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The Economy Got Off to a Historically Bad Start in 2014

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Re: The Economy Got Off to a Historically Bad Start in 2014

#51

Post by mikeyouse »

jqm wrote: post #44
mullingitover wrote: post #21

Earlier quoted context omitted.

> Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. I seem to recall a round of stimulus checks that were sent out in 2008, before things went to…

"The idea of taxing the socially beneficial act of working and hiring workers is pretty repugnant anyway." HEAR! HEAR! Payroll taxes are essentially a form of slavery. Every week you work X number of hours for the government. Almost like you were hauling pyramind blocks under a whip. And, on this point, conservatives (who are often wrong) are exactly right. Taxing innovation and labor are hardly incentives to provide…

Payroll taxes are nothing like slavery. You do yourself no favors with such ridiculous comparisons.

Re: The Economy Got Off to a Historically Bad Start in 2014

#52

Post by jgamman »

nostromo wrote: post #2

I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…

Australia did this back in 2011 or so. last time i looked, i think it was still there and chugging along...

Re: The Economy Got Off to a Historically Bad Start in 2014

#53

Post by jimmaswell »

Retric wrote: post #13
nostromo wrote: post #2

I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…

The US has huge structural problems and the Fed is just a useful band-aid. It's value is stabilizing the banking system not the economy. Systemic Corruption, Terrible primary education system, Ridiculous Military Spending, Unsustainable Debt Levels, Minimal Infrastructure Spending, Huge undocumented Immigrant population, Ridicules Sentencing Laws, Anti Middle Class / Start-up Tax Code, Legislation Requiring Middle Me…

>We even get basic things wrong like promoting home ownership and heavily subsidizing farming.

Could you expand on what exactly is wrong with those things?

Re: The Economy Got Off to a Historically Bad Start in 2014

#54

Post by opendais »

aliston wrote: post #49
opendais wrote: post #34

Earlier quoted context omitted.

The Fed is a tool for managing inflation and monetary supply and it does its best with that tool to sustain job creation and the economy in general. The real problem is the US's structural problems have become a systemic cancer that is choking off growth: 1) We have a tax code that incentives capital when capital isn't an economic constraint. We are demand constrained as far as I can tell, which means more people nee…

In principle, this is what the Fed should be. But, in 1977 the Fed became tasked with managing "maximum employment, stable prices and moderate long-term interest rates." This is one of the fundamental problems with the Fed's dual mandate -- its conceivable that those levers may be at odds with one-another.

Fair enough, I was focusing more on the fact the problem with the Fed isn't the Fed. The Fed is doing its job as best as any human can really expect it to function.

The problem is Congress+Presidents repeatedly passing the buck and pandering, rather than being productive.

Re: The Economy Got Off to a Historically Bad Start in 2014

#55

Post by scarmig »

jqm wrote: post #44
mullingitover wrote: post #21

Earlier quoted context omitted.

> Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. I seem to recall a round of stimulus checks that were sent out in 2008, before things went to…

"The idea of taxing the socially beneficial act of working and hiring workers is pretty repugnant anyway." HEAR! HEAR! Payroll taxes are essentially a form of slavery. Every week you work X number of hours for the government. Almost like you were hauling pyramind blocks under a whip. And, on this point, conservatives (who are often wrong) are exactly right. Taxing innovation and labor are hardly incentives to provide…

The best things to tax have a couple of attributes:

1) Goods that have little or no elasticity 2) Activities that have high negative externalities (and, implicitly, moderate or high elasticity) 3) Easily legible to the State, meaning things that the State can easily monitor and send people at to extract resources from.

Labor is very useful to the economy; you want to encourage it, not discourage it. Same with capital and technology. And they're both relatively tricky to track down.

Land taxes satisfy 1) and 3), so I'm all for them, though they've fallen out of favor.

But what seems best of all is carbon taxes, up the whazoo. As high as you can set them.

There are two countervailing tendencies: carbon is a deadly pollutant, and fuels that emit carbon as a side effect of use are essential to the functioning of society. A carbon tax lets you straddle that: at low levels you're taxing a negative externality to discourage it, which is pretty much creating free value (in the same way that government reducing crime creates value). But, to the extent that fossil fuels are absolutely necessary to the functioning of society, their use is inelastic: at higher levels, an increasing proportion of the tax would be passed directly on to consumers, so the tax is minimally distortionary once you hit that inelastic area.

Best of all, domestic production is very easy to hunt down and tax: a couple dozen very large corporations handle the vast majority of fossil fuel extraction, so you simply track them down and have them all write you a very large check once a week. The only real trickiness is handling rebates for domestic exports and tariffs on foreign imports--the implementation of which would make or break the scheme--but that's surmountable.

Set a sky high carbon tax. Make it revenue neutral by setting the tax's revenues equal to the costs of abolishing capital gains and corporate taxation, which are not as economically efficient as a carbon tax and double as a sweetener to Republicans and the Chamber of Commerce. The USA and world end up a whole lot richer.

Re: The Economy Got Off to a Historically Bad Start in 2014

#56

Post by noonespecial »

jimmaswell wrote: post #53
Retric wrote: post #13

Earlier quoted context omitted.

The US has huge structural problems and the Fed is just a useful band-aid. It's value is stabilizing the banking system not the economy. Systemic Corruption, Terrible primary education system, Ridiculous Military Spending, Unsustainable Debt Levels, Minimal Infrastructure Spending, Huge undocumented Immigrant population, Ridicules Sentencing Laws, Anti Middle Class / Start-up Tax Code, Legislation Requiring Middle Me…

>We even get basic things wrong like promoting home ownership and heavily subsidizing farming. Could you expand on what exactly is wrong with those things?

Nothing is wrong with those things intrinsically but it is a market distortion. Taking a purely external view, it means that we end up building houses we don't really need and farming crops that we don't really want.

Re: The Economy Got Off to a Historically Bad Start in 2014

#57

Post by shirkey »

mikeyouse wrote: post #24
shirkey wrote: post #14

Earlier quoted context omitted.

Government stated inflation based on chained CPI and other new measures to reduce inflation may be at around 2%, but previous formulas used in the past to calculate inflation would show a much higher rate (6-10%)[1]. For those actually buying or consuming anything, that official number is a farce. [1] http://www.shadowstats.com/alternate_data/inflation-charts

Shadow stats isn't credible in any way. They can't even be bothered to take the raw data and apply the 'old' weights to them, so they just arbitrarily add a few percentage points to the CPI. The BLS has dedicated far too much effort into showing why they are an asinine source for 'data': http://www.bls.gov/opub/mlr/2008/08/art1full.pdf Consider this: If "real" inflation was 7%/year, in 10 years, the price of everythi…

The data provided in my link shows 4-6% average, I was referring to the most recent spike in real inflation that is not showing up in the BLS data. At the lower end, you'd have 48% price growth compounded annually over that 10 year period, at the higher end is 79%, so not sure why you extrapolated that at 7% over ten years.

Re: The Economy Got Off to a Historically Bad Start in 2014

#58

Post by opendais »

jimmaswell wrote: post #53
Retric wrote: post #13

Earlier quoted context omitted.

The US has huge structural problems and the Fed is just a useful band-aid. It's value is stabilizing the banking system not the economy. Systemic Corruption, Terrible primary education system, Ridiculous Military Spending, Unsustainable Debt Levels, Minimal Infrastructure Spending, Huge undocumented Immigrant population, Ridicules Sentencing Laws, Anti Middle Class / Start-up Tax Code, Legislation Requiring Middle Me…

>We even get basic things wrong like promoting home ownership and heavily subsidizing farming. Could you expand on what exactly is wrong with those things?

My guess for food is his means this:

http://www.motherjones.com/tom-philpott/2014/01/are-agricult...

http://www.scientificamerican.com/article/fresh-fruit-hold-t...

We basically subsidize 50 billion worth of exports to other countries. These subsidies also raise our healthcare costs.

The other part, I can't really speak for.

Re: The Economy Got Off to a Historically Bad Start in 2014

#59

Post by crazy1van »

jqm wrote: post #40
oldmanjay wrote: post #11

Earlier quoted context omitted.

What I like about wealth redistribution scenarios is how they're so much easier to sell when you ignore the potential negative effects.

Redistributing some wealth would be a positive for the economy at this point and time. It's like playing monopoly and someone wins all the money. The game is over at that point. Now sure... some people try to keep it going by lending money. But when the winner gets all that as well and the other party eventually has mortgaged and sold everything there is no more money for the winner to get. Getting money out of the h…

> Getting money out of the hands of accumulators and hoarders (oh, I mean, "investors") and back into the hands of consumers

The banking system may be seriously flawed, but I'm not following your critique of accumulators / hoarders / investors. When people acquire excess money, they rarely put in under a mattress. They don't need it right now so they enter into a transaction with someone who does need it in return for more money later.

For example, when a "hoarder" puts money into a bank account, the bank doesn't just stare at it. It lends it to someone who needs money now. The bank gets paid back interest and some of that goes to pay interest to the "hoarder". Obviously, this is a simplification, but the idea is the bank is an intermediary that matches people who want more money later with people who want money now.

Re: The Economy Got Off to a Historically Bad Start in 2014

#60

Post by cpher »

jimmaswell wrote: post #53
Retric wrote: post #13

Earlier quoted context omitted.

The US has huge structural problems and the Fed is just a useful band-aid. It's value is stabilizing the banking system not the economy. Systemic Corruption, Terrible primary education system, Ridiculous Military Spending, Unsustainable Debt Levels, Minimal Infrastructure Spending, Huge undocumented Immigrant population, Ridicules Sentencing Laws, Anti Middle Class / Start-up Tax Code, Legislation Requiring Middle Me…

>We even get basic things wrong like promoting home ownership and heavily subsidizing farming. Could you expand on what exactly is wrong with those things?

I'm not GP, but I probably agree with his entire list. I think the home ownership incentives over the past decade may have been well-intentioned from an emotional standpoint, but they were the siren song of Lorelei for many people. "The spirit of America is expressed through owning a piece of property." That sounds awesome.

Who wouldn't want to help our food producers ? I worked for years with farmers who got subsidies for completely spurious reasons. Even then, some were so bad at managing their operations they failed. Working your butt off during spring and fall should qualify you for that $100k combine (with corn and bean heads), right?

I think we may have gotten lucky because we were the only WWII country without a destroyed everything. So, we took advantage of our strategic position, played the odds in our favor, and didn't think 75 years into the future.

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