To spur job creation, bring on supply-side economics

cawacko said:
Mott, what has Keynesian economics done for us here? What has QE done for us? What about the actual issues the professor addresses? Why aren't banks lending? How much longer does the Fed need to stick with monetary stimulus and how bad will we feel the affects when it's done? (it's highly highly optimistic to think the Fed can print money like it has and there will be no ill effects when it stops)
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Wild ass guess, you don't own a lot of stock!
 
Truth Detector said:
Failed? Because you say so? Very compelling arguments from the Liberal left as usual.
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We've waited over 30 years for trickle down to work, so where are all the jobs it was supposed to create? Oh yea, first they went to Mexico then your conservative leaders made insane trade deals with your Communists Chinese allies. All at the cost of American jobs, society and economy. The only thing it (trickle down) did create was a world wide depression in 2008 that I believe is the purpose of your 'free trade' and 'trickle down' bullshit.

Thom Hartmann, one of the great thinkers of our time, too bad your conditioning won't let you understand him.

Where are all the jobs your ideology was supposed to create? 30 yrs is enough time to implement and see the results of trickle down. Bottom line, it's a failed ideology that needs to be treated like a cancer on the U.S.
 
Crashk said:
Reganomics" is nothing more than the fulfillment of capitalism, which is infinite greed elevated to maximum virtue -- the methodical rejection of every humanitarian precept our species has ever set forth. "Reagonomics" is therefore capitalism that has captured all the powers of the state and thereby imposed "capitalist governance": absolute power and unlimited profit for the Ruling Class, total subjugation for all the rest of us. "Capitalist governance" is precisely what Marx and Engels foresaw when they correctly predicted capitalism would inevitably morph into what they labeled "imperialism." Another name for "Reagonomics" aka "capitalist governance" aka "imperialism" is "fascism."

- See more at: http://www.thomhartmann.com/blog/2014/03/cancer-stage-reaganomics#sthash.qlxzOSbC.dpuf
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Imperialism and aristocracy preceded capitalism by a span of the entirety of human history up until 1776. They also preceded every other contemporary economic theory in the same manner.
 
Crashk said:
We've waited over 30 years for trickle down to work, so where are all the jobs it was supposed to create? Oh yea, first they went to Mexico then your conservative leaders made insane trade deals with your Communists Chinese allies. All at the cost of American jobs, society and economy. The only thing it (trickle down) did create was a world wide depression in 2008 that I believe is the purpose of your 'free trade' and 'trickle down' bullshit.

Thom Hartmann, one of the great thinkers of our time, too bad your conditioning won't let you understand him.

Where are all the jobs your ideology was supposed to create? 30 yrs is enough time to implement and see the results of trickle down. Bottom line, it's a failed ideology that needs to be treated like a cancer on the U.S.
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Where were the jobs and the economy on 1/20/1981 when Reagan first entered office - lost to Keynesianism, I presume?
 
Crashk said:
Reganomics" is nothing more than the fulfillment of capitalism, which is infinite greed elevated to maximum virtue -- the methodical rejection of every humanitarian precept our species has ever set forth. "Reagonomics" is therefore capitalism that has captured all the powers of the state and thereby imposed "capitalist governance": absolute power and unlimited profit for the Ruling Class, total subjugation for all the rest of us. "Capitalist governance" is precisely what Marx and Engels foresaw when they correctly predicted capitalism would inevitably morph into what they labeled "imperialism." Another name for "Reagonomics" aka "capitalist governance" aka "imperialism" is "fascism."

- See more at: http://www.thomhartmann.com/blog/2014/03/cancer-stage-reaganomics#sthash.qlxzOSbC.dpuf
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It would be at this point that you dazzle us with the stunning recap of historically successful economies premised upon societal altruism.
 
cawacko said:
Mott, what has Keynesian economics done for us here? What has QE done for us? What about the actual issues the professor addresses? Why aren't banks lending? How much longer does the Fed need to stick with monetary stimulus and how bad will we feel the affects when it's done? (it's highly highly optimistic to think the Fed can print money like it has and there will be no ill effects when it stops)
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Read your history. Keynesian economics saved capitalism.
 
Mott the Hoople said:
Read your history. Keynesian economics saved capitalism.
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LMAO; where did you find this; in the Communist manifesto found on leftist blog sites? Apparently you are wallowing in denial over the current Keynesian created malaise and slowest recovery since FDR's Keynesian attempts before WWII.

I am always amused by the moronic leftist claims that Governments can print and spend their way out of economic recessions. I only wish it were that easy and actually worked. But unfortunately for you and millions of others who cannot find any decent full time work, it doesn't as this dunce of a President has been proving for over five years now.
 
cawacko said:
I agree with what the OP says. Mott laughed at it. I attempted to have a discussion with Mott. Thankfully you are here to chime not on any actual political subject with thoughts or opinions of your own but to judge and argue with other posters.
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I laughed because the failure of supply side economics has been so well documented as to not really be in dispute. Only those who have a political stake in increasing income inequality support it.

The failures of this over simplistic model are legion.

Supply Side Economics overstates the behavioral changes to tax rates. Labor supply, investment and business activity are just not as responsive to tax changes as supply siders would lead you to believe. That's not to say there's no response it's just that the response tends to be the restructuring of income and not the creation of income. Which is not was supply sider envisage, unless you're a tax lawyer.

Supply Siders don't place enough emphasis of budget deficits. As Dick Cheney famously quipped, to them, budget deficits don't matter. As a Keynesian I'm no deficit hawk, there is a time and a place for deficit spending. Namely as economic stimulus during recession or depression when there is a contraction in demand. Ultimately though we must pay for what we spend. History clearly shows that supply side tax cuts, since they don't have the growth effects their adherents tout, are causally linked to structural budget deficits (and by that I mean deficits even at full economic capacity) making a sustainable economic path virtually impossible.

Supply Side Economics is also a significant contributor to income inequality. Supply-Side economics is a net zero sum proposition. All you essentially accomplish with supply side tax cuts is raise after tax income on the wealthy while losing federal revenues with no net economic growth. The wealthy gain income without adding value or economic growth. The rest of us lose federal revenue that's needed for important services like defense, building roads, hospitals, schools etc. Result, no net gain. No economic growth. Since supply siders are essentially redistributing income upwardly and not producing value is why I often refer to supply side economics as reverse socialism.

Then there's the fact that in the never, never land of supply-siders demand never, ever contracts. Thus stimulus spending to offset demand contractions (a central principle of Keynesian economics) are never required cause in supply side land demand never contracts. That just doesn't fit their model. Economic growth and prosperity are always just one marginal tax cut away. How they can miss current demand constraints that are so clearly evident is beyond me.

So yea, this notion of the OP is selling that Supply Side Economics is our route to prosperity and it's ONLY ONE MORE TAX CUT FOR THE WEALTH AWAY is pretty damned laughable given the evidence.

As for me, I'm sticking with an economic system that is proven to work during periods of constraints in demand that do actually stimulate economic growth and prosperity in an across the board manner based on increasing productivity and adding value, Keynesian Economics.
 
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Supply Side Economics = expand/grow the economy and there is enough pie for everyone to make a grab for wealth.
Keynesianism = spend more money on the government side to ensure that there is at least a miniscule GDP growth.

I guess neither could technically be called a "zero sum game" philosophy, but one is certainly more progressive and optimistic.
 
Mott the Hoople said:
I laughed because the failure of supply side economics has been so well documented as to not really be in dispute. Only those who have a political stake in increasing income inequality support it.

The failures of this over simplistic model are legion.

Supply Side Economics overstates the behavioral changes to tax rates. Labor supply, investment and business activity are just not as responsive to tax changes as supply siders would lead you to believe. That's not to say there's no response it's just that the response tends to be the restructuring of income and not the creation of income. Which is not was supply sider envisage, unless you're a tax lawyer.

Supply Siders don't place enough emphasis of budget deficits. As Dick Cheney famously quipped, to them, budget deficits don't matter. As a Keynesian I'm no deficit hawk, there is a time and a place for deficit spending. Namely as economic stimulus during recession or depression when there is a contraction in demand. Ultimately though we must pay for what we spend. History clearly shows that supply side tax cuts, since they don't have the growth effects their adherents tout, are causally linked to structural budget deficits (and by that I mean deficits even at full economic capacity) making a sustainable economic path virtually impossible.

Supply Side Economics is also a significant contributor to income inequality. Supply-Side economics is a net zero sum proposition. All you essentially accomplish with supply side tax cuts is raise after tax income on the wealthy while losing federal revenues with no net economic growth. The wealthy gain income without adding value or economic growth. The rest of us lose federal revenue that's needed for important services like defense, building roads, hospitals, schools etc. Result, no net gain. No economic growth. Since supply siders are essentially redistributing income upwardly and not producing value is why I often refer to supply side economics as reverse socialism.

Then there's the fact that in the never, never land of supply-siders demand never, ever contracts. Thus stimulus spending to offset demand contractions (a central principle of Keynesian economics) are never required cause in supply side land demand never contracts. That just doesn't fit their model. Economic growth and prosperity are always just one marginal tax cut away. How they can miss current demand constraints that are so clearly evident is beyond me.

So yea, this notion of the OP is selling that Supply Side Economics is our route to prosperity and it's ONLY ONE MORE TAX CUT FOR THE WEALTH AWAY is pretty damned laughable given the evidence.

As for me, I'm sticking with an economic system that is proven to work during periods of constraints in demand that do actually stimulate economic growth and prosperity in an across the board manner based on increasing productivity and adding value, Keynesian Economics.
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I appreciate the theory's and all but what is Keynesian giving us today? We have massive deficits but we don't the growth you speak of right now and what growth we do have is all goin to the top 5% so there is no 'across the board manner' that you reference. And what's going to happen when we pull the plug on QE? That's not going to be pretty.
 
Truth Detector said:
It's ironic to find an Op-Ed article that is spot on in a journal that desperately avoids reality and tries to defend the Imperial Presidency at every turn. But I guess there comes a time that even while practicing malfeasance, the facts are hard to keep out.

Great article on the worst economic recovery in the history of America. Bolded points are mine.

To spur job creation, bring on supply-side economics

The Obama administration must shed its ideological blinders to spur hiring.
By Brad Schiller
March 23, 2014

The Congressional Budget Office says unemployment won't drop to 5.5% — the benchmark for "full employment" — until 2024. That implies a 15-year recovery from the Great Recession (which officially ended in June 2009, when the economy started growing again).

That projection seems at odds with recent labor market improvements. Employment has increased by 7 million since October 2009 and unemployment has fallen from 10% to 6.7%. But the population continues to grow, bringing more workers (including immigrants) into the labor market.

To bring the unemployment rate down further, job creation has to be faster than population growth. That's just for starters. Then there are those 2.3 million workers who are sitting on the labor market sidelines because they are so discouraged by futile job-seeking that they are not actively looking for work (and not counted in official unemployment statistics), and an additional 7.2 million who are working part time while waiting for full-time employment. Those workers will trickle into the labor market as job prospects improve.

To get back to the 4.7% unemployment we had in 2007 requires nearly 300,000 new jobs every month. According to the Bureau of Labor Statistics, that has happened in only two of the last 62 months.

The current recovery is so much slower than earlier ones that it easily qualifies as America's worst. In less than one out of 24 months have at least 300,000 jobs been created. In the recovery from the 1973-75 recession, 300,000-plus jobs were created in 14 months out of 24; for recovery from the 1981-82 recession, 13 out of 24 months; for the 1990-91 recession, nine of 24 months.

Moreover, in 1978 total U.S. employment was only 83 million people, compared with 137 million in 2014. So, creating 300,000 jobs per month was a much more extraordinary feat in that much smaller labor force. To match the job creation records of 1973-75 and 1981-82 would require job creation of 450,000 to 500,000 jobs per month in today's labor market. That has happened only once in the last 62 months.

It took four years to restore full employment in the wake of the 1973-75 recession, 5 1/2 years after the 1981-82 recession and only 2 1/2 years after the short 1990-91 recession. The CBO says it will take a staggering 15 years to achieve in the current recovery.

What accounts for this abysmal track record and gloomy forecast? The 2009 American Recovery and Reinvestment Act and subsequent tax/spending initiatives add up to the largest fiscal stimulus in history. The same is true for monetary policy: The Fed drove interest rates down to near zero and has continued to pour reserves into the banking system. The end result has been the most aggressive use of fiscal and monetary policy tools in history. Yet job creation has been agonizingly slow.

Why? The greatest failing of the Obama administration is its refusal to recognize, much less accommodate, supply-side determinants of job creation.

Supply-side policy focuses on the conditions that influence business creation, production and hiring decisions. What inspires or deters business start-ups? What motivates producers to increase output? Hire more workers? Invest in new machinery, buildings and technology? Demand for goods and services is a critical consideration in those decisions, but not the only one. Tax rates count, as do regulations on banking, production and payrolls. Ronald Reagan understood this well, heralding the heyday of supply-side economics with dramatic cuts in marginal tax rates for small businesses.

What this administration has instead given us are disincentives for business and job creation, such as the Dodd-Frank bank reforms, which have kept a stranglehold on bank loans for nearly five years. How else is one to explain the huge buildup of bank excess reserves in a growing economy? Any homeowner who has tried to refinance or buy a new home in recent years knows how odious and uncertain the process has become. Small businesses don't stand a chance of getting loans in this uncertain and restrictive banking environment.

The 2010 Consumer Financial Protection Act exasperated the financing problems of small businesses, burying alternative financing sources in red tape. Then there's the marquee Affordable Care Act, which has raised payroll costs and discourages the hiring of full-time employees. Now the White House wants to increase the minimum wage by 40%, an initiative that the CBO says would eliminate 500,000 jobs in its first two years.

The greatest obstacle to faster job creation is the continued unwillingness of the Obama administration to even recognize the possibility that its interventions might actually deter small-business creation and more hiring. It asserts that new banking regulations have made consumer access to loans easier and cheaper, that healthcare reforms will create jobs and save businesses money, that higher marginal tax rates don't discourage work and investment, and that minimum-wage hikes don't eliminate jobs.

So long as the White House continues to wear such ideological blinders, full employment will be elusive. However meritorious banking, healthcare, transportation and workplace reforms might be, we have to consider their unintended and largely negative consequences for job and business creation. To restore full employment in less than 15 years, we need more supply-side incentives, not more fiscal and monetary stimulus.

Brad Schiller is emeritus professor of economics at American University and the author of "The Economy Today."


http://www.latimes.com/opinion/comm...covery-20140323,0,1997055.story#ixzz2wiEzOyqe
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The recession under Reagan was an entirely different sort of economic phenomena. There was a huge amount of inflation at the time, and the federal reserve decided to raise rates as high as needed to conquer it. This naturally lead to a large amount of unemployment. When inflation started finally going down, the federal reserve let off the extremely high interest rates, unemployment predictably went back down as well. Whatever effect Reagan's economic policies had, they were largely secondary. It was primarily a monetary phenomena, not a fiscal one.

I can't understand this right wing obsession with tax cuts as a panacea for all economic ills. The government may not be the people, but neither is it a black hole, taxes aren't subtracted from GDP. I've never seen a convincing and clear correlation between tax rates and economic growth. What conservatives will do is cherry pick the data, "Oh, things were good for a few years under Reagan", "Oh, North Dakota's doing good currently, it must be their tax policy". Guess what, I can pick a few years in a few places that were great in high tax places as well. Norway has a spectacular economy right now, I'm sure it's all due to their 55% marginal income tax rate and 25% GDP (more than double the Obamunists current tax rate as a % of GDP), it probably has no more to do with any oil boom than North Dakota's case does.

This is not an enlightening intellectual exercise. No country has ever tax-cut itself out of poverty, indeed, almost all of the countries that have raised themselves from poverty in the past hundred years had very large, invasive government. But 50 years of incredible growth in South Korea apparently mean nothing. The right would rather exaggerate the mediocre and short lived economic performance in Pinochet's Chile instead. Anytime you get a smidgen of growth in a low tax regime, it will be praised to high heaven, anytime you get the same growth in a high-tax one, it's all "fake", as if Adam's Smith invisible hand is eventually going to come down and punish these disrespectful people who dare grow without his approval. Yet, these economies keep keep on with their fake growth, year to year, the Hunanese peasant has discovered that fake food fills the stomach, and is so heedless to the condemnation of foreign conservatives that he be eating it.

In reality, all lowering tax rates by eliminating transfer policies does is to shift consumption patterns. Before, more of the economy was focused on producing things rich people like, now it's less so. It has pretty much zero net economic effect. Lowering it by reducing infrastructure and other investments has a definite net negative effect. The only place where it could unambiguously help would be with the military - shifting consumption to military matters is not an economic black hole either, but it's not a sector with in built long term ability to innovate and produce economic growth itself, and is only justified if foreign threats are large. But this is apparently the one thing we should keep, we should drop transfer payments with zero net effect, reduce infrastructure and investment in our future, and increase our dedication to an economically stagnant area.
 
cawacko said:
I appreciate the theory's and all but what is Keynesian giving us today? We have massive deficits but we don't the growth you speak of right now and what growth we do have is all goin to the top 5% so there is no 'across the board manner' that you reference. And what's going to happen when we pull the plug on QE? That's not going to be pretty.
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Deficits have dropped fairly dramatically since 2008. As it was, a good bit was due to drops in tax revenue, since 2010 there's been nothing in the way of extraordinary stimulus programs and mostly cuts to regular spending levels. Most would say our stimulus was never large enough anyway, China had a stimulus 2-3 times as large as a % of their GDP.
 
Threedee said:
Also, was it Keynesianism that grew the economy in 1939-1950, or was it Nazism and fascism? :D
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From 1932 to 1937, unemployment dropped by about 2/3 during the FDR administration. 1937 is the year FDR decided to balance the budget. The US joined the war in December 1941, which is what is probably represented by the unemployment rate suddenly dropping to nearly 0% at the tail end there. That's only the final 6 months in the graph, though, it's clear he had it to full unemployment before December 1941.
 
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