 11, 2018, 10:24:08 AM »
"If the election were held today..."  (Democrats lead by double digits...)
   - I checked, and the election won't be held today!

"This hugely unpopular tax bill..."
   - The old 'polls make news' trick.  Tell us how bad it is and poll on that question.  See point one - the election won't be held today.  Unless Republicans are completely caught with foot in mouth and head up the other end, the election will be held after economic results start coming in on the effects of the Republican policies.  People vote their pocketbooks, we are told, and anyone with eyes and ears should know that one party brought you malaise and division and one party is bringing you growth and prosperity for anyone who cares to participate in it.

Growth and prosperity is good for blacks (see previous post), and for gays, for Hispanics, for women, single moms, for suburbanites, for workers, for wages and for neighborhoods.  At some point the proof in results has to have some effect on voters and voting groups, even those inclined to vote against us.  Taking growth from 2% to 4% is not a 2% improvement; it is a 100% increase in growth!

Here is Peter Ferrara predicting a booming economy.  Nice of him to express my view for me.  )  If the staticists are right and growth under these policies is the same as growth under anti-growth policies, I will (figuratively) eat crow.
-----------------------------
http://observer.com/2018/01/tax-reform-booming-economy-will-smash-democrats-in-2018-elections/

2018 is a midterm election year, and typically the party that holds the White House gets thrashed in the midterms. But just the opposite will happen this year for several reasons.

The first reason is that tax reform is going to work spectacularly with Trump’s deregulation to finally restore booming economic growth of four percent a year or more. Just like President John F. Kennedy’s tax cuts in the 1960s and President Ronald Reagan’s tax cuts in the 1980s, the critical tax rate cuts in the 2017 tax reform legislation will result in skyrocketing investment, flooding job creation, surging wages, swelling labor supply, rocking business expansion, rolling business creation and booming growth.

That will result in part because tax reform cuts taxes on the middle class and working people directly, which the Democrat-controlled media has strived mightily to keep secret. Even bigger for middle class and working people is the cut in the federal corporate rate from 35 to 21 percent.

Experience and the latest economic studies confirm that roughly 80 percent of corporate income taxes are actually paid by workers in the form of lost wages and jobs. http://www.goodmaninstitute.org/wp-content/uploads/2017/08/BA-120.pdf That’s because in today’s global economy, capital is freer than families are to move across international borders.

America’s formerly outdated corporate tax rates averaged nearly 40 percent, counting state corporate taxes—roughly double Asia’s 20.1 percent and Europe’s 18.9 percent. Other countries worldwide have been cutting their corporate tax rates for decades, creating this crippling tax disadvantage. Those countries responded to global competition and the latest economic studies showing that workers in modern economies actually bear most of the corporate and business tax burden.

America is falling behind the times, crippled by socialist media and misleading Democratic rhetoric.

This is why tax reform focused on cutting corporate and business taxes, bravely doing the right thing for working people and the middle class. Too many voters do not understand this because the Democrat-controlled media won’t tell them.

Besides the tax cuts, the boom will also result from the expensing of capital investment (immediate deduction, replacing depreciation over many years), territoriality in taxation of overseas investment, and repatriation (bringing back to America trillions held overseas by American companies). Investment will flow into America, just as it did under Kennedy and Reagan.

This economic boom will boost Republican candidates by November, all the more because not one Democrat voted for the tax reform. The boom will also rapidly nullify any increase in the deficit, with further help from spending restraint, further boosting Republicans.

Democrats will surely be hurt when voters realize that they and their media lied to them about tax reform. Blue collar workers and the middle class will see their taxes decline, and the fabrications about over 80 percent of the tax benefits going to the top 1 percent will be disrobed.

The realization that Democrats and their media were wrong about tax reform and Trump’s deregulation will spread across America. Voters will see that they don’t understand economics and consequently aren’t able to represent working people and the middle class, who want jobs and higher wages. For over 200 years, Americans have voted for economic growth, not the Democratic Party’s model of higher taxes and redistribution trying to buy votes.

The sharp contrast between Trump’s boom and Obama’s stagnation over the last decade will help Republicans and hurt Democrats. The economy never really recovered from the steep 2008-09 recession, even though the American historical record has been the steeper the recession the stronger the recovery. The Democratic record of less than two percent average real growth is the worst recovery from a recession since the Great Depression.

Trump’s energy deregulation will further boost the boom, as America takes its place as the world’s number one producer of oil, natural gas and coal. Democratic extremism over debunked and falsified global warming hysterics will further sink Democrats, while Republicans will ride even faster growth.

Democratic failure will affect even blue states, which will suffer continued stagnation as Democrats resist cutting radically high taxes. State tax revolts will further benefit brave and articulate Republicans, even in these places.


DougMacG

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Re: Political Economics, Trump got tired of winning
« Reply #1719 on: January 25, 2018, 02:17:21 AM »
http://m.startribune.com/trump-launches-his-long-promised-war-on-imports/470987913/?section=opinion

I take back whatever good I said about him or his policies. "Protectionism", we are back to why I opposed him in the first place.

DougMacG

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Political Economics - What 4% Growth would mean for America
« Reply #1720 on: January 29, 2018, 09:05:31 AM »
This article is from 2013.  The measure of the benefits would be even larger now.

http://www.bushcenter.org/publications/articles/2013/03/what-4-growth-would-mean-for-america.html

Growth Fact #1 of 10: If the economy grew at 4% per year, we would create 10 million additional jobs during the next decade, returning the economy to full employment through growth alone, with no rise in government spending.

Growth Fact #2 of 10: If the economy grew at 4% per year, the government would collect more than $3 trillion in additional revenue over the coming decade,[ii] matching the revenue that the Administration proposes to generate by raising income tax rates on the highest earners and allowing some business tax cuts to expire.

Growth Fact #3 of 10: If the economy grew at 4% per year, we would see a 30% reduction in the 10-year budget deficit — subtracting almost $3.2 trillion from the projected $10.9 trillion deficit[iii] and making our budget look less like Greece’s and more like Germany’s.

Growth Fact #4 of 10: If the economy grew at 4% per year, we would generate $260 billion in additional exports over the decade,[iv] creating over 1.5 million jobs.[v]

Growth Fact #5 of 10: If the economy grew at 4% per year, an additional 3,000,000 people would rise out of poverty over the next decade, reducing the burden on government safety nets by $200 billion.[vi]

Growth Fact #6 of 10: If the economy grew at 4% per year, there would be a 1.2 percentage point increase in the aggregate savings rate, making $300 billion available[vii] for investment in plant, equipment, and new technology, and laying the groundwork for future economic growth. This is roughly twice what the U.S. spends each year maintaining and expanding its roads.[viii]

Growth Fact #7 of 10: If the economy grew at 4% per year, there would be about 20,000 fewer robberies and 250,000 fewer instances of larceny during the next decade,[ix] resulting in safer communities and a better environment in which business can flourish.

Growth Fact #8 of 10: If the economy grew at 4% per year, charitable contributions would increase by $200 billion over the next decade, improving health care, the environment, and the arts, with $28 billion more in donations for education alone.


Growth Fact #9 of 10: If the economy grew at 4% per year, developing countries would see stronger growth as well, with increased tourism, imports, and foreign aid from America adding almost an entire percentage point to their annual average growth rates.[xi]

Growth Fact #10 of 10: If the economy grew at 4% per year, U.S. households would be able to buy an extra $8 trillion worth of goods and services in the next decade.[xii] This amounts to over $70,000 per household, or the equivalent of a year’s income for the median household.

See the footnotes documenting all this at the link!

DougMacG

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Political Economics - Wages are up!
« Reply #1721 on: January 29, 2018, 10:58:51 AM »
Who saw THIS coming?
https://www.reuters.com/article/us-usa-economy/u-s-job-growth-cools-as-labor-market-nears-full-employment-wages-up-idUSKBN1EU0EF
https://www.cnbc.com/2017/09/13/what-it-means-that-wages-are-up-and-americans-earn-more-than-ever.html
https://www.economist.com/news/united-states/21731332-weaker-dollar-and-energy-boom-are-pushing-up-pay-blue-collar-wages-are-surging-can-it
Mr Trump’s rise seems to have coincided with a turnaround in fortunes for the middle class. In 2015 median household income, adjusted for inflation, rose by 5.2%; in 2016 it was up by another 3.2%. During those two years, poorer households gained more, on average, than richer ones. The latest development—one that will be of particular interest to Mr Trump—is that blue-collar wages have begun to rocket. In the year to the third quarter, wage and salary growth for the likes of factory workers, builders and drivers easily outstripped that for professionals and managers. In some cases, blue-collar pay growth now exceeds 4% (see chart).
... the biggest beneficiary of a sustained wage boom for workers may be a suited man sitting in the Oval Office.
« Last Edit: January 29, 2018, 03:12:26 PM by DougMacG »

DougMacG

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Political Economics, GDP Growth rate of the Obama Presidency? 1.48%
« Reply #1722 on: January 30, 2018, 10:03:12 AM »
Logging some facts for our records.  This is the starting point to judge Trump's policies, tax cuts, etc.

1.48% Average growth rate for two full terms, 8 years
1.5%  Final year growth
Trump's first year:  2.3%, up 0.8 (more than 50% improvement)
If growth after tax cuts is 3% or more, that is a 100% improvement over Obama's final and average growth rates.
If Obama had 3% growth, we wouldn't have a Trump Presidency - or $20 trillion in debt.

"average annual growth rate of just 1.48% during Obama's business cycle the weakest of any expansion since at least 1949, he has just become the only President to have not had even one year of 3% GDP growth."
https://www.zerohedge.com/news/2017-01-27/barack-obama-now-only-president-history-never-have-year-3-gdp-growth



The numbers years by year, https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/
2009  -2.8%  (recession ended June 2009)
2010    2.5
2011    1.6
2012    2.2
2013    1.7
2014    2.6
2015    2.9
2016    1.5
If you remove the recession year, the average growth rate is only 2.1% over the last seven years, and that is after flooding the economy with "stimulus", "shovel ready jobs", "cash for cars", Solar Solyndra, $3.6 TRILLION in quantitative expansion, NEAR ZERO INTEREST RATES, and adding nearly $10 TRILLION to the national debt.
https://www.brookings.edu/blog/ben-bernanke/2017/01/26/shrinking-the-feds-balance-sheet/

Without the distortion of artificial stimuli, real economic growth under Obama was negative.
« Last Edit: January 30, 2018, 10:51:04 AM by DougMacG »

DougMacG

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Re: Political Economics - Wages are up!
« Reply #1723 on: January 30, 2018, 10:47:55 AM »
An article by people who actually understand the economy, Investors Business Daily:
https://www.investors.com/politics/editorials/wages-obama-economys-weakest-link-now-surging-under-trump/

A new survey out by the National Association of Business Economics finds that companies are starting to boost pay for their workers in order to attract and keep productive, skilled employees in a tighter labor market.
https://nabe.com/nabe/NABE/Surveys/Business_Conditions_Surveys/January_2018_Business_Conditions_Survey_Summary.aspx

Why are companies doing it? Not to be nice. No, the real reason is that, in what's expected to be a fast-growing economy, they want to retain their best workers.

But they're not only raising pay, they're also investing in their workers.

Both are great news for American workers, who will emerge from this expansion with higher pay, more skills and, hopefully, better job security than following the last two recessions.

Crafty_Dog

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Harvard Economist & Obama Chairman of Council of Economic Advisors
« Reply #1724 on: February 16, 2018, 02:15:47 AM »
As Boomers Go Gray, Even 2% Growth Will Be Hard to Sustain
Hoping for 3% or more is folly. The fundamentals—people and productivity—seem unlikely to provide it.
By Jason Furman
Feb. 14, 2018 6:58 p.m. ET
53 COMMENTS

Most of what was good in the American economy last year was unsustainable, and most of what was sustainable was not good. A decade after the financial crisis, there is still no sign the economy can generate the consistent growth of 3% a year many continue to hope for. The growth rate for 2017 was just 2.5%, and even that seems unlikely to last. Is this the new normal?

Not exactly. Instead it’s a return to the old normal, a reversion that was widely expected after baby boomers began to retire. While policy makers should do what they can to increase the economy’s long-run growth rate, they also need to avoid making decisions based on unrealistic expectations.
As Boomers Go Gray, Even 2% Growth Will Be Hard to Sustain
Photo: iStock/Getty Images

Economic growth comes from two sources. First is a cyclical rebound in demand as the economy gets closer to full capacity (or even proceeds beyond it). Second is an increase in the economy’s underlying potential output—also called the supply side—driven by growth in either the workforce or productivity.

The trouble is that more than half of last year’s economic growth came from the cyclical factors, which have little left to contribute given that we’re at or near full employment. What this means is that absent much bigger productivity improvements, it will be a challenge for the U.S. to achieve sustained economic growth of even 2%.

The stock market’s recent travails provide a vivid illustration of unsustainable growth. Last year the market went up 19%, which boosted consumer spending through a wealth effect. This surge in consumption probably accounted for about 0.75 percentage point of the growth in gross domestic product. For four straight years, consumer spending has risen faster than GDP, causing the personal-savings rate to drop to 2.4%—nearly the lowest on record.

Now a market correction has happened, and even with their recent rebound stocks are still 6% off their highs, as of close on Wednesday. Whatever may happen in the market, it’s sobering to listen to the people arguing that stocks are correctly valued. The theory that today’s high price/earnings ratios are justified—meaning it simply has become more expensive to buy a given return—implies lower earnings going forward. That, too, would undercut the consumption-fueled growth the U.S. has been enjoying, leaving households vulnerable after the past several years in which they took on increased debt and reduced their personal savings.

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Another unsustainable boost to the economy has been the falling dollar. Last year the dollar’s effective exchange rate—a measure that compares the dollar against a basket of currencies weighted by trade volume—fell 7%. Although the U.S. pursued a de facto strong-dollar policy through higher interest rates and larger budget deficits, this was more than offset by unexpectedly strong global growth. The weak dollar helped roughly stabilize the trade deficit, meaning net exports only subtracted 0.1 percentage point from GDP growth in 2017, compared with an average of 0.5 point a year from 2013-16.

The momentum in GDP growth could continue into 2018, especially given that tax cuts and the recent spending bill will provide about $250 billion in new demand-side fiscal stimulus this year. The unemployment rate, now 4.1%, could fall into the 3% range, a welcome development. Lagging benefits from the weakening of the dollar may arrive. Beyond 2018, however, these factors will begin to lose their force, especially since the Federal Reserve is sure to raise interest rates to offset any additional fiscal stimulus. More important, while predictions about markets are uncertain, it is a mathematical fact that the unemployment rate cannot indefinitely fall by 0.6 percentage point a year, as it did in 2017.

Growth will therefore have to come from the supply side. But a bigger workforce is an unlikely candidate. Assuming that current immigration rates continue and that employment rates by age are stable, the workforce will expand by 0.5 percentage point a year over the next decade. It is theoretically possible that people out of the workforce today could return. Betting on this, though, would be imprudent, given the steady decline in labor-force participation for men since the 1950s and for women since around 2000.

That leaves productivity growth, which is even less certain. The statistics usually reported exclude farms and the government, meaning they cover only a faster-growing subset of businesses. Instead let’s look at economywide productivity, which is what’s relevant for predicting overall economic growth. In 2017 economywide productivity increased 0.9%, slightly below its 1% annual pace over the past decade. If that average rate continues, overall economic growth in coming years will average only 1.5%. But maybe the productivity figure for 2007-17 is too pessimistic, reflecting a combination of fallout from the global financial crisis and bad luck. In that case we might look to the average economywide productivity growth of the past 50 years, 1.6%. That would push the baseline for overall growth to 2.1%.

Actual growth over the next five or 10 years could vary from this range of 1.5% to 2.1%, but there is little basis for a forecast that diverges significantly. As an analogy, imagine you’re asked to predict the high temperature in Boston on Christmas Day. You might say 43 degrees (the average over the past decade) or 40 degrees (the average over the past 50 years). It could well end up being 20 degrees or 60 degrees, but those would be foolish predictions.

Slower growth is less the fault of President Trump than of his generation. Mr. Trump, born in 1946, was in the first wave of boomers. Forty percent of the people born that year have left the workforce. This was predictable, which is why in 2005 the Social Security Trustees projected that the economy would grow 1.8% a year from 2020-30. If anything, additional data since then would lead us to revise that forecast down. Americans simply have forgotten this basic reality. To the degree that policy and business decisions are based on false hopes for much higher growth, the result can only be dashed expectations.

Mr. Furman, a professor of practice at the Harvard Kennedy School, was chairman of the White House Council of Economic Advisers, 2013-17.

Appeared in the February 15, 2018, print edition.

ccp

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Re: Political Economics
« Reply #1725 on: February 16, 2018, 07:47:20 AM »
"As Boomers Go Gray, Even 2% Growth Will Be Hard to Sustain"

And that is why we need to change SS.

We live longer can work longer
and less physical work.

Yet the politics are imposing
one party will bash the other if anyone dares to do this.

Only Trump's fearless big mouth can help us now.

But he is silent .  Maybe after 2018?..........

DougMacG

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Re: Harvard Economist & Obama Chairman of Council of Economic Advisors
« Reply #1726 on: February 16, 2018, 09:14:37 AM »
I saw that headline and glad Crafty posted the details.  A thought leader of the Left, this sums up the heart of the left economics view. It reminds me of Nobel prize winner Krugman saying the market will never recover from the Presidential election, right before it ran up like never before.  My belief is that the headline, "Hoping for [economic growth of] 3% or more is Folly", will come back to haunt them.  We will see!

They brought us the lowest male workforce participation rate in history and much of the country barely knows anyone who works full time in the private sector, yet Furman believes the economy is already running at full employment. (As ccp points out, a slight SS age change alone would affect that.)  Furman is admitting that if we had given the Obama-Left and their policies more time, the results would have gotten worse and worse.  While the old management goes back to teaching, believing there is no more upside potential, the US economy has re-opened under new management.

He makes valid points about headwinds and how hard it is to increase growth - without real changes in policies.  When his side governed, they implemented anti-growth policies, raised tax rates, increased government dependency by intention, reduced workforce participation, and put regulation ahead of enterprise.  They at least proved the other side of it, how hard it was to fully kill off growth and economic activity after 8-10 years of trying.

It is hard to increase growth, for one reason, because people are kind of set in their ways.  They are not always dynamic, not willing to move to where jobs are, not eager to re-join the workforce after they've left.  They don't need to.  But keep this math in mind: going from 2% growth to 3% growth is a 50% increase and going from 2% growth to 4% growth is a 100% increase.  That still far understates the potential it as it ignores what Einstein allegedly called the most powerful force in the universe, the power of compound [growth].

Furman writes:  "absent much bigger productivity improvements..", and after listing all the headwinds limiting growth, writes: "That leaves productivity growth..."    What he ignores is that increasing capital from improving capital investment incentives IS what increases productivity, and capital is coming back in the trillions.

An administration that chased away capital and considered ways to punish it for leaving can't imagine that we can do things better than what we do right now.

"Everything that can be invented has been invented."
Charles Duell, Commissioner of US patent office, 1899

That is not my view or a supply side, dynamic economy view.  Government doesn't invent things for the most part or find better ways to do things.  Just the other way around, oversized government serves as a hindrance to all of that.

Lowering tax rates for production (companies, rich people) doesn't sound like a formula for economic growth to the Left, for one reason, because economic growth wasn't their goal in the first place.  But adding trillions of dollars into invested capital is exactly what enables productivity growth.

Without capital you can dig a hole with your hands and get nowhere.  With a little capital you can hire workers and equip them with shovels.  Efficient capitalism is what makes possible a Caterpillar or Cummins turbo diesel machine that you won't see in third world countries. Egyptians built the pyramids without horses - or a wheel - but now every advancement has already been made?  That is as false now as it was in 1899, or 2000 BC.  Even if it was true, what we already have invented is most certainly not being fully utilized!   Bringing back trillions of dollars of capital employs trillions of dollars of labor, along with productivity and wage increases.  Wages can't and don't increase without capital investment and Furman's fingerprints are all over the effort to kill off and chase away capital.  New initiatives are bringing old capital back and new capital in.  With that comes wage growth, employment growth and a rising economic tide.

On the dependency side of the Obama stagnation, many people in lower incomes face effective marginal tax rates over 100%.  For example, I made a few hundred dollars more one year and lost thousands of dollars on my daughter's college tuition support.  People can make a little more and lose healthcare support, SSI, housing, food stamps, etc. right after government drove up costs to where they can't afford them without help.  It is hard to reverse the damage they did to our economy and economic system, but is it possible to recognize we headed into a hole of our own digging and change the trajectory ever so slightly.  That effort is underway.  Can we get some who ride the system to start pulling?  Yes.  Can we get those who are pulling the wagon to pull with a little better traction and little more horsepower, and keep improving that until the plowhorse is powered with jet fuel and the weight of $20 trillion in debt feels like a load of pillows?  I don't know  but we had better do everything we can, soon!

It  takes a small increment of improvement on the margin to double the growth rate that Furman and the Democrats achieved, and that is the difference between a Venezuela-like collapse and prosperity.
« Last Edit: February 16, 2018, 11:21:47 AM by DougMacG »

DougMacG

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Re: Political Economics
« Reply #1727 on: February 16, 2018, 11:27:16 AM »
Further on Furman, Krugman, Obama, et al:

Doesn't it seem that it's always the people who tie us up in asphyxiating over-taxation and strangling over-regulation that keep telling us our prosperity is limited by resources and demographics.

DougMacG

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Political Economics, Government causes inflation
« Reply #1728 on: March 06, 2018, 09:31:42 AM »
Not just the printing of money but by their interference in markets, take a look:



Notice in the chart below that it is the high-inflation items that are most influenced by government – things like health care and government-subsidized education. (If you think education is not influenced by the government, you are not paying attention.) The items that are not growing in price? Those are more purely market-driven.

http://www.mauldineconomics.com/frontlinethoughts/inflation-and-honest-data


Crafty_Dog

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Re: Political Economics
« Reply #1730 on: March 20, 2018, 06:38:30 AM »
Second particularly interesting post of the day:

Even thought the graphs won't print here, IMHO it is well worth the time:

==========================================================

    A new U.S. tax reform will boost the country's economy for years to come, especially as U.S. corporations are likely to repatriate many of the funds they hold overseas.
    As a result of demographic change in China, Beijing will shift from an export-led economic model to one more predicated on domestic consumption.
    The United States will be well-positioned to make the most of new opportunities in emerging trends, such artificial intelligence.

In December 2017, U.S. President Donald Trump signed into law his country's first major tax reform since the Reagan era. Sometimes new legislation is seismic in its effects, directly altering the playing field on which the citizens of the country operate. At other times, a new law can serve as a useful signpost for greater changes that are already underway. In this case, the tax reform represents a bit of both: It will have important ramifications itself, and it will inform the wider trends that occur over decades. From a geopolitical perspective, the move will have three main effects: It will lead to a repatriation of sizable amounts of cash by U.S. corporations, provide a stimulus for the domestic economy and increase the country's debt. The combined dynamics of these effects will play a key role in shaping the outlook for the U.S. economy – and its place in the world – for many years to come.

The Big Picture

As Stratfor said in the 2018 Annual Forecast, battles to dominate the global economy will be a key feature of the year. U.S. tax reform will tie the country's tech companies into the national economy and stimulate potential growth, just as technological developments present new opportunities in international markets. Global demand for the U.S. dollar will also mitigate risks related to increasing debt. And with the United States well-placed to take advantage of emerging artificial intelligence, the future looks bright for the country — particularly when compared to its peers.

See 2018 Annual Forecast

Melting the Cashbergs

Under the previous system, U.S. corporations had incentives to hold their spare cash offshore in tax havens. A high corporate tax rate, coupled with an absence of time limits as to when companies had to repatriate their foreign earnings for taxation purposes, resulted in firms accruing ever larger piles of cash in friendly offshore jurisdictions that were willing to offer favorable terms in exchange for hosting the American giants. The realities of the modern economy greatly impacted this trend. Technology firms whose value largely lies in intangible assets such as intellectual property (iPhone software, for example) found they could choose where they booked their profits because the product was not physical, making its location harder to pinpoint. Accordingly, they often opted to park their profits in tax-efficient locations. The upshot has been the emergence of giant "cashbergs" in offshore havens. One study found that 63 percent of U.S. offshore earnings were reported in six jurisdictions – the Netherlands, Bermuda, Luxembourg, Ireland, Singapore and Switzerland. The main beneficiaries of this trend have been companies that rely heavily on intellectual property, such as technology firms like Apple, with an offshore stash of an estimated $216 billion, and Microsoft at $109 billion.

A chart showing U.S. corporate wealth stored offshore.

The new system implemented after the December 2017 ruling was designed to close these loopholes. U.S. corporations will have to pay tax on foreign earnings as well as domestic revenues, and there are specific new provisions designed to eliminate "profit-shifting" or the retention of profits in more favorable jurisdictions. U.S. companies will thus no longer have the incentive to park their earnings offshore — meaning the cashbergs will likely soon start melting. To sweeten the deal, such firms are only required to pay a reduced tax on these repatriated earnings of between 8 and 15.5 percent (Apple will need to pay a one-off $38 billion bill), making the whole exercise relatively painless for all concerned — except for, naturally, the countries that have been playing host to these vast sums of money. Ultimately, the United States will soon have a tax system in which the financial activity of U.S. companies pads U.S. government revenues, which has not always been the case in the recent past.

U.S. companies will no longer have the incentive to park their earnings offshore, which means that the cashbergs will soon begin melting.

The second effect of the tax reform is the positive boost it will give to the domestic U.S. economy. Officials have cut the corporate tax rate from 35 to 21 percent in a move that has dual benefits. First, the United States will become much more competitive in relation to the outside world, potentially attracting more foreign companies to the country as a base for their operations due to the size of the domestic market of consumers. Second, U.S. companies themselves will immediately witness an improvement in their profit and loss columns as their tax bills decrease. U.S. firms could choose to use this windfall in various ways. The prevailing trend in recent years has been that companies have used any extra funds they have accrued (profits have generally been pretty healthy as of late) to buy back their own shares, driving up stock prices and keeping their shareholders happy. But companies could also put this money to work in other, more productive ways. If U.S. corporations were to see new potential in the U.S. economy or in new technologies, they could invest the money in modernizing their activities or in research and development, which could feed back into potential growth. Indeed, this may already be happening: In January, Apple pledged to invest an extra $30 billion in its U.S. operations as a result of the tax reform.

The End of the Party

So far so good, but as always, every positive comes with a corresponding negative – in this case, it's in the shape of the debt. By definition, a fiscal stimulus means a short-term reduction in government revenues (or increase in spending), which necessarily results in increased government borrowing. Moreover, the government's subsequent decision to raise spending on entitlements and defense in the latest budget has increased this effect. The overall result is that the previous targets to balance the budget have now been blown out of the water. Goldman Sachs forecasts a deficit of 5.2 percent of gross domestic product in 2019 and even more thereafter. This will play into the U.S. debt balance: the Congressional Budget Office estimates that the debt-to-GDP ratio is currently around 77 percent, and Goldman Sachs predicts that the figure will rise to 85 percent by 2021 based on the current trajectory. This is high by historical U.S. standards, but compared to some other advanced economies, it remains fairly modest.

The United States is not like other countries. Quite simply, the world's largest economy has an ace up its sleeve — and that just happens to be the U.S. dollar.

The danger with increasing debt is always that lenders begin to doubt debtors' ability to pay it back. This dwindling of faith makes debt holders' bonds less attractive, prompting investors to demand higher interest rates to cover the risk. This can lead to a vicious cycle as an already-indebted country witnesses its debt repayments increase just when it can least afford them. Many countries have succumbed to the resulting death spiral in the past, ultimately requiring a bailout from an external source such as the International Monetary Fund (which, incidentally, could not afford to bail out an economy the size of the United States). One could argue that this effect is already evident in the U.S. bond market. In recent months, interest rates on U.S. bonds have been rising for the first time in a decade (they jumped from 2 percent in September 2017 to nearly 3 percent in February) in tandem with the new debt outlook implied by the tax reform and increased spending. The danger is thus that the negative effects of the increased debt could swamp the positive effects of the tax cut and fatally undermine the health of the U.S. economy.

But the United States is not like other countries; the world's largest economy has an ace up its sleeve in the form of the U.S. dollar. The dollar is the pre-eminent currency in the global economy; it is the unit of choice for central banks looking for a safe asset in which to keep their savings, and 64 percent of global currency reserves are denominated in the greenback. The most common way for anyone, be it a central bank or private investor, to invest in the dollar is to buy U.S. government debt. This results in a unique global demand for U.S. debt that will continue for as long as demand for the dollar holds.

The Dollar Goes the Distance

The critical question, accordingly, is this: How long will demand for the dollar hold? The answer might be found in the experience of the previous issuer of the world's reserve currency, Great Britain. The pound was the global reserve currency through the 19th century and the first half of the 20th – a fact which reflected the global dominance of the British Empire during the period. The pound's pre-eminence survived various economic stresses for its issuer: Following the Napoleonic Wars, for example, the United Kingdom's debt levels rose to 260 percent of GDP in 1819, and it remained above 100 percent all the way through until 1860, but investors remained committed to the sterling for nearly a century more.

But most striking is the lag with which the pound's demise followed Britain's. One could argue that the United Kingdom started to wane by 1890, when the United States began to take over as the world's largest economy. Its descent was certainly underway by 1918, as London owed Washington massive debts accrued during World War I, and it was pretty much complete by 1947, after another world war had battered the United Kingdom and the country lost its key overseas possessions, particularly India. After World War II, the United Kingdom was something of a basket case, suffering currency crises in 1947, 1949, 1951 and 1955. Against this backdrop, it is notable that the pound-to-dollar transition did not occur until 1956, when the Suez Crisis hammered home the British demise. But even then, the process was gradual, as the inertia possessed by a global reserve currency and the energy required to dissuade the world from retaining it are substantial — certainly much larger than the potential debt levels implied by the new U.S. tax reform and spending plans.

A graph showing the transition from the pound to the dollar as the world's reserve currency.

There are other differences between the structure of the historical British Empire and today's United States that suggest a similar "demise" is not even possible. The British Empire was constructed by a small nation that managed, step by step, to physically take control of a large proportion of the world's economic output via military power, economic influence and political guile. Like other empires before it (the Spanish and Roman to name a few), British strength rested on its ability to maintain control of external regions. As it began to lose them, so went its overall importance in the outside world.

The United States is a different story. The dominant U.S. position in the world since 1945 has been the result of a combination of timing and its inherent attributes. Timing because in World War II, the world's other major economies had largely obliterated one another, leaving the United States producing 50 percent of global output, thus empowering it to establish a global system that locked in some of its gains. But the inherent attributes are particularly key. Unlike the United Kingdom, which is but a small handful of islands — even if it is fertile in places and possesses high connectivity potential — the United States sits astride a continent. It boasts a wealth of natural resources including farmland, metals and hydrocarbons, as well as wind, solar and hydropower sources that could become more important with time, while it also has inherent connectivity in the form of an extensive internal river system. The country's position on both the Atlantic and Pacific Oceans provides both maximum maritime access to the world's key power centers and isolation from any threat that might challenge it militarily. It can maintain a giant population, but it is not currently overcrowded like other countries. While a loss of influence and control over far-flung possessions scuppered the United Kingdom's predominance, the United States' strength comes from within itself. So unlike the United Kingdom, the United States as a basic unit has a strong claim to being the world's largest economy just by fulfilling its inherent potential. All of this suggests that the United States is a much more resilient animal than was the British Empire, and will be harder to dislodge from its pole position anytime soon.

China Sailing into Headwinds

Today's rising interest rates are probably not the start of the U.S. death spiral, but they are important for understanding the future that the United States will face. Several influential market commentators declared in recent months that the long-term interest rate cycle is reversing. The cycle is the trend in which bond yields follow a rising path for several decades and then fall for a similar length of time before repeating (see the following chart). The peak of the last cycle was in 1981, when yields hit 15.8 percent; since then, they have been drifting gradually downward, hitting 1.5 percent in 2016. Beyond the simplistic thinking that "it's about time" for the trend to reverse, there is a deeper explanation as to why capital has been so cheap for 30 years and why that might not continue in the future – and that relates to the influence on the global economy of the United States' great rival, China.

A chart showing the multi-decade U.S. interest rate cycle

The arc of China's economic growth since it began its reform process in 1978 is unmatched in history, but the Middle Kingdom has also exerted a seismic impact on the global economy, specifically on capital and labor. The effect on the global labor market was fairly simple. China's opening (and also that of Eastern Europe, which occurred 10 years later) to the global economy resulted in a massive influx of new labor entering the market. As the Bank of International Settlements presented in a 2017 paper, the working population in China and Eastern Europe in 1990 was 820 million – some 135 million more than in industrialized countries. Accordingly, the opening in China and Eastern Europe more than doubled the workforce available for global production. The result has been a global glut of cheap labor over three decades that has driven down wages in the West and largely undermined companies' need to invest in new technology because of the relative cheapness of manpower.

The effect on capital was more subtle. In the Chinese growth model, leaders focused on taking advantage of the country's labor supply to manufacture vast quantities of products very cheaply before shipping them to the developed world. But instead of directing the capital it received in payment toward investment or consumption, China lent it back to the West – largely by purchasing U.S. bonds and holding them as savings. This resulted in the easy availability of capital in the West, as it effectively provided the latter with the opportunity to spend the same money twice; this explains the falling interest rate of the last three decades.

China is now entering a phase in which its demographic advantage is fading away, to be gradually replaced by a surfeit of dependents over workers.

The reason why there could soon be a reversal of this megatrend stems from a major change at its source: Chinese demographics. China's growth since the 1980s has coincided with a remarkable demographic dividend; a burst of young people entered the workforce over time, adding willing hands to the workforce and, importantly, outnumbering the dependent old and young people who must receive financial support and who provide minimal productivity. But the young must grow old, and China is now entering a phase in which its demographic advantage is fading away, to be gradually replaced by a surfeit of dependents over workers. This development changes the whole shape of the Chinese economy, which has been able to monetize its labor advantage in the world for the last three decades. Instead, that advantage will disappear more by the day, with China already shifting from its export-led model to one with a much larger role for consumption. China will need to start spending its own money instead of lending it back to the West. As a result, capital will become scarcer in general, which should drive interest rates upward. As a result, rising yields on U.S. debt will become less of an issue on a relative basis — especially when the United States' largest emerging competitor appears to be facing sizable headwinds of its own.

Discovering the New World

The final question to consider is the new growth opportunities in the coming world – and whether the United States is well-placed to make the most of them. The tax reform might foster investment and growth, but if the potential growth is in an area that does not play to U.S. strengths, it could still go to waste. The answer again lies in China's effects on the rest of the planet, specifically the labor market, and in the latest developments in technology.

China's contributions to the global workforce have already begun to shrink, and indeed rising wages in the country have also eroded the efficiency gains provided by its workers. Aging is not solely a Chinese phenomenon, as the trend is striking the developed world just as strongly. In the coming period, the global workforce will encounter increasing scarcity, which could drive wages upward. A Western corporation that has relied on cheap labor will now have far greater incentive to invest more in technology in order to increase its productivity – as is already occurring, particularly in the automotive sector. The hunt thus turns to technologies that will increase productivity – which is exactly where recent rapid developments in artificial intelligence enter the picture.

It is hard to overstate how much of an impact artificial intelligence is about to make across all industry sectors. The explosion of data availability and storage in the last five years has provided a perfect ecosystem for artificial intelligence, though its foundational technologies have been available since the 1960s. There is an urgency to the trend: one recent survey of 203 executives found that 75 percent of respondents expected to "actively integrate" AI into their firms within the next three years, yet only 3 percent said they had already done so. The potential of AI lies across the board, with consulting firm McKinsey predicting that financial services, retail, healthcare and advanced manufacturing will lead the way. Another consultancy firm, Accenture, expects artificial intelligence to be transformative enough that it will serve as a new factor of production, equivalent to labor or capital. In fact, the firm's model projected that a United States that successfully integrates AI will attain 35 percent more growth by 2035 than one which does not.

A chart showing how AI early adopters earn high profits than their competitors.

Of all the countries in the world, the United States is the best-placed to take advantage of this emerging trend. For one, it has enjoyed a head start. In Silicon Valley, the United States boasts the world's leading center for technological innovation, and AI is no exception – in 2016 the country garnered 66 percent of all external investment (including venture capital, private equity and mergers and acquisitions) in AI, with China lagging behind at 17 percent. The United States has also been producing the most influential research in the area; although China has been publishing a much larger volume of papers, they receive fewer citations than their U.S. and British equivalents. A 2017 McKinsey report identified 39 promising AI startups in the United States but just three in China.

One of the key factors surrounding AI will center on helping the human workforce adapt to the changes – either in retraining people to work with robots or retraining people to find a new job after their displacement by robots.

The United States has one of the world's most flexible labor markets, meaning it should, in theory, be relatively well-prepared for this type of disruption. There are caveats though, in that the last great economic shift toward deindustrialization left sizable parts of society behind, especially in more industrial regions. The United States will no doubt need to invest in retraining and education if it is to make the next transition go smoothly. But regardless of the challenges, positivity about the U.S. positioning for the AI wave is reflected in recent studies, with Accenture finding that the United States has the potential to double its GDP as a result of AI, making it the developed country likely to post the highest potential gains (see the chart "Economic Impact of AI").

A graph showing economic potential of artificial intelligence.

The Shape of Things to Come

The United States currently finds itself on the cusp of a new economic epoch. The story of the last 30 years has centered on the unleashing of China's giant workforce on the global economy, along with the resulting impact. In the coming era, the influence of Chinese labor will fade, and the importance of technology will rise. The leading edge of this trend is in AI, which will arrive on the global economy like a whirlwind in the next few years.

With this in mind, the 2017 tax reform should be a great enabler. In terms of global AI, the United States boasts market leaders such as Apple, Amazon and Google, and by removing those companies' incentives to retain their wealth offshore, the U.S. government will tie their fates more closely to that of the national economy. The reform should release the dormant potential inherent within the United States. As economic capacity increases, so should the ambition of U.S. companies, which will be free to invest their windfalls in new technology.

But the costs of the reform are also real, specifically in the case of increased U.S. debt. The fact that this move coincides with a potential rise in interest rates could cause some problems, particularly in the short term. The U.S. economy is now approaching its longest ever stretch without suffering a recession, and it is possible that disquiet over U.S. debt could coincide with immediate considerations such as the current administration's trade policies, ultimately triggering a brief downturn. As time passes, however, the shape of the world to come will become more apparent, along with the United States' strong position in it.

Mark Fleming-Williams is a Senior Global Economics Analyst at Stratfor, following political economies, trade and financial trends around the world. He joined the company with more than a decade of experience working in London's financial sector.

Stratfor





DougMacG

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Government Spending is NOT on the "Supply Side"
« Reply #1731 on: March 23, 2018, 03:12:06 PM »
Government spending IS a tax.  Government spending taxes the private economy the same or even more so than does a tax -tax.  Spending in the government takes resources away from the private economy.  That drives up the cost of the remaining scarce resources making less and fewer of everything available to the private economy.  Over-regulations have the effect of a tax as well.  Expanding all of these moves us in the opposite direction of "supply side economics".

George W Bush gave supply side economics a bad name by never trying it.  He cut tax rates and then kept increasing spending, designing new government programs and leaving the worst of the existing ones, CRAp for example, in place to take down the whole house of cards.

Some government spending is good.  Bricks holding up the school house and ships and tanks.  The courthouse, fire station and so on. These resources and services take from the private sector as well, but so be it. That's not what we're talking about in the latest federal spending bull, now law.  Without knowing all the details, suffice it to say, Chuck Schumer is thrilled with it.

Here's what's missing.  The tax rate cuts and major regulatory reform is designed to grow the economy.  With a growing economy, we need less government in certain parts, less support for people needing a hand up from the government.  Government gave part of the hand up by getting partly our of the way.  That should be a cost SAVINGS.  To pass the opposite is to not believe in your own plan. 

Why should independent and undecided voters believe that the (Republican) economic plan is going to grow the economy and improve the prosperity of the people if those running for reelection on those policies don't believe it themselves?

Crafty_Dog

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Re: Political Economics
« Reply #1732 on: March 23, 2018, 08:20:02 PM »
President Trump today called for ending the Filibuster (which is how the Dems block Rep budgeting) and a Line Item Veto.

DougMacG

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Political Economics - Rep Erik Paulsen, Jobs boom and growth agenda
« Reply #1733 on: March 26, 2018, 10:27:51 AM »
I ranted recently my frustration with the lack of an agenda and a silence on the issues that seems to come out of Congress in this once or twice in a lifetime unified Republican (in name only?) government.  This is my congressman, Chairman of the Joint Economic Committee, taking a shot at explaining what Republicans are trying to accomplish and how that is going.  A very good start IMO at ending the silence and articulating the agenda.

https://www.investors.com/politics/commentary/americas-jobs-boom-and-the-gops-growth-agenda/
 Investor's Business Daily
America's Jobs Boom And The GOP's Growth Agenda

America's robust economic potential slumbered in the eight years following the 2008-2009 recession because her greatest resource—American workers and job creators—were sidelined by a pessimism that pervaded federal tax and regulatory policy. Now, with the passage of the most significant tax reform since 1986 and a rollback of the federal regulatory burden, we have an optimistic economic policy that believes in the American worker.

Look at the U.S. economy today: the first two months of 2018 have added 550,000 new jobs, which follows on the heels of the economic resurgence that began in 2017 with the creation of 2.2 million new jobs. What could account for such change? The answer is simple: Republicans' growth-oriented policies are getting government out of the way and once again allowing Americans to do what they do best.

It is rare that economic improvements from changes to federal policy show results so quickly. Yet the results indicate Congress and the new Administration have had a deep impact thanks to the Tax Cuts and Jobs Act and ongoing efforts to eliminate senseless and wasteful, job-choking regulations.

Take business optimism, which according to the National Federation of Independent Businesses is surging for the first time in over 10 years. Consumer sentiment is at its highest level since 2004, Americans are seeing more take-home pay, and many will spend less time preparing their taxes next year.

Last Friday, the Bureau of Labor Statistics announced the 5th straight month of 4.1% unemployment, which is the lowest since the year 2000, and the number of new unemployment claims is at historic lows. In the last six months, nearly 1.2 million more prime working-age men were able to find employment despite what Obama Council of Economic Advisers Chair Jason Furman said about the declining trend in the prime-age male employment rate and the need for more assistance.

In response to tax reform, businesses are giving their employees raises, paying bonuses, repatriating offshore earnings, and investing more in the United States. The list of Americans benefiting from TCJA is long and getting longer every day.

In my home state, we are seeing results among big and small businesses alike. Hormel Foods, Inc. has increased its starting wage for new employees and has pledged to make capital investments in its business. Data Sales Co. has given $1,000 bonuses for all 80 employees. U.S. Bancorp gave $1,000 bonuses for 60,000 employees, a base wage hike to $15 per hour, and a $150 million charitable contribution. House Minority Leader Nancy Pelosi dismisses these moves as crumbs, yet these decisions to invest in America mean more opportunity here at home over a longer term.

This wouldn't have happened were it not for the new course the Trump Administration and Congress are setting. Research by my staff at the Joint Economic Committee shows that America's recovery from the 2008 recession fell far short of past recoveries, and even the Obama administration's own expectations.

Each of the eight years the President Obama was in office, the Congressional Budget Office downgraded the economy's potential output. We were told this would be the "new normal," and it may have been, had we allowed government-first policies to continue.

The Obama administration's policy gave us a prolonged recession because the challenges facing the market economy were amplified by attempts to increase federal control over it. President Obama's tax hikes discouraged domestic investment and incentivized U.S. corporations to move their headquarters overseas. By ignoring the more favorable tax treatment in other countries, our government drove investment and jobs away, and with it, Americans' ability to rebuild the economy.

Worse, as the economy struggled to grow, regulatory costs mounted thanks to the Obama regulatory surge. The supposed justification for the regulatory onslaught was that the benefits greatly exceeded the costs. Yet the Office of Information and Regulatory Affairs never calculated whether claimed benefits would raise GDP.

Meanwhile, the U.S. business startup rate dropped precipitously, and still needs more revival. As each startup creates an average of six jobs, and firms less than a year old account for nearly all net new job creation, elevating the business startup rate is of great importance.

Reversing the Obama policy approaches, as we have started to do, has already yielded encouraging results — both in job creation and in accelerating the lackluster recovery. Going forward, we must pursue sound economic policy to help increase the economy's potential for growth. This is vitally important in the face of long-term challenges like the aging of the population, keeping America's promises on Social Security and Medicare, and reducing the size of the public debt in relation to the economy.

By seizing on the momentum from the Tax Cuts and Jobs Act and pursuing a regulatory overhaul that will lift barriers to job creators, we will succeed in putting Americans — rather than the government — back in the driver's seat of the economy.

Paulsen, a Republican, is chairman of the Joint Economic Committee. He represents the Third District of Minnesota.

DougMacG

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Political Economics, U of Chicago Casey Mulligan v. NYT Krugman
« Reply #1734 on: March 29, 2018, 07:46:40 AM »
If you like this kind of thing, put U of Chicago Economist Casey Mulligan on your reading list, blog: 'supply and demand, in that order': http://caseymulligan.blogspot.com/

http://caseymulligan.blogspot.com/2018/03/nytimes-packs-five-ungrounded-economic.html
Sunday, March 4, 2018
NYTimes Packs Five Ungrounded Economic Opinions in Two Sentences
Some misconceptions about tax incidence have been getting a lot of press, but Paul Krugman's column from last week is particularly efficient at perpetuating them:

"How much of a trickle-down effect depends on a bunch of technical factors: what share of corporate profits represents monopoly rents rather than returns to capital, how responsive inflows of foreign capital are to the U.S. rate of return.  Enthusiasts claim that the tax cut will eventually go 100% to workers; most serious modelers think the number is more like 20 or 25 percent."

Of course I am not a "serious modeler", but let's break this down:

"Enthusiasts claim that the tax cut will eventually go 100% to workers"

Actually, the White House Council of Economic Advisers, I, and anyone else using the standard supply and demand model claims that MORE THAN 100% of the tax cut will eventually go to workers. The analysis is in pdf here and executable Mathematica notebook here.
http://models.economicreasoning.com/FurmanRatio.pdf

"what share of the capital stock is even affected by the corporate tax rate"

This extension of the supply and demand model only strengthens the conclusion, because now workers not only have to pay for the revenue received by the treasury and for the productivity lost due to less aggregate capital, but also the productivity lost due to the misallocation of capital between activities covered by the statutory corporate rate and activities not covered. The analysis is here.
http://caseymulligan.blogspot.com/2018/03/robots-leibniz-dream-is-coming-true-in.html
Perhaps the proponents of this argument are thinking that the tax does less damage when it covers less capital. Maybe, but for sure it brings in less revenue too, and Krugman is referring to damage as a percentage of revenue.

"what share of corporate profits represents monopoly rents rather than returns to capital"

Krugman and the others do not give any citation to "serious modeling" of monopoly rents (monopoly rents = free lunch is not a serious model by any definition). But it looks to me that adding monopoly rents to the model also strengthens the conclusion, because now workers not only have to pay for the revenue received by the treasury, the productivity lost due to less aggregate capital, the productivity lost due to the misallocation of capital, but also exacerbation of the productivity lost due to monopoly. The analysis is here and in the links therein. 
http://caseymulligan.blogspot.com/2018/03/corporate-income-tax-incidence-with.html

"how responsive inflows of foreign capital are to the U.S. rate of return"

This is a red herring. All of the models that I have cited make the assumption most charitable to Krugman's conclusions: namely that foreign capital inflows are completely unresponsive (they are closed-economy models!). Nevertheless, they conclude that labor pays more than 100 percent of the corporate-income tax.

These counterintuitive results, and many more, are treated in the forthcoming Chicago Price Theory textbook by Sonia Jaffe, Robert Minton, Casey B. Mulligan, and Kevin M. Murphy.

ccp

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Re: Political Economics
« Reply #1735 on: March 31, 2018, 09:16:34 AM »
https://www.politico.com/story/2018/03/31/trump-amazon-post-office-jeff-bezos-492853

Is this true?  The USPS loses $ 1.46 on each Amazon package it delivers ?

How can this be?

Trumps point about the corporate / government racket is a point one would think would be taken up by the Left BIG TIME.

No doubt part of the Big techs strategy at pushing LEFTist agenda to divert being criticized by the big mouth Soros types.


G M

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Re: Political Economics
« Reply #1736 on: March 31, 2018, 09:53:17 AM »
https://www.politico.com/story/2018/03/31/trump-amazon-post-office-jeff-bezos-492853

Is this true?  The USPS loses $ 1.46 on each Amazon package it delivers ?

How can this be?

Trumps point about the corporate / government racket is a point one would think would be taken up by the Left BIG TIME.

No doubt part of the Big techs strategy at pushing LEFTist agenda to divert being criticized by the big mouth Soros types.



http://www.nola.com/business/index.ssf/2011/10/money-losing_amtrak_operated_a.html


DougMacG

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Re: Political Economics
« Reply #1737 on: April 01, 2018, 06:34:54 AM »
USPS loses $ 1.46 on each Amazon package it delivers.

As G M's link indicates, losing money is what they do.  I doubt they have the expertise or even curiosity to calculate what they lose per package.

I thought it was letters they lose on; package delivery should be profitable.  It depends on how you apportion costs.

The City of Minneapolis was going to close a golf course because it was losing money and I wondered,  what park or program don't they lose money on?

DougMacG

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Re: Political Economics, Wealth Inequality, Here we go again
« Reply #1738 on: April 12, 2018, 09:21:02 AM »
Media and Leftists, I repeat myself, are starting to cite the latest study to come out on inequality.

https://www.theguardian.com/business/2018/apr/07/global-inequality-tipping-point-2030
Headline: Richest 1% on target to own two-thirds of all wealth by 2030

This of course is being reported and repeated everywhere as if it is true and already happening, yet no one reads the report or knows what they are measuring.  They move quickly from alarming headlines to polling to see how people feel about it.  When the release the report's details, it will be debunked but still cited Bernie, UK Labour and all the networks.

Normally not measured in these studies is home ownership.  They omit the largest store of wealth  for most families to tell you most families don't have much wealth.  In world wealth, what about the land, ships, buildings, roads, bridges, airports, parks and everything else owned by the governments of the world?  Not counted?  Why not?  To make the headline false but the message more sensational?

How about holding the group constant for measure?  They never say that today's top 1% will own tomorrow's wealth, but someone will.  Mobility up and down is necessarily ignored.

The people who own a lot of stocks or a phenomenal company have more equity assets than the people who don't own a lot of stocks, if that is what they are measuring.  Interesting, but what is the right amount of wealth for the wealthy to own and who should decide that?  No one knows but everyone feels the current disparity is bad.

What do the super-rich have without wealth also to the masses?  Let's take Zuckerberg, and the owners of Google, Apple and Amazon for examples.  Even if they hit 100% market share in the space they invented, what do they have if they don't have wealth out there in the masses?  Their value comes only out of creating value with their users, or are we required to use their platforms?  They are not taking from the masses to gain their wealth, they are providing something that enhances lives and makes people more productive, more wealthy. These same studies show total global wealth increasing as well.  Well of course.  FB, etc. is worthless without purchasing power of the users.  And will it be FB, GGL, APPL that are dominant in 2030?  Maybe so, but far more likely not.

Isn't upward and downward mobility a more relevant measure.  Isn't the public policy interest to improve the plight of the lower tiers, not to limit the potential of the top tier?

To address it, the Left always proposes policies that make it worse.  Where the inequality alarmists are running things is where inequality is the widest, see NY and California.  Where wealth is fully banned or chased out, the poor do worse and the agents of powerful government do best, see Republic of the Congo and Venezuela.

A liberal, caring democratic government should be interested in helping those who can't help themselves and making economic opportunities including upward mobility available - to all of those who want that.  

DougMacG

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Re: Political Economics - badly measured poverty data
« Reply #1739 on: April 25, 2018, 08:08:59 AM »
Unfortunately almost all of economics involves badly measured data.  One of my pet peeves is that we discuss questions like income inequality and incomes of the poor without accurately measuring the income of the poor.  They are called poor because they lack 'money', but we determine that while ignoring nearly all of their income.  Nice to see a published article take my side and spell this out.  The number of Americans living in third world poverty is effectively zero.

https://www.nationalreview.com/2018/03/third-world-poverty-in-us-mythical/

Do 5 Million Americans Really Live in Third World Poverty?
By ROBERT RECTOR
 & JAMIE BRYAN HALL
March 29, 2018 6:30 AM
 
The claim that they do is based on a failure to account for all sources of income.
Nobel Prize–winning economist Angus Deaton recently published an op-ed in the New York Times titled “The U.S. Can No Longer Hide from Its Deep Poverty Problem.” Deaton asserted that 5.3 million Americans (or 1.7 percent of the population) live on less than $4 per day and “are as destitute as the world’s poorest people. . . . [Their] suffering, through material poverty and poor health, is as bad [as] or worse than that of the people in Africa or in Asia.”

But measurements of poverty and deep poverty based on income are seriously flawed, because U.S. government income surveys:

• omit or severely undercount most of the $1.1 trillion that the government spends on means-tested welfare assistance each year;

• omit or undercount off-the-books earnings, which are prevalent in low-income communities;

• omit the incomes of cohabiting partners and parents; and

• ignore assets acquired in prior periods.


The omission and undercounting of welfare aid is particularly troubling. For example, in 2016, federal, state, and local governments spent $223 billion on cash, food, and housing benefits for low-income families with children, an amount three times that needed to eliminate all official poverty and ten times that needed to wipe out deep poverty among them. But the Census Bureau’s income surveys counted only $7.6 billion of this spending for purposes of assessing poverty or deep poverty.


DougMacG

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Re: Political Economics - 3.9% Unemployment, Tight Labor Market?
« Reply #1740 on: May 08, 2018, 09:06:49 AM »
If the labor force participation rate were the same today as it was in December 2000, the unemployment rate wouldn't be 3.9%. It would be 10%!
https://www.investors.com/politics/editorials/unemployment-jobs-economy-wages/

Just mentioned on another thread, we will need a higher retirement age and there are many other people out of the workforce that don't count as unemployed.

DougMacG

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Political Economics: Government creates wealth ...
« Reply #1741 on: May 23, 2018, 03:01:29 PM »
Government creates wealth ...
same way that a tick creates blood.  
« Last Edit: May 23, 2018, 03:05:35 PM by DougMacG »

DougMacG

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Political Economics, unemployment definition and statistical distortion
« Reply #1742 on: May 24, 2018, 05:30:42 AM »
By now, everyone knows the published unemployment rate is not the entire out of work rate.

Casey Mulligan, Labor Economist at Univ of Chicago, on his blog, Supply and Demand (in that order) http://caseymulligan.blogspot.com/

"low unemployment is not synonymous with high employment. Aside from identifying Americans as either working or being unemployed, federal government statisticians also put adults into a third category: out of the labor force (OLF).

In other words, "unemployed" is just one of two not-working categories, so that both employment and unemployment can fall at the same time if enough people are switching from unemployed to out of the labor force.

The official distinction between unemployed and OLF is whether the not-working person is actively looking for work. This distinction helps to prevent confusing a retiree or a full-time student with a laid-off head of household who is eagerly looking for a new job.

But a number of people are on the margin of looking for work and could be classified either way."
http://caseymulligan.blogspot.com/2018/05/inflation-has-little-to-do-with.html

Crafty_Dog

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WSJ: Gramm and Ekelund: How Income Equality Helped Trump: quality read
« Reply #1743 on: June 25, 2018, 12:21:46 PM »
How Income Equality Helped Trump
Working Americans sense that taxes and transfers now leave them little better off than those who work less.
How Income Equality Helped Trump
Photo: Phil Foster
By Phil Gramm and
Robert B. Ekelund Jr.
June 24, 2018 1:47 p.m. ET


Frenzied rhetoric about income inequality was a larger theme in Hillary Clinton’s 2016 presidential campaign than in any previous American election. When the ballots were counted, however, not only did income inequality fail to move voters, but a massive shift in voting preference among lower-middle and middle-income Americans led to the election of the wealthiest president since George Washington. Now, startling new data on government spending and taxes suggests a novel explanation for this voter shift: It was a backlash against rising income equality among the bottom 60% of American household earners.

The new analysis was published in April by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics, and it provides the most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. His study includes the roughly $1 trillion of annual government spending not currently counted in the U.S. Census Bureau’s income-distribution tables. That includes Medicaid, food stamps, the earned-income tax credit, and 85 other federal payments and services, along with similar state and local income supplements. The study also subtracts federal, state and local taxes from individuals’ measured income, an adjustment not contained in the census data.

The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era. Hardworking middle-income and lower-middle-income families must have recognized that their efforts left them little better off than the growing number of recipients of government transfers. The perceived injustice of this equality helped drive the political shift among blue-collar workers, many of whom supported the pro-growth candidacy of Donald Trump in 2016 despite having voted for Mr. Obama in the two previous presidential elections.

The bottom quintile earned 2.2% of all earned income in 2013, but after adjusting for taxes and transfer payments, its share of spendable income rose to 12.9%—six times its proportion of earnings. The second quintile’s share more than doubled, rising from 7% of earned income to 13.9% of spendable income. For the third quintile, middle-income Americans, the increase was much smaller, from 12.6% to 15.4%.

Not surprisingly, high earners lost a considerable share of their earnings after taxes and transfers are taken into account. The fourth quintile’s share fell from 20.5% to 18.6%, while the top quintile dropped from 57.7% of earnings to 39.3% of consumable income. In other words, the top quintile’s share of earnings was 26 times that of the bottom quintile, but after taxes and transfer payments its share of spendable income was only three times as much.

Even more startling is the near equality among the bottom three quintiles. The bottom quintile, which earned only 2.2% of all earned income, had virtually the same share of spendable income as the second quintile, lower-middle-income Americans. This equality is despite the fact that lower-middle-income workers earned more than three times the share of income and worked 21/2 times as much, measured by comparing each group’s number of full-time workers relative to its working-age population. Middle-income workers earned almost six times the share of income and worked almost four times as much compared with the bottom quintile, but they enjoyed only about 20% more spendable income.

And even these numbers understate the huge difference in work effort. Compared with the bottom quintile, the lower-middle-income quintile had almost four times as many working-age families whose members worked two or more jobs, and the middle-income quintile had more than seven times as many families with members working two or more jobs.

The politics of envy based on income inequality has always been a hard sell in the U.S. Few Americans resent Bill Gates, whose innovations made him megarich but also made the rest of us better off. Who resents Warren Buffett, who became one of the richest men in the world by raising the return on Americans’ savings and retirement accounts? George Mitchell, the Texas oilman who invented fracking, made oil and gas cheaper for the whole world—and he received only a tiny share of the wealth he created in so doing.

Americans tend to believe that people become rich because they are smart and work hard, but it is easy to see how a middle-income husband and wife who both work could resent that people who don’t work are about as well off as they are. It might be fair that Bill Gates is rich, but it seems unjust that 60% of Americans have virtually the same standard of living despite dramatic differences in the effort they exert and the income they generate.

The harder people worked without getting ahead, the more reason they had to feel disrespected and alienated in November 2016. President Obama and Hillary Clinton mocked their values. The tax and regulatory policies of the Obama era caused economic growth and middle-income wages to stagnate. But what must have added insult to these injuries was the increasingly obvious fact that the boom in government benefits and the decline of economic growth had all but eliminated the rewards that middle-income Americans traditionally received for working hard. The explosion of social spending, and the dependency it generated, no doubt benefited the Obama campaign in 2012. But that same spending helped create the wagon-puller backlash that defeated Mrs. Clinton in the next election.

Mr. Gramm is a former chairman of the Senate Banking Committee. Mr. Ekelund is a professor emeritus in economics at Auburn University. This article is adapted from a forthcoming book, “Freedom and Inequality.” Mike Solon and John Early contributed to this article.


DougMacG

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Re: Disincentives
« Reply #1745 on: June 26, 2018, 08:09:36 AM »
http://www.aei.org/publication/julias-mother-why-a-single-mom-is-better-off-with-a-29000-job-and-welfare-than-taking-a-69000-job/

Unbelievable!  This is a very important I have been trying to make too, only here it is measured and documented.  Some of the highest effective marginal tax rates are faced by inner city single mom's, the people you would think we would want to help the most.  But the only way we know how to help is to give people free sh*t, and the only way we know how to control the cost of that is to cut them off if they make over a certain amount.  What could possibly go wrong?  How much positive work contribution in the economy are we shutting down with our disincentive system.  I would argue that it is enough to close the deficit, pay off the debt and have a whole lot more people live prosperously.  But somehow there is one whole side of politics including academia and media who don't want that!

Is it rocket science to think people will keep their incomes down to stay on programs?

I made $500 more by accident one year and lost thousands on FAFSA, the federal government program that causes college costs to escalate.  Dumb.

SSI (disability) payments, discussed recently, is a contract with the federal government to stay poor the rest of your life - or lose the money they got you dependent on.

Medicaid has been that way for over 50 years.  Make more money and lose your free health care.  But now the same government made the costs of healthcare prohibitive.  You could probably call it child abuse to make a little more money and lose coverage for your kids.  Obamacare takes that from 'poverty level' to income at 400% of poverty level, roughly $50,000 income and you are on a federal program, lose your health plan if you make more.

I had Section 8 tenants where the father of the children had to hide his presence or the family loses the subsidy and the home. 

There are no easy answers to having a generous welfare state without screwing up the incentive system for people at the income thresholds.  Generous welfare systems only work where the population has a work ethic and pride greater than all these distractions.  Those days are long gone, world wide.  Ask Sweden about it.

Does anyone remember when it was a Democrat in the White House promising to "end welfare as we know it".  It worked for a bit except the never applied it to the "layering of programs" discussed in this article.

Instead, welfare as we know it is alive and well, one of the greatest economic forces facing over 50% of our population.

DougMacG

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Re: Political Economics, the decline of what made western civilization great
« Reply #1746 on: July 18, 2018, 07:56:33 PM »
[Dan Mitchell has done great writings and studies at Cato, Heritage, WSJ, etc.]
https://fee.org/articles/the-western-world-s-most-depressing-chart/
Sunday, July 08, 2018
Economics Government Spending Redistribution
The Western World’s Most Depressing Chart
Western nations are abandoning the policies that made them prosperous.
by Daniel J. Mitchell
..
The “most depressing” chart about Denmark, which shows a majority of the population lives off the government.
A “very depressing” chart about the United States, which shows how big business profits from cronyism.
The “most depressing” chart about Japan, which shows the tax burden has nearly doubled since 1965.
Now it’s time to add to that list. There’s a website called Our World in Data, which is a great resource if you’re a policy wonk who likes numbers. But some numbers are quite depressing.

For instance, if you peruse the “Public Spending” page, you’ll find a chart showing the dramatic expansion of redistribution spending as a share of economic output.



These numbers are very similar to the table I shared from Vito Tanzi back in 2013, which isn’t surprising since Professor Peter Lindert is the underlying source for both sets of data.

While the above chart is depressing to a libertarian, it’s nonetheless instructive because it confirms my argument that the Western world became rich when governments were very small and redistribution was tiny or even nonexistent.

For instance, nations in North America and Western Europe largely made the transition from agricultural poverty to middle-class prosperity during the “golden century” between the Napoleonic wars and World War I. That was a period when redistribution spending basically didn’t exist, and most nations didn’t even have income taxes (the U.S. didn’t make that mistake until 1913).

Indeed, redistribution spending in Western nations averaged only about 10 percent of economic output, about half the size of today’s supposedly miserly American welfare state.

Even as recently as 1960, welfare states were very small compared to their current size. Indeed, redistribution spending in Western nations averaged only about 10 percent of economic output, about half the size of today’s supposedly miserly American welfare state.

These points are important because some folks on the left misinterpret Wagner’s Law and actually try to argue that bigger government is good for growth.

P.S. South Korea has been a great success story for the past five decades, but that redistribution trendline is very worrisome.

P.P.S. The trendline for Greece helps to explain why that nation is bankrupt.

P.P.P.S. The chart shows that Canada is better than the United States, though that may not last since Canada’s current prime minister is seeking to undermine his nation’s competitive advantage.

P.P.P.P.S. While fiscal trends in the Western world have been unfavorable, that bad news has been offset by positive trends for trade liberalization. Whether we will see a big step backward because of President Trump remains to be seen.

Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

DougMacG

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Political Economics, what 4% growth would mean for the economy
« Reply #1747 on: July 27, 2018, 07:08:23 AM »
http://dogbrothers.com/phpBB2/index.php?topic=1467.msg108440#msg108440

This article is from 2013.  The measure of the benefits would be even larger now.

http://www.bushcenter.org/publications/articles/2013/03/what-4-growth-would-mean-for-america.html

Growth Fact #1 of 10: If the economy grew at 4% per year, we would create 10 million additional jobs during the next decade, returning the economy to full employment through growth alone, with no rise in government spending.

Growth Fact #2 of 10: If the economy grew at 4% per year, the government would collect more than $3 trillion in additional revenue over the coming decade,[ii] matching the revenue that the Administration proposes to generate by raising income tax rates on the highest earners and allowing some business tax cuts to expire.

Growth Fact #3 of 10: If the economy grew at 4% per year, we would see a 30% reduction in the 10-year budget deficit — subtracting almost $3.2 trillion from the projected $10.9 trillion deficit[iii] and making our budget look less like Greece’s and more like Germany’s.

Growth Fact #4 of 10: If the economy grew at 4% per year, we would generate $260 billion in additional exports over the decade,[iv] creating over 1.5 million jobs.[v]

Growth Fact #5 of 10: If the economy grew at 4% per year, an additional 3,000,000 people would rise out of poverty over the next decade, reducing the burden on government safety nets by $200 billion.[vi]

Growth Fact #6 of 10: If the economy grew at 4% per year, there would be a 1.2 percentage point increase in the aggregate savings rate, making $300 billion available[vii] for investment in plant, equipment, and new technology, and laying the groundwork for future economic growth. This is roughly twice what the U.S. spends each year maintaining and expanding its roads.[viii]

Growth Fact #7 of 10: If the economy grew at 4% per year, there would be about 20,000 fewer robberies and 250,000 fewer instances of larceny during the next decade,[ix] resulting in safer communities and a better environment in which business can flourish.

Growth Fact #8 of 10: If the economy grew at 4% per year, charitable contributions would increase by $200 billion over the next decade, improving health care, the environment, and the arts, with $28 billion more in donations for education alone.

Growth Fact #9 of 10: If the economy grew at 4% per year, developing countries would see stronger growth as well, with increased tourism, imports, and foreign aid from America adding almost an entire percentage point to their annual average growth rates.[xi]

Growth Fact #10 of 10: If the economy grew at 4% per year, U.S. households would be able to buy an extra $8 trillion worth of goods and services in the next decade.[xii] This amounts to over $70,000 per household, or the equivalent of a year’s income for the median household.

See the footnotes documenting all this at the link

DougMacG

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Re: Political Economics, 4% growth
« Reply #1748 on: July 27, 2018, 08:23:02 AM »
One more thing on 4% growth, that is the amount we spend on National Defense.  We just grew the economy by the amount of the entire military budget.
https://www.usgovernmentspending.com/defense_spending

Our allies should try it, and start defending themselves!
« Last Edit: July 27, 2018, 08:49:44 AM by DougMacG »