Corporate Profits At All Time High:

[RandFan]

Originally Posted by Skeptical Greg

Are you kidding?

No. I'm not kidding. Just tell me what you found objectionable? Paraphrase, explain, quote, something? I honestly haven't a clue what you are on about.

[RandFan]

In an honest attempt to help. Greg, please to tell me what it is exactly that you are so upset about because I just don't see it. I honestly don't.

Originally Posted by RandFan

Corporate Profits After Tax (CP)

http://img163.imageshack.us/img163/1...ateprofits.png

Waiting for the trickle down to start. Any day now that money has to start making it's way down to the rest of us. That is how it works right?

Originally Posted by RandFan

http://img14.imageshack.us/img14/3884/djiamax630378.png

Originally Posted by RandFan

Corporate profits are up. Stock market is up. Is there anyone out there that does not get why the "job creators" are so damn upset at Obama?

[thaiboxerken]

Originally Posted by RandFan

I love that. Yes.

And let's be clear. To date no one in this thread has done anything to defend supply side economics other than express their hurt feelings over the OP. How about that?

To be fair, respect brought up the price of tea in China price of sugar in the USA.

[thaiboxerken]

Sugar prices prove supply side works, until it doesn't...

[Skeptic Ginger]

If I might jump back in and perhaps distract from some of the bickering...

So you have the supply producers and they are very efficient and gauge demand well and make huge profits. I believe this is approximately the current case.

However, the supply producers, are able to squeeze the workers because, while supply and demand of the products are following market forces, supply and demand for workers is a different dynamic.

Now you have the rich getting richer, but the workers getting poorer. Eventually the workers, who are also the consumers run out of money to spend. I believe this is approximately the current case.

How would the market correct this?

Wouldn't taxing the rich and using the money to provide more jobs in the public sector, thus increasing the demand for workers thereby stimulating higher pay, be a reasonable solution?

How would giving more money to the rich producers result in an increase demand for products? Isn't it the consumers who are strapped for cash that is the root of the current problem?

And why can't Libertarian leaning people see this? It's so obvious to me.

[RandFan]

Originally Posted by thaiboxerken

To be fair, respect brought up the price of tea in China price of sugar in the USA.

Well, yeah, there's that. Whatever that is. I sincerely tried to wrap my head around it. Protectionism results in a smaller supply of goods, like sugar. That's a component of supply-side economics (see below), okay, so it could be a premise for an argument but what inference are we to draw from the premise? That there is a relationship between two things does not constitute an argument.

Originally Posted by wiki

Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices. Typical policy recommendations of supply-side economists are lower marginal tax rates and less regulation

If, and I emphasize "if", supply side economics consisted of a single variable I could understand the point. But supply side economics isn't simply about the relationship between protectionism and the price and availability of goods and services.

BTW: what is it suddenly with simply stating a single premise without any argument or explanation as to how that premise supports one's conclusion?

[RandFan]

Originally Posted by The Don

Except you don't even, at least retail sugar prices.

Thanks for that. I have to admit I've bought into the notion that we pay more for sugar than other nations on average. And I did note your link supporting your claim.

[WildCat]

Originally Posted by RandFan

Thanks for that. I have to admit I've bought into the notion that we pay more for sugar than other nations on average. And I did note your link supporting your claim.

Someone may want to quote that so RandFan can see it. He loves charts.

[Virus]

Originally Posted by Skeptic Ginger

Wouldn't taxing the rich and using the money to provide more jobs in the public sector, thus increasing the demand for workers thereby stimulating higher pay, be a reasonable solution?

Transferring wealth ≠ creating wealth.

[RandFan]

Originally Posted by Virus

Transferring wealth ≠ creating wealth.

1: Actually you are wrong. It actually can and does (see below). Now, it's limited and there is a point of diminishing returns but it most certainly can create wealth.

Quote:

Those who believe in cutting SNAP funding as a cost-saving measure should know that food stamps boost the economy -- not put a strain on it. Supporters of federal food benefits programs including President George W. Bush understood this, and proved the economic value of SNAP by sanctioning a USDA study that found that $1 in SNAP benefits generates $1.84 in gross domestic product (GDP). Mark Zandi, of Moody's Economy.com, confirmed the economic boost in an independent study that found that every SNAP dollar spent generates $1.73 in real GDP increase. "Expanding food stamps," the study read, "is the most effective way to prime the economy's pump."

2: We are an evolved social species. There is a synergistic effect of social species. The more people who are taken out of poverty the better society works. That's not at all controversial. Every modern liberal democracy provides social services and they do so for a reason. And it's not simply that we are endowed with empathy. It's because those programs work to better society for everyone. Which is why nations that are hell holes like Somalia don't offer up much in the way of govt social programs and nations highest in GDP, HDI and/or other metrics do.

[WildCat]

Now we're back to the claim that you can have a vibrant and growing economy based on nothing but transfer payments.

And I'm pretty sure the flaw in that formula is it only looks at one side of the equation, as if that $1 in food stamps just appeared as if by magic out of thin air as opposed to having been extracted from another part of the economy.

[Skeptic Ginger]

Originally Posted by Virus

Transferring wealth ≠ creating wealth.

Creating wealth is an overused apology for greed.

If the owners are making more profit than ever, production is up, and the producers on the factory floor are not making more despite being more productive, that is not creating wealth, it's shifting more of it into some pockets despite the creativity of the workers.

[Skeptic Ginger]

Originally Posted by WildCat

Now we're back to the claim that you can have a vibrant and growing economy based on nothing but transfer payments.

And I'm pretty sure the flaw in that formula is it only looks at one side of the equation, as if that $1 in food stamps just appeared as if by magic out of thin air as opposed to having been extracted from another part of the economy.

Seems to me you are ignoring the part of the equation that says squeezing the workers more and more eventually eliminates the bulk of consumers.

Then what happens?

[thaiboxerken]

Originally Posted by WildCat

http://home.mindspring.com/~a.lo/sugar.jpg

Someone may want to quote that so RandFan can see it. He loves charts.

And therefore supply side economics works?

[RandFan]

Originally Posted by RandFan

1: Actually you are wrong. It actually can and does (see below). Now, it's limited and there is a point of diminishing returns but it most certainly can create wealth.

Some people have serious reading comprehension problems. You cannot have a vibrant economy simply by transfering wealth. No one that I know of in this thread has made that claim. I certainly never made that claim. On the contrary I made it crystal clear that creating wealth through SNAP is A.) limited and B.) there is a point of diminishing returns.

But straw men are always easier to address than actual arguments.

[RandFan]

I never claimed that sugar prices were not higher in the USA. I only acknowledged another posters claim and link and said that I had bought into the notion that prices for sugar are higher in the USA than other nations.

Originally Posted by thaiboxerken

And therefore supply side economics works?

Exactly. Why do people continue to post in the thread without addressing the thesis of the OP? What the hell does the price of sugar in the USA have to do with SSE?

Wildcat: I'm going to take you off of ignore for a little bit to give you an opportunity to address the OP.

• Please to define supply side economics?
• Please explain how the Bush Tax cuts had any of the stated effects of supply side economics (what is the predictive power of the model and did the results meet the prediction)?

[RandFan]

Originally Posted by WildCat

Now we're back to the claim that you can have a vibrant and growing economy based on nothing but transfer payments.

A.) Straw man. B.) Lie. I never said any such thing. I said THE OPPOSITE.

Quote:

And I'm pretty sure the flaw in that formula is it only looks at one side of the equation, as if that $1 in food stamps just appeared as if by magic out of thin air as opposed to having been extracted from another part of the economy.

Let me see if I get this straight. Someone posts a source to demonstrate that the US pays roughly the same for sugar as other nations. You post a source (USDA) and ostensibly you want me to trust your source (USDA) over the other source, right?

Okay, work with me here for a moment. I post a source (USDA) and you are telling me I can't trust the source? Serious? BTW: That was also confirmed by Moodys. I take it you don't want me to trust them either?

One last thing. Please to show me your math. How exactly does that work?

[Virus]

Originally Posted by Skeptic Ginger

Creating wealth is an overused apology for greed.

That doesn't even mean anything. It's just rhetoric.

You've been listening to demagogues and professional liars too much.

[RandFan]

Originally Posted by Virus

That doesn't even mean anything. It's just rhetoric.

Says the guy who said this:

Originally Posted by Virus

Transferring wealth ≠ creating wealth.

Originally Posted by Virus

You've been listening to demagogues and professional liars too much.

You seriously need to go look in the mirror. And I say that as one who has been a life long conservative and one who used to argue passionately against SG. In fact I had her on ignore for awhile.

[WildCat]

Originally Posted by Skeptic Ginger

Seems to me you are ignoring the part of the equation that says squeezing the workers more and more eventually eliminates the bulk of consumers.

Then what happens?

Who's in favor of squeezing workers? I'm certainly not. Nor am I the one advocating opening the borders to low-skilled foreign workers to add to the existing glut of low-skilled domestic workers solely because they'll work for cheap. But let me guess, you don't mind squeezing workers that way, do you?

Originally Posted by thaiboxerken

And therefore supply side economics works?

Uh, yeah, sure ken... that's clearly the logical conclusion.

[Belz...]

Originally Posted by WildCat

Now we're back to the claim that you can have a vibrant and growing economy based on nothing but transfer payments.

Yeah, apparently. However, since I'm a bit lazy, would you mind quoting the post where someone said this ?

[Corsair 115]

Originally Posted by allanb

Charts like that don't mean much because so much depends on which base year you choose. Why 1979?

Would you like to publish a chart showing the same data, but with 1986 instead of 1979 as your base year?

I refer you back to post #66. Because I commented on how the income growth trend was remarkably similar from 1947 to about 1979 across the quintiles and top 5%, but after about 1979 income growth starts diverging noticeably.

Below is a graph I made from Census Bureau data mentioned on the links given in that post. The values are based on constant dollars and are relative to each category's income level in the first year of the data series. The time period is from 1947-2009 (the latest year the source Census Bureau file went to at the time I created the graph).

Note the incredibly similarity in each category's growth relative to the starting year through to about 1979. Then notice how the lines markedly diverge after about 1979. Clearly some sort of fundamental changes took place in or about 1979. What was going on for the first thirty years that allowed such nearly identical rates of income growth? And what was happening in the next thirty years which resulted in such disparate income growth?

[thaiboxerken]

Originally Posted by WildCat

Uh, yeah, sure ken... that's clearly the logical conclusion.

Then what is the conclusion? Why mention it at all?

[RandFan]

Originally Posted by Corsair 115

I refer you back to post #66. Because I commented on how the income growth trend was remarkably similar from 1947 to about 1979 across the quintiles and top 5%, but after about 1979 income growth starts diverging noticeably.

Below is a graph I made from Census Bureau data mentioned on the links given in that post. The values are based on constant dollars and are relative to each category's income level in the first year of the data series. The time period is from 1947-2009 (the latest year the source Census Bureau file went to at the time I created the graph).

Note the incredibly similarity in each category's growth relative to the starting year through to about 1979. Then notice how the lines markedly diverge after about 1979. Clearly some sort of fundamental changes took place in or about 1979. What was going on for the first thirty years that allowed such nearly identical rates of income growth? And what was happening in the next thirty years which resulted in such disparate income growth?

Wowzers. Thank you. I've bookmarked that. It's really amazing to look at. I'll bet most conservatives haven't a clue about the data.

[Skeptic Ginger]

Originally Posted by WildCat

Who's in favor of squeezing workers? I'm certainly not. Nor am I the one advocating opening the borders to low-skilled foreign workers to add to the existing glut of low-skilled domestic workers solely because they'll work for cheap. But let me guess, you don't mind squeezing workers that way, do you?...

Let me guess, you believe it is liberals who want open borders and you don't believe powerful corporate entities have anything to do with it?

It's not just open borders, BTW. My son is currently in grad school and despite the fact I've paid taxes my whole life, which should have gone to educational benefits he'd enjoy, current Tea Party politics have strangled the educational system under the BS belief that the educational system is overfunded leading to overspending. That's just CRAP. So he'll graduate with more dept than he should have while we import educated workers from abroad to fill the corporate needs.


BTW, you dodged the question: Seems to me you are ignoring the part of the equation that says squeezing the workers more and more eventually eliminates the bulk of consumers.

Then what happens?

[Skeptic Ginger]

Originally Posted by RandFan

Wowzers. Thank you. I've bookmarked that. It's really amazing to look at. I'll bet most conservatives haven't a clue about the data.

In lala land, all that top end wealth was "created" not shifted.

[WildCat]

Originally Posted by RandFan

Wildcat: I'm going to take you off of ignore for a little bit to give you an opportunity to address the OP.

• Please to define supply side economics?
• Please explain how the Bush Tax cuts had any of the stated effects of supply side economics (what is the predictive power of the model and did the results meet the prediction)?

RandFan, all economic theories have their good points and bad points. Some explain some things well, and other things not so well. The reason you have so much disagreement among economists about so many things is most economic theories are impossible to test. There are infinite variables, and it is usually impossible to control for these variables.

Which leads us to the Bush tax cuts - how can anyone say if they made things better or worse? We dont have two perfectly identical USAs to compare, one with tax cuts and one without. The economy was in recession when Bush took office, did the cuts reduce the effects of the recession? It's impossible to say with any certainty. 9/11 didn't do our economy any favors, and certainly not the wars.

I think it stands to reason that if people have more money to spend that they will spend more, and even you agree that consumer spending is good. But you also have to pay for the government you have, where should that balance be?

There are examples of a country increasing tax revenue even as they lowered tax rates. Russia's revenue increased 20% when the went to a 13% flat tax, previously there was a 40.5% payroll tax and also an income tax which topped out at 30%. But there was also more compliance, so once again it's hard to discern the effects of just one variable or policy change.

You criticize the Bush tax cuts, yet I never hear you criticize the Obama cuts (the payroll tax cuts). If Bush's are bad, aren't Obama's bad too? 80% of the Bush cuts went to the middle class, and Obama is on record as opposing those rates to rise to where they once were. Do you agree or disagree with Obama on those? It seems like so many of your posts are partisan political rants, I really wish we'd (I mean the country as a whole) stop looking at everything through a political lens and instead work for the common good. But it seems every policy change is directed at appeasing one group of voters at the expense of another rather than what is good for all. Dems want to dole out goodies to their base, the GOP wants to do the same for theirs. It really disgusts me how bad it's become, wheree any discussion about economics or other policy turns into partisan bickering.

Supply side economics gained prominence in the 1970s, when inflation pushed more people into the higher tax brackets even though their purchasing power wasn't increasing. It was thought that this reduced consumer spending and contributed to the bad economy of the time (and I'm sure you remember that). Maybe we wouldn't be having this debate if marginal tax brackets were adjusted for inflation instead of trying to adjust tax rates?

As for the chart in the OP, I'm at a loss to explain what it has to do with supply side economics. We're slowly coming out of a recession, consumers still aren't spending and companies have cut costs to the bone and are reluctant to expand so long as demand remains stagnant. The housing crisis is still dragging everything down, tens of millions of Americans aren't as wealthy as they thought they were 5 years ago and this has a deep psychological effect. It's kind of like how for many decades after the Great Depression those who lived through it were reluctant to spend their savings or throw away anything which could be reused. It's going to be a while until consumers have the confidence to spend again. I think they're taking their tax savings and paying down debt rather than buying new things. Perhaps once debt gets down to a comfortable level they'll spend more.

I don't see incomes rising until both unemployment decreases and worforce participation increases. The labor market responds to glut just like any other market does.

So in conclusion I think the real estate bust and subsequent consumer wealth reduction and unemployment are influencing the economy now far more than changes in marginal tax rates. But I do think we have to start living within our means. Government spending can't keep growing at its current pace and we should probably raise taxes too, but I think those should be raised across the board, because there simply isn't enough revenue to be had from just the rich. But I don't expect that to be a magic bullet to pull us quickly out of the economic doldrums. It's going to be along slog.

My $0.02

[psionl0]

Originally Posted by Corsair 115

Note the incredibly similarity in each category's growth relative to the starting year through to about 1979. Then notice how the lines markedly diverge after about 1979. Clearly some sort of fundamental changes took place in or about 1979. What was going on for the first thirty years that allowed such nearly identical rates of income growth? And what was happening in the next thirty years which resulted in such disparate income growth?

Your chart suggests that 1979 was a pivotal year. What has happened since then?

Some of the developments since then include:

• Dismantling of protective international trade barriers
• Deregulation of the banking system
• Increasing availability of credit for consumers
• Governments borrowing rather than printing their deficits
• Increasing restrictions on the ability of unions to win wage increases for their members
• An explosion in the financial derivatives market
• Tax breaks aimed for the wealthy and corporations
• A constant increase in the size of governments

It should be noted that your chart doesn't show that the 1970's were characterized by "stagflation". Evidently the boom conditions of the 1950's and 1960's could not be sustained by the economic policies of that era.

[WildCat]

Originally Posted by Skeptic Ginger

Let me guess, you believe it is liberals who want open borders and you don't believe powerful corporate entities have anything to do with it?

I think if you want wages to rise at the lower end of the scale you can't continue to glut an already glutted market. And I think you should know by now that I think those who hire illegal workers should pay a heavy price for doing so. And I'm happy to allow those already here to stay in exchange for a rational immigration policy that imports workers only when truly needed and not just because they're willing to work for cheap. You want to fine companies $1,000 for every day theu employ an illegal worker? I'm fine with that. It's far easier to control illegal immigration by cracking down on employer rather than trying to seal a border.

Originally Posted by Skeptic Ginger

It's not just open borders, BTW. My son is currently in grad school and despite the fact I've paid taxes my whole life, which should have gone to educational benefits he'd enjoy, current Tea Party politics have strangled the educational system under the BS belief that the educational system is overfunded leading to overspending. That's just CRAP. So he'll graduate with more dept than he should have while we import educated workers from abroad to fill the corporate needs.

The cost of college was spiraling out of control (way more than the rate of inflation would dictate) long before there was a tea party, and the reasons for that are complex and well beyond the scope of this thread. But yes, it's not just low-skilled workers who are feeling the squeeze from foreigners willing to work for less. But in this case it's from legal workers who take advantage of a broken work visa program. Far too many employers are claiming they can't find domestic workers when in fact they just can't find cheap domestic workers. The work visa program needs to be reformed.

Originally Posted by Skeptic Ginger

BTW, you dodged the question: Seems to me you are ignoring the part of the equation that says squeezing the workers more and more eventually eliminates the bulk of consumers.

Then what happens?

I didn't dodge it, I agree with you. Income stagnation is a real problem, and I think much of it is related to skyrocketing health care costs. When a company pays more for health insurance there's less available for raises. And surely you know by now I'd like to break the link between employment and health insurance? If I had my way benefits would be taxed as income and government should be managing health care. IMHO only the government has the power to force health care providers (note I'm not talking about health insurance but hospitals and such) to rein in their costs. Insurance companies simply don't have the clout to do it themselves. But that's another thread...

[RandFan]

Originally Posted by WildCat

RandFan, all economic theories have their good points and bad points. Some explain some things well, and other things not so well. The reason you have so much disagreement among economists about so many things is most economic theories are impossible to test. There are infinite variables, and it is usually impossible to control for these variables.

¹Which leads us to the Bush tax cuts - how can anyone say if they made things better or worse? We dont have two perfectly identical USAs to compare, one with tax cuts and one without. The economy was in recession when Bush took office, did the cuts reduce the effects of the recession? It's impossible to say with any certainty. ²9/11 didn't do our economy any favors, and certainly not the wars.

⁴I think it stands to reason that if people have more money to spend that they will spend more, and even you agree that consumer spending is good. But you also have to pay for the government you have, where should that balance be?

⁴There are examples of a country increasing tax revenue even as they lowered tax rates. Russia's revenue increased 20% when the went to a 13% flat tax, previously there was a 40.5% payroll tax and also an income tax which topped out at 30%. But there was also more compliance, so once again it's hard to discern the effects of just one variable or policy change.

You criticize the Bush tax cuts, yet I never hear you criticize the Obama cuts (the payroll tax cuts). If Bush's are bad, aren't Obama's bad too? 80% of the Bush cuts went to the middle class, and Obama is on record as opposing those rates to rise to where they once were. Do you agree or disagree with Obama on those? It seems like so many of your posts are partisan political rants, I really wish we'd (I mean the country as a whole) stop looking at everything through a political lens and instead work for the common good. But it seems every policy change is directed at appeasing one group of voters at the expense of another rather than what is good for all. Dems want to dole out goodies to their base, the GOP wants to do the same for theirs. It really disgusts me how bad it's become, wheree any discussion about economics or other policy turns into partisan bickering.

Supply side economics gained prominence in the 1970s, when inflation pushed more people into the higher tax brackets even though their purchasing power wasn't increasing. It was thought that this reduced consumer spending and contributed to the bad economy of the time (and I'm sure you remember that). Maybe we wouldn't be having this debate if marginal tax brackets were adjusted for inflation instead of trying to adjust tax rates?

⁶As for the chart in the OP, I'm at a loss to explain what it has to do with supply side economics.

⁷We're slowly coming out of a recession, consumers still aren't spending and companies have cut costs to the bone and are reluctant to expand so long as demand remains stagnant. The housing crisis is still dragging everything down, tens of millions of Americans aren't as wealthy as they thought they were 5 years ago and this has a deep psychological effect. It's kind of like how for many decades after the Great Depression those who lived through it were reluctant to spend their savings or throw away anything which could be reused. It's going to be a while until consumers have the confidence to spend again. I think they're taking their tax savings and paying down debt rather than buying new things. Perhaps once debt gets down to a comfortable level they'll spend more.

⁸I don't see incomes rising until both unemployment decreases and worforce participation increases. The labor market responds to glut just like any other market does.

So in conclusion I think the real estate bust and subsequent consumer wealth reduction and unemployment are influencing the economy now far more than changes in marginal tax rates. But I do think we have to start living within our means. Government spending can't keep growing at its current pace and we should probably raise taxes too, but I think those should be raised across the board, because there simply isn't enough revenue to be had from just the rich. But I don't expect that to be a magic bullet to pull us quickly out of the economic doldrums. It's going to be along slog.

My $0.02

1. I've conceded on many ocassions that there is no way to know whether or not things would have been better without the Bush tax cuts. I note that A.) things have not been all that great with them. B.) things have been much better in times past with higher rates.
2. I find it the height of irresponsibility that we went into debt for the wars. In the past we didn't fight wars after lowering tax rates.
3. Consumer spending is good but there is a point where you cannot decrease tax rates without having sufficient revenue to cover debts. IMO 2001 and particularly 2003 likely did not help us much.
4. Okay, how do you know? If you tell me that we can't establish cause and effect following the bush tax cuts how do you know things wouldn't have been even better in your two examples if tax rates had not been lowered? We don't have two identical examples to run, right?
5. I don't criticize the Bush tax cuts. I criticize those who say they cannot be raised. I criticize those who sincerely believe that the only thing that can be done with tax rates is to lower them. I criticize those who make supply side economics claims by selectively picking data (we can infer that lowering taxes is good in the Russian example but we cannot insure that lowering tax rates is bad in the Bush example).
6. Had you answered my question I could have told you what the chart had to do with supply side economics. As it is I've not a clue what you even think it is.
7. Here's the thing, I see no evidence that supply side economics has any means to improve our situation now or in the past. You say "well we can't know". Well, we've had higher rates in the past and we did okay. The idea that taxes can only harm the economy is without justification.
8. Companies won't hire a single person without demand. Until consumers start buying more goods we won't get out of this. It doesn't matter how much money the companies have. It doesn't matter how low their tax rates are. They aren't going to hire without increased demand.

I think there is no question we need to cut spending. I just don't think we should until the economy turns around. And that's my 2 cents.

Anyway, I appreciate your responding to me and doing so in a measured tone. Thank you.

[SezMe]

WildCat, we've had our moments but I have to say that your #307 & #309 are very well stated. I don't agree with all you points (but some I certainly do) but those two posts made a real contribution to the thread. Whether I agree or not is beside the point; you stated your case clearly.

Thanks.

[Belz...]

Originally Posted by Belz...

Yeah, apparently. However, since I'm a bit lazy, would you mind quoting the post where someone said this ?

Still waiting, WildCat.

[Belz...]

Originally Posted by WildCat

RandFan, all economic theories have their good points and bad points. Some explain some things well, and other things not so well. The reason you have so much disagreement among economists about so many things is most economic theories are impossible to test. There are infinite variables, and it is usually impossible to control for these variables.

Which leads us to the Bush tax cuts - how can anyone say if they made things better or worse?

We can't say for sure, but there's no harm in trying to raise taxes on the wealthy and see what happens in the medium term.

[Caper]

Originally Posted by RandFan

Wildcat: I'm going to take you off of ignore for a little bit to give you an opportunity to address the OP.

Why would you ever have Wildcat on ignore? Almost no one defends his position or brings more relevant points to a discussion.

[3point14]

Originally Posted by Skeptic Ginger

Seems to me you are ignoring the part of the equation that says squeezing the workers more and more eventually eliminates the bulk of consumers.

Then what happens?

Consumption remains the same, but this time it's on the never never?

Of course, when the credit runs out...

[The Don]

Originally Posted by WildCat

Can you say "value added tax"?

It isn't charged on sugar.

[bobwtfomg]

Originally Posted by RandFan

Wowzers. Thank you. I've bookmarked that. It's really amazing to look at. I'll bet most conservatives haven't a clue about the data.

not just conservatives, it seems most Americans don't have a clue about the data when it comes to wealth distribution according to a survey of 5,522 Americans by two behavioral scientists.

Test yourselves
What percentage of wealth in America is owned
by the poorest 40 percent? Wealth, or net worth,
means all property of value, from cash to art to
stocks and bonds to homes, minus debts.

http://taxprof.typepad.com/files/129tn0251.pdf

sorry if this is a little OT

[respect]

Originally Posted by Belz...

Well I don't know if it's evidence or not but he did try to give you what you asked for here:

The point was that some of the arguments advanced in supply side theory are supportable.

It makes considerably more sense to look at their numerous policy positions and determine which ones are useful and which ones are not than to ask blanket questions about whether supply side economics is correct or not.

The evidence for their assertions about expansionary supply policies is highly dubious. Keynes' most enduring contribution to the field is arguably his observation that demand drives the economy. Supply siders attempted to resurrect old classical arguments contrary to that and have not been convincing IMO. However, when Keynesians dominated the field in the 40's and 50's they seem to have taken that view a little too far, and were dismissive about supply side policies mattering at all. While demand drives the economy and attempts to jump start the economy typically focus on demand side policies, supply side policies certainly do affect the ability of supply to meet demand and have a considerable impact on prices and product availability.

This failing was already recognized in the neoclassical views that have dominated mainstream economics from the 70's to the present, supply side economics didn't really add anything. But, as a primarily political movement, rather than economic movement, they can probably be said to have helped shift public policy debates and understanding about the importance of pro-supply policies.

[respect]

Originally Posted by RandFan

This is just an assertion but that said, how is market monetarism so different from Keynesian economics as to declare Keynesian economics dead? Please to show this is the consensus of experts if you are going to appeal to authority? In any event, it seems that market monetarism, like Keynesian economics is opposed to Laissez-faire. I'm fine with that. If there were a term for non-laissez-faire capitalism that encompassed Keynesian and other terms I would be fine with using that.

Okay, so America and many other nations have fiscal and monetary policies and a central bank to stabilize the output of the business cycle. Raising and lowering interest rates and controlling the printing of money.

I don't claim classical Keynesian economics BTW.

There isn't a sign up sheet or anything like that, rather it can be seen in the discussions ongoing amongst economists. In a nutshell this issue is that monetary policy has to be restrained way below its potential for fiscal stimulus to work at all. The interest that rose a few years back in Keynesian fiscal stimulus policies has largely receded because the same old problems with it have cropped up again. Promises that it can pay for itself have not materialized which really shouldn't surprise anyone because they weren't true in the past, arguments advanced by Brad DeLong and Larry Summers along these grounds are the same kind of pie in the sky dreaming that supply siders and their promises of self-paying tax cuts engage in. Fiscal stimulus trades short term benefits for long term deficit problems and does not seem to be able to generate enough activity to offset them, even Krugman sort of inadvertently acknowledged this the other day, "Remember, the U.S. government can’t run out of cash (it prints the stuff)." Well okay then, that's the problem, well one of them anyway. This doesn't pay for itself, but does risk uncontrolled inflationary problems, one of the major failings in Keynesian positions.

The perhaps bigger, more pressing problem is that central banks have to restrain themselves for fiscal stimulus to work. It relies on a positive multiplier effect that approaches zero when interest rates are not zero bound. The argument Keynes himself advanced was that central banks run out of ammo when interest rates drop to zero, it is the situation he described as a liquidity trap, but we now know that central banks are never out of ammo, especially when they are not restrained by a gold standard (or some other similar restriction). The question is whether or not restraining them to protect fiscal stimulus goals is a good idea, the answer appears to be no, optimistic stimulus projections have not materialized, central banks can pursue expansionary policies that do not bring in long term debt problems, too much Keynesianism means stagflation in the long run, monetary policy does not share that problem.

It is too late now, in that because the government has enacted fiscal policies, the Fed does not appear to be willing to sabotage them. However, we can still learn for future situations and the Fed does appear to be listening to the market monetarist arguments to the degree it can without sabotaging Washington's goals.

As Sumner says here:

"It seems to me that there are two ways of thinking about how monetary policy would react to fiscal stimulus. One approach would be to ask: “What is the optimal Fed response to fiscal stimulus?” And the answer to that question is rather obvious; the Fed should act in such a way as to completely neutralize the impact of fiscal stimulus, i.e. make sure the multiplier is precisely zero. This is because the Fed has some optimal level of expected AD growth in mind, and that level should not change just because fiscal policy changed. So if the Fed is doing its job, which means if it is always targeting expected AD growth at what it sees as the optimal rate, then it will try to completely offset fiscal stimulus and the expected fiscal multiplier will be precisely zero. That’s why fiscal stimulus almost disappeared from graduate textbooks in recent years."

The Fed isn't doing its job anywhere to the level it can because of fiscal stimulus goals.

What makes this all incredibly stupid is that this shouldn't be surprising. The relative strengths of monetary policy were already well known, the Keynesians lost this debate 40 years ago for the same reasons they are now. Monetary policy that does not require all of the long term problems associated with fiscal policy is far more compelling.

[respect]

Originally Posted by psionl0

Your chart suggests that 1979 was a pivotal year. What has happened since then?

Some of the developments since then include:

• Dismantling of protective international trade barriers
• Deregulation of the banking system
• Increasing availability of credit for consumers
• Governments borrowing rather than printing their deficits
• Increasing restrictions on the ability of unions to win wage increases for their members
• An explosion in the financial derivatives market
• Tax breaks aimed for the wealthy and corporations
• A constant increase in the size of governments

It should be noted that your chart doesn't show that the 1970's were characterized by "stagflation". Evidently the boom conditions of the 1950's and 1960's could not be sustained by the economic policies of that era.

Stagflation is what killed off Keynesianism as a dominant school of thought. Which isn't to say they have nothing to offer, but mainstream economics these days is neoclassicalism with a side dishes of Keynesianism and monetarism.