It was still better than doing nothing, which would have worsened unemployment. No economy fixes a recession all by itself and, since Keynes first suggested the idea to Roosevelt in the early 1930s, stimulus-spending on the part of governments remains the most effective tool in: *Putting people back to work, so *They have money in the pocket to spend, such that *Consumer Demand is increased, which results in *Increased production, thus adding jobs. Supply-side Spending Works. Not all the time, mind you, depending upon the nature of the recession, but most of the time stimulus-spending works. Last time around it was in the form of Obama's ARRA-spending in 2009 upon entering office, when the unemployment had skyrocketed: . It took four-more long years before the unemployment rate came down to less than 5%, but only because the Replicants (then heading the HofR after the 2010 mid-terms) refused all further spending. Of course, now with Donald Dork in the White House, they will open the spigot again. And claim to the nation the credit for "ending the recession". Believe that if you wish. But as regards historical economic fact, it remains a lie ...
Ok, color me confused, but when I hear "supply side" talked about in economics, generally the belief is that putting more money into the hands of producers and lowering taxes and regulation will spur the economy. This notion is a dismal failure in a global economic economy with so many other options for investing. Stimulus spending is about putting money into the hands of those that need goods and services and let supply increase driven by increased demand of those that have more dollars. Yes, agreed I'm not fan of DT, but it will be interesting to see if he engages in real deficit spending. He's talked about "paying for it" within the private sector, but if that money is diverted back to the Federal Government, it will be worthless. What is a lie?
A BASIC FACT OK, but it remains a "basic fact" that has been around for quite some time. The Global Economy did not start yesterday. It's been around for a long, long time. I suspect that you don't remember in the 19th century when Britain had almost a monopoly on the production of fabrics because they had cotton from their Indian Colony and wool produced in Scotland. What became of all that? Aint nothing left except the wool sweaters from Scotland. What happened? American cotton was cheaper, and so was American labor in the water-mill plants of New England that produced all sorts of cloth products. Where are those plants now? They are still there but not producing cloths. They were once used by hi-tech companies selling computers. That too has changed. Digital Equipment Corporation (DEC) - the second largest computer company until the 1990s - no longer exists. IBM sells more software services than BigMachines. (Everything is on a DataCloud somewhere.) We cannot resist change; only bend to it. And, as I never tire of saying, that change now manifests itself in jobs requiring a higher set of qualifications that can only be had by those with a postsecondary degree. MY POINT Which is why we have just stoopidly shot ourselves in the foot with Donald Dork, because Hillary was promising tertiary level degrees for our kids free, gratis and for nothing from state-schools of higher education. You know, like a primary and secondary education already is ...
My post you responded to didn't have the word "deficit" in it. I don't know what you are referring to.
Supply side economic policies are those which lower the gov imposed costs on production thus lowering prices which results in more wealth creation, jobs, and economic growth. The best examples are the Reagan years and the second term of Bill Clinton. That is hardly a failure in the global economy. Why would anyone conclude that ?? The best stimulus is an economic policy which creates wealth by increasing production. Production must precede consumption and the means for consumption comes from the workers paid wages in exchange for their human capital. It's all quite simple. Gov spending does not create wealth because the source of the spending comes from the wealth created by production. Gov spending is a transfer with an ~ 17% processing charge required by the bureaucracies which manage the transactions.
THE GOOD AND THE BAD ABOUT SUPPLY-SIDE ECONOMICS "Supply-side economics" is this: I, for one, disagree because it simply manifests the same reactionary thoughts of the Rabid Right. (It's all the gummints fault!) Bollocks to that notion. All they are looking for is less regulation of goods/services and the regulations are there to prevent harm to the public - like pools of polluting liquids or gases next to residential properties. Never underestimate the ignorance of people who propose "Supply-side Economics" - they will start a war to get DoD expenditures up and also their profits in Supplying the "New Demand". There is goodness in some Supply-side economics nonetheless. It is when national projects (like interstate highways) enhance/facilitate the entire economy. Obama had a great Supply-side idea that never came to be. It was a high-speed electric (non-polluting) rail-line from all major cities to all major cities across the US. (Then spurs to other state cities.) This is the sort of "government intervention" that actually benefits the economy universally and not just for select industrial/commercial groups. Such programs are damn few. (Which is why Dubya went to war in the middle-east.) Traditionally (Samuelson Economics), to effect Supply you must increase Consumer Demand. (The Supply & Demand curves are the first things you learn in EC101.) Now, it is axiomatic in Samuelson Economics that you cannot increase Supply of consumer goods/services without increasing Demand - which is instigated by consumers who have a strong propensity to buy. And, that only happens when they have the money to do so. Thus, when the economy is hit by a Great Recession and massive unemployment occurs, it is Keynesian-economics (which goes back to 1933 when he first proposed it to Roosevelt) to spur Demand by increasing government project expenditures. (And how we got the Hoover Damn in California and Tennessee Valley Authority back then.) These are massive Public Projects that benefit the entire nation, and they help spur Employment by boosting Demand (which results in increased Labor to Supply that Demand). Especially in times like the Great Recession. Those times are now behind us as the economy has been building employment for the past two years. See Unemployment to population Ratio: The economy has been adding jobs since two years. And unemployment is down to less than 5%! Which is not enough for some people! SO WHAT DOES THE NATION NEED? It needs to expand the Employment-to-population Ratio and get it back up to where it was before the Great Recession in 2008 at around 63%. That is, the economy pulls workers in who previously were not considered part of the work-force before. Iow, it needs to create jobs that will entice a select group of people (who think they really need not work) back into the workforce. And, as we all know, "want to work" is different from "need to work" ...
You refuse to learn from history. Why does your chart start in 2006 ?? And why does the chart indicate such a slow rate of increase ?? And why is real unemployment at 10% ?? And why is the LFPR at the lowest point since the late 70's ?? Why are 95 million people not in the labor force ?? For an economy to grow you must increase production in order to create the wealth necessary to 'fund desire' (aka demand). Supply side economic policies act to reduce consumer price which acts to increase production which acts to increase wealth creation and employment. Gov spending does not create wealth because the money is a transfer.
Lowering costs to do business in this economy will only increase wealth for those that own businesses. I have a good friend who owns a Benjamin Moore paint store (among several other businesses) in the town I live in. I was in a conversation with him at his store one day and in a conversation, he complained of taxes and regulations that were too high, he said that was what was holding him back. I asked him if taxes and regulation were lower, do you think you would hire more people? Would you move your store to another larger location? He thought about it for a minute and he told me that the only reason he would do those things were if business picked up. He needs more demand first. I asked him what he'd do with the extra money then. He said he'd probably invest most of it in stocks or bonds for his retirement. Now this is an anecdotal story of one business owner, but I think it's indicative of the situation we find in the majority of SMB's today. Even if you beleive that he might spend that money back into the economy, there just aren't enough people in the top 20% (which is where most sucessful business owners reside) to spend enough to create work for the other 80%. Apples and oranges. Prevailing economic conditions at that time were much different. No, it's not that simple. The productivity already exists and the producers aren't going to produce more until they see pressure on the inventories they already own. Benjamin Moore is not going to order increases in raw materials or hire more people to make paint until the demand at the retail end increases. And it's not going to increase until people have more money. If you are familiar with BM's paint it is very expensive, some of the pain runs $70 a gallon. Having used it I can tell you it is a fantastic product, but I'll tell you like I told my friend that owns the paint store. Until people have increasing amounts of disposables income, they will continue to buy their paint for $9 a gallon at Walmart and there is little that will convince them as to why they should buy a $50-$75 a gallon paint no matter what's its practical benifits. It's not all one side or the other, clearly, productivity is not the issue. Today 25%of US companies productive capacity is unused. The reason they don't utilize more of what they already have is the demand isn't there and no amount of lowering taxes, lowering regulation or decreased government (as it realtes to businesses) is going to fix that. If you're theory were true, you'd have to explain why, some of the best economic times the nation has seen in the last 100 years were when the nominal tax rate was at 90% on top income earners. One need only looks at Kansas to see that what I'm saying is true. Here, here, and here. Before you're tempted to point me to stories like these, I'll just say that positives are being paid for in terms of real value, be it education (or the lack thereof), roads (which are crumbling) or environment (the cost of which will be paid in the much longer term). Kansas will be an unmitigated falure, it's just going to take 10-15 years to fully realize that failure as real value is lost, value that cannot easily be calulated. The Federal government doesn't pay for spending with taxes, therefore spending does not come from production. Taxes have 4 main purposes. This has been known for a very long time. Though it's true we act like it does, which is, of course, why the economy is in such a mess. In the 1940's Chairman of the US Fed Beardsley Ruml recognized that taxes serve 4 main purposes: (1) as an instrument of fiscal policy to help stabilize the purchasing power of the dollar; (2) to express public policy in the distribution of wealth and of income as in the case of the progressive income and estate taxes; (3) to express public policy in subsidizing or in penalizing various industries and economic groups; and (4) to isolate and assess directly the costs of certain national benefits, such as highways and social security. (ibid p. 26 Source- Taxes for Revenue are Obsolete” in 1946, and “Tax Policies for Prosperity” 1964 Now I know you're going to tell me how dumb I am, that the evidence is clear and that I'm ignoring the obvious. I would simply respond by saying that you are mistaken, but I understand why you might think that. History is filled with these moments, when the accepted truth is turned on its face and people are faced with a different reality. One that challenges ideas they've been taught and come to understand to such a degree that it's no longer questioned, it's simply taken as true (Columbus prove the world was round anyone?). The idea that, at the Federal Level, that taxes pay for spending is one of those ideas. It's not true, but given the circular nature of the economy and the roots of our money based in commodities a long time ago makes the fact that most people don't comprehend the reality of their money, understandable. Now I'm very familiar with your argument. It's part economic, part political ideology. The fact that it's linked to politics makes my challenge of the idea, not simply an academic one, but a political one. I've known of few people that didn't internalize their ideas about their politics, thus, at its root, I'm not simply challenging a simple notion of economics, but an idea that, I suspect, you hold as part of your identity. I'm not interested in debating politics, I am interested in debating economics and letting people make their decisions about the politics on their own. There are unnecessary costs associated with government spending, specifically the sale of bonds directly to the private sector. That function was meant to meet a very different purpose what it was created, a purpose it no longer serves and has become an unnecessary transfer of wealth between the government and those in the banking sector. That, however, is an argument for another time. All government spending creates net new dollars minus the dollars that are removed via taxes. You know this as the deficit and deficit spending (at the federal level) creates wealth.
The Reagan economy, the Bush 41 economy, the Clinton economy, and the Bush 43 economy show that supply side economics work to grow the economy. Paint store anecdotes - really ?? It is that simple. Lowering the costs of production results in lower prices and resulting increases in production with resulting increase in employment. Basic stuff. How many did the 90% tax rate apply to ?? How much greater with lower tax rates would the economy have grown. Of course the federal gov pays for spending with tax revenues. The processing fee is that charged by the bureaucracies which do the spending. I have no idea where the ideas in your post come from. They certainly have no basis in economics.
Pure question begging. No stats, no facts. First, I should point out that I don't support federal taxes on corporations as a way to collect revenue at the federal level. It's regressive. Honestly, I support an entirely different tax structure, but I digress, that's best left for another thread. Second, lowering the cost of production may lower prices, but you're begging the question, again. You've skipped a step. First, you have to show that lowering taxes and regulation translates into increase profits to the business AND is spent to lower production costs. In fact, that has not been the case since 1980. Companies have 3 choices when they consider how to handle their profits: 1) Invest in plant, equipment and employee training 2) Pay dividends to stock holders 3) Buyback shares in order to boost stock prices. Starting n the 1980's paying dividends and soon after, the repurchasing of stock which has become a way for companies to please investors. So the fantasy that decreasing costs will lead to decreased costs is just that, pure fantasy. I invite you to read/ watch this. It should help you understand the economic reality of the US economy since Regan. https://hbr.org/2014/09/profits-without-prosperity You can't have to both ways. Either low taxes leads to growth and high taxes stifle growth or they don't, but given that the period of highest taxes was during one of the periods of over best overall health of the economy, you're claim would appear to be nothing more than question begging. I could just as easily reword your answer.....If the economy was good under Regan, Clinton and Bush 41 as you claim, imagine what it would have been if taxes were higher! Then explain how the Federal government would pay for spending on the very first day of the economy, assuming it worked under the same system we have today? You couldn't tax, because no one would have money until the government spends. You couldn't sell bonds because bonds are only bought and sold in US dollars. The simple fact is that you have to spend money before you collect it. One other example. Ever played the game of Monopoly? What is the first thing you do in the game after you set up the board, and pick your piece? Collect taxes or hand out money? You can't buy anything until the bank gives players money, similarly, people in the private sector cannot buy things until the government spends money. It's obvious that you've learned a lot from the "free market" playbook of economists Like Milton Friedman, Thomas Sowell, Arthur Laffer and perhaps (shudder) the Mises school of thought. You probably even think that Adam Smith supported these ideas with notions of the "Invisible Hand".
Anyone with an understanding of the economic history is familiar with the growth in non recessionary years under supply side policies. Lowering the costs of production of course means lower consumer prices using the same profit margins upon which corporations operate. Any company which does not lower prices will go out of business as competitors take market share. Except the action of raising taxes has never lead to increased economic growth. The Obama economy is an example of that. The tax rate on small businesses using a pass through tax system was increased by ~ 10%. The gov imposed costs on production have been increased. Per capita gdp growth under Obamanomics ~ 1%, supply side per capita gdp growth under Reaganomics ~ 3%. On the first day people would pay taxes which the gov would use to run the gov and provide for defense, rule of law, and infrastructure. Citizens have wealth and income before the US declared independence and formed a country. Are you seriously claiming that no one would have wealth before the gov began spending ?? That's bizarre.
JUST THE FACTS, MA'AM* The above statement is a non-sequitur. Government spending creates Income, and taxed-Income becomes Wealth. Balderdash. Supply-side economics is this: The barriers that most "supply-siders" decry are "interfering" Government regulations that guarantee the safety of workers in plants or other protective measures of the same nature. Like the zoning of dangerous manufacturing in places far from human habitation. There is no evidence whatsoever of the "supposed benefits", except to "profits". Furthermore, as proof, from here: The Failure of Supply-Side Economics, excerpts - Yes, "it's all quite simple" but WRONG; and I suggest that the above factual data show why. The main benefit of "supply-side economics" is too lessen the regulatory environment such that companies can have a larger bottom-line ... *Attributed to Joe Friday on Dragnet ...
JUST THE FACTS, MA'AM(2) Furthermore, over the past twenty-five years, American manufacturing at the low-end has been decimated by Chinese low-cost products (that Americans willingly bought). But, significant amounts of job-loss are also due to Production Automation Equipment that has replaced workers. What's a country to do in face of such a situation? Go upward in the job-market, by instituting free Tertiary Education that allows individuals to obtain the skills/competencies necessary for better jobs at better pay. But, no, we can't have that even though Hillary proposed the idea (taken from Bernie) to fund all Tertiary Education for all families earning up to an average $100K a year (a cut-off point at two members earning the national average income of $54K per year). But, stupidly (out of spite for Hillary) we voted for the other guy as Prez. So, our kids are going to take the punishment? Howzat? Because of these two facts: *85% obtain a high-school diploma in the US, but, *Of that amount only 44% obtain a Tertiary Education (vocational, 2- or 4-year) degree because they cannot afford one, *So, in fact only 37% of our kids will obtain a degree that will allow them a better lifestyle ...
Typo: Of that amount only 44% obtain a Tertiary Education (vocational, 2- or 4-year) degree because they cannot afford one. Should read: Of that amount only 44% obtain a Tertiary Education (vocational, 2- or 4-year) degree because the other 56% cannot afford one.
The above is a great example of how to lie with statistics. The premise that gov spending creates net wealth is a classic example. And the statement that "taxed income becomes wealth" indicates a fundamental lack of understanding of economics. BTW, the 1990's were supply side years although Bush 41 strayed a bit. Clinton/Gingrich clearly understood and implemented supply side principles in his last term. His chief economic adviser Joe Stiglitz so indicated before these policies were initiated.
Question begging is your specialty... Nope. You still haven't explained why, since the 1980's companies have shifted profits from plant, equipment, and training to stock buybacks. If you were right than companies engaging in that practice should all have gone out of business by now. You are still begging the question. You haven't actually shown that increased profits have led to real changes in equipment and training investment. That is, accounting for population. Here is the statistic that annihilates your claim. Assuming your right with respects to increase in taxes (source?), I'm not fan of corporate taxes as I already said, however, taxes aren't levied on production, they are levied on the business as a whole. How the business deals with that is on per-case bases. A business could decrease profits rather than cut back on production. You still need to show us that what you claim on paper is actually a reality. First, you're making broad claims about periods some 30 years apart and ignoring other major factors. For instance the trade deficit, which was balanced or even positive under Reagan, and today it's negative $680-$800 billion. Per capita household debt: These are just two examples of trends that have changed consistently since the 1980's, many of which are a result of supply-side thinking. Remember. we're asking about the first day. On day one, the people have no dollars. If there are no dollars in the hands of people how can the government tax? Taxes are only payable in dollars the government creates. Remember that we're using a fiat economy. The question asked, in a fiat economy, how could the government tax before it spends? Remember the US government has only ever excepted taxes in the money it creates. Bonds have only ever been denominated in dollars. You can't, nor have you ever, been able to pay taxes in gold (unless it was a legal tender coin). Same for bonds. So the question is, since the 1970's, when the deficit was a few hundred billion dollars, how did we tax 20 trillion in revenue? It's physically impossible to go from $398 billion in debt to $20 trillion in debt if the government had only to rely on revenue. In fact, the economy would never grow and per-capita earnings would fall as the population has increased by 120 million people. The fact is the government deficit spends, which is brand new money injected into the economy which creates wealth, the debt is nothing more than the accumulation of that money in the hands of the non-government (private+foreign sector) Of course. I never claimed that wasn't so. Again, that's not my claim. The point you seem to be missing, is that taxes aren't payable in weath, they are payable ONLY in US dollars. On day one, the government would have created dollars and purchased that wealth, decreasing the amount of wealth in inventory and increasing the amount of dollars held by the public. Think of dollars kinda like bricks. Bricks aren't houses, but houses are made of bricks. Dollars aren't wealth, but wealth is created with dollars. Why? Because the government has created a situation (whether you believe it's right or wrong) where the consumption of dollars is mandatory. People claim the value of the dollar is faith based, but that's simply wrong. If the government has the means and the support to take your dollars, your property, and your freedom for failure to remit dollars in the form of taxes, if you wish to keep those things, you will acquire and submit dollars or risk that they are taken. The dollar's value, at the very minimum, is measured in how you measure, the dollars you've earned, the property you own and your freedom. Said another way...What is the intrinsic value of a key? if the key is made of tin or brass, almost zero, but if everything you own is locked in an impenetrable safe and the key is the only way in, then it's value can be measured in those things. What if you were locked in a cage never to get out unless you can obtain the key which is just out of your reach, what is the value of that key? There is a difference between "intrinsic value" and "value" and the two can be interchangable under the right circumstances.
All that is required to understand the economic growth provided by supply side economic policies is to compare the performance of the Reagan through Bush 43 years with the Obama years. Gov spending is independent of economic growth. The failure of gov to control spending is just that - a failure.
Well, it does - unless somebody spends it right away. As well, Wealth - Debt is Net Worth. Can't imagine where you are coming from - and a lotta people here are "in denial" ... I'm not sure we are talking about the same Stiglitz. From here: CNBC - Trickle down economics has failed: Stiglitz (22 Apr 2015) There is a Stiglitz who runs a pizza-parlour in Tulsa. Maybe you mean him ... ?
Stiglitz fails to recognize the most important metric of household median income. That is the measure of prosperity - not some false argument that wealth is distributed. Capitalism produces the most benefit for the most people of any other system and supply side economic policies produce the most economic growth. The up side of wealth growth is not bounded. There was never a promise that supply side (or any economic system) would give the middle class a bigger piece of the pie. I've read his book - all it contains is a collection of newspaper editiorials which blame income inequality for what ever is wrong with the US today.
What facts? Assertions aren't facts. You've asserted everything and failed to explain several things. Who are you trying to convince, me or you?
I've asserted that supply side economic policies will grow the economy by ~ 3% per capita. The Obama economy has grown by ~ 1% per capita. That's a factual statement which you cannot explain.
No, that is the definition of an assertion that you have yet to support with a single fact. See, in a debate, when your opponent does not accept your assertion (a claim made without evidence) it is incumbent upon the person making the claim (that would be you) to provide evidence to the assertions that he makes. Acceptable evidence would be things like real statistics and then an explanation of how the statistics you cite offer evidence to your claim. See, you said earlier that lowering the cost of production will result in lower prices. I asked you to offer evidence that if the cost of doing business was lower, say via taxes or reduced regulations, that the savings would in fact, be spent on production. Then I provided evidence to the contrary (A video, and article and a graph), showing that over the last 30 years, companies have been using profits, not to increase R&D, training, and wages, but are repurchasing stock in order to deflate the market for their stock, causing the per share price to rise. You completely ignored that fact and simply move on with your unsubstantiated assertions. The explanation is you're to make. It's your claim, the burden of proof is upon you. So either do your homework, or we can all safely assume you have no facts to back up your claims. -Cheers
I'm not interested in a debate. I'll point out the fallacies as I see them supported by factual statements. If you choose to ignore the facts I can't control that. I've pointed out the factual gdp growth numbers and you keep telling us why they could not have happened ??
