Limericking on Twitter

Limericking on Twitter

Economics Without The B.S.**: 

[**  Double entendre intended.]

https://twitter.com/tPfit87ter/status/947695363271434240

There once was a man from Queens,
Whose ambition was driven by dreams.
He bullied and bribed,
But as hard as he tried,
Wound up getting creamed for his schemes.

https://twitter.com/Limericking/status/947279025650540544

Democratic Party Autopsy

Democratic Party Autopsy
They are trying to figure out what went wrong???

Economics Without The B.S.**: 

[**  Double entendre intended.]

It's a difficult point trying to explain to the Democratic Party why "working people" are dissatisfied with the performance of the Democratic Party -- not that they were expecting the Republican Party to bail them out.

The Laffer Curve: Taxes and Economic Output

The Laffer Curve: Taxes and Economic Output

Economics Without The B.S.**: 

[**  Double entendre intended.]

With the Trump Tax Cuts/Reform now before the nation in Republican hands in Congress, let's look back on a discussion item from the Reagan years when tax cuts were discussed, the Laffer Curve.

The Laffer Curve displays the relationship between tax rates/revenues and economic output (GDP).

Taxes are just transfer payments. Tax cuts are transfer payments from the government to individuals and businesses. Tax increases are the reverse: transfer payments to government from individuals and businesses.

While the Laffer Curve drew the Tax Rate on the y-axis and Tax Revenues on the x-axis, the x-axis can be a representation of economic performance (GDP) with optimum economic output yielding optimum revenues from a desired tax rate that does not hamper productive incentives. If the tax rate is too high it will dampen the initiative of individuals and businesses to engage in commerce. If the tax rate is too low it will stifle the government from providing the services and investment needed by society.

Vic Volpe Retweeted Vic Volpe

Arthur Laffer's napkin tax curve

For the nation to derive an economic benefit from either tax cuts or tax increases for this transfer of money between the government and individuals/businesses, the question is, Who benefits? Where is the greatest return? So, how is the money spent if individuals/businesses get the money versus how is the money spent if government gets the money?

One key is the Savings/Investment versus Consumption expenditures -- Consumption expenditures by government would be the welfare function while Investment could be defense spending, R&D, infrastructure, government plant and equipment, NASA projects, etc. And on the other side of the economy, the private sector of individuals and businesses, personal consumption expenditures account for approximately 70% of GDP.

During the 1960s, with tax cuts in 1964, Gross Private Domestic Investment doubled; and during the 1990s tax increases Gross Private Domestic Investment also doubled. During the 1990s the tax increases went toward paying down the Federal Government debt while budget deficits were reduced and small budget surpluses were being produced during the latter 1990s, all helping to increase the Savings/Investment Ratio.

https://fred.stlouisfed.org/graph/?g=fpmg

During the Bush Tax Cuts 2001/2003 investment increased but more moderately and only for 5 years; as a result, economic recovery peters out. The same was true for personal consumption.

So tax cuts/increases in and of themselves don't make the economy better or worse -- it is what is done with the money, consumption versus investment. And even with consumption versus investment, it is what would benefit the economy more; what is the multiplier that will ripple through the economy and act as a driver for good broad economic growth.

And here is the economic performance. [Hasn't been a good trendline since the 1960s, has it?]

https://fred.stlouisfed.org/graph/?g=fpmG

The Monetary Policy Quagmire

The Monetary Policy Quagmire

Economics Without The B.S.**: 

[**  Double entendre intended.]

The Monetary Policy quagmire: right now the Fed is pondering how to revive our economy from its real GDP growth of 2%.  Monetary Policy is a blunt instrument whereas Fiscal Policy can be a surgical knife.  Our $20 trillion economy is big and diverse; and, right now uneven in performance among productive sectors and geographically. 

The economy needed restructuring (put emphasis on design, R&D, innovation) after 2008; instead Obama/Democrats patched up the old economy.  And Republicans, with their Laissez Faire ideology, have never understood how to get good growth out of our economy.  Their "starve the beast" ideology, running up the Federal Government debt so that no further fiscal spending can be accomplished, has put our economy in a stagnant growth cycle of real GDP growth between 2% to 3% instead of 4% to 5%.

Fiscal Policy can be directed at specific sectors of the economy and specific geographical areas of the country. Monetary Policy cannot.  It is difficult for Monetary Policy to work in an uneven economy because Monetary Policy involves broad applications, not specific fixes.  Today Fiscal Policy advocates have weak policies and applications -- e.g., infrastructure funding, tax reform. incentives that are too general. 

Conservatives with their Laissez Faire policies is like an 8-cylinder car running on 6-cylinders. That's why we have economic growth at a real GDP of 2% to 3% instead of 4% to 5%. The 1960s was over 5%; almost three times more than what we have been since 2000.  An economy like ours, $20 trillion, can still grow without Federal Government intervention, but it is growing on inertia instead of being driven by a dynamo.

Republicans cannot advocate for Fiscal Policy because Government would be an interventionist in the economy and Republicans are for limiting Government not enhancing it.  Democrats/Progressives fail to make an argument for good economic growth. Their other issues (environment, anti-gentrification, etc.) get in the way.  Our democratic process needs/thrives on a vibrant economy, not economic stability. Full employment is when all can realize their skill potential.

Let's have that political fight that Bannon wants: within each political party

Let's have that political fight that Bannon wants:

within each political party

Economics Without The B.S.**: 

[**  Double entendre intended.]

Steve Bannon wants Republicans to have a fight.  
https://www.usatoday.com/story/news/politics/2017/09/29/steve-bannons-breitbart-going-war-against-gop-incumbents/717724001/

Matt Schlapp, American Conservative Union, says Republicans need to have that fight over direction of Republican Party.  Yes, and Liberals and Old Style Democrats (like myself) need to have that fight: the role of Government in Society and the role of America in the World.

Role of America in the World -- We just had a Vietnam series on PBS, showing a mis-reading by Greatest Generation of conflict of ideology vs dis-establishing colonial empires after WWII. But, it is still America's role in World to set an example and help people toward self-government (a democratic process) and peaceful resolution of conflicts. That secures the blessings of liberty.

When you hear someone, of the political Left or Right, talk about America's role in the World using pejorative terms like 'nation-building' or 'policeman of the world', put these into the greater context of the previous paragraph to determine what interests are being served.  In a less than perfect world, what is the ultimate outcome trying to be achieved?  And can less than optimum solutions, while not perfect, put us in the right direction and keep us on the right side of an issue?

Role of Government in Society -- use 1960s as example, it is the best economic performing period in American history with nothing close to it (within 40% of economic growth of this 10 year period):  so, get Federal Government spending and revenues within 15% to 17% of GDP (has been over 20% since 2008) and real GDP (inflation adjusted ) sustained broad-based economic growth up to 3% to 4% (has been no better than 2% since 2001).  Get the national (public held) debt-to-GDP down to 40% (currently over 100%). With that our society can afford to have a social-welfare function of Government and support programs like Social Security and Healthcare for all.  And it can also support an activist international function (both economic and diplomatic) supplemented with strong military involvement.

Simply speaking about the nation's debt without taking into account the level of debt in relation to the overall economy or the rate of growth of the debt in relation to the rate of growth of the economy becomes a meaningless discussion unless its purpose is to stir up political pointers.  The same can be said for proposing new spending programs, however beneficial, without taking into consideration what they will do with the performance of the overall economy.  And the same can be said with cutting taxes and what effect that will have on revenues.

A nation's priorities are determined by people and their leaders as to what role they want to play in the quest for human progress.  America has always looked upon itself, since very early in our history, as a leader in that quest.

Trump's Tax Plan Effect On Trade Deficit

Trump's Tax Plan Effect On Trade Deficit

Economics Without The B.S.**: 

[**  Double entendre intended.]

Do you wonder if there is any coordination on the Trump Economic Team -- Wilbur Ross, Steve Munchin, Gary Cohn, Peter Navarro, Robert Lighthizer -- and Trump himself?

The argument should not be whether Trump's Tax Plan helps or hurts the Middle Class; it should be does it help or hurt broad-based economic growth.

If you relate the Tax Plan to Trade and our persistent trade deficit due to U.S. spending in excess of savings, and the trade deficit being a reflection of the overall economy, then the tax cuts are going to exasperate the savings/investment ratio (make it worse) with more spending and bigger deficits and a drag on economic growth -- a short-term fix with long-term detrimental consequences. If tax cuts just feed our consumption habits (like it did under Bush) instead of investment, then we are worst off. If it went toward investment then we should be better off. But where in fiscal policy is there incentives for investment?...we didn't get any with Bush and it looks questionable with Trump.

I'm curious if Peter Navarro had any input into the Trump Tax Plan, because government deficits do affect trade imbalances. Not that I'm in agreement with Navarro's point of view -- I'm not; but, he is interesting to listen to (since the 1990s). He had Trump's ear.

So what is this Economic Policy? And who is Trump going to appoint to the Fed to implement all this Economic Policy? We have several vacancies on the Board beside Yellen. Coordination??? My goodness, why would I think that? Why should Trump's Economic Policy be any more coordinated than his National Security Policy?

Trump's Tax Plan -- the Republican nostrum for what ails us

Trump's Tax Plan

The Republican nostrum for what ails us

Economics Without The B.S.**: 

[**  Double entendre intended.]

Tax cuts are not tax reform or tax simplification - although the Alternative Minimum Tax would go away - nor economic growth.

Tax cuts are the Republican nostrum for what ails us, but they do not have a history of bringing economic well-being. Check out JFK, Reagan, Bush (2001) tax cuts and Bush/Clinton tax increase and look at effect on revenues and economic growth. Revenues decreased in 2001 and economic growth petered out from trillion $ tax cuts in 2001. Tax cuts worked with revenues in '60s and '80s.

Want to talk about tax cuts and jobs?...We produced more jobs in '60s with workforce of 70 million than Bush 2000s with workforce of 140 million. And during '60s the Debt-to-GDP went down almost in half although we had no balanced budgets; it rose during Reagan's tax cuts; went down again during Clinton with economic growth and tax increases; and increased again under Bush in 2000s with his trillion $ tax cuts.



Want to fix economic growth?...Fix the structural problems in the real economy -- one problem is poor labor productivity. Labor productivity was improved in '60s and '80s and '90s, it has been poor since 2004. Obama (and Bush) failed to address this problem. JFK and Reagan specifically went after this problem. I never heard Trump Administration even mention this as a problem. Tax cuts won't fix this problem

If tax cuts would fix this, the Bush trillion $ tax cuts would have worked miracles on our economy. Are you still waiting for a miracle?

The Vietnam War: A film by Ken Burns and Lynn Novick

The Vietnam War: 

A film by Ken Burns and Lynn Novick

The Vietnam War is a controversial topic for the Baby Boomer generation and it will never be settled one way or the other -- it is a mixture of viewpoints, on the War, and on politics and social issues; at the root of our political divide.

They say old men send young men into war; and, so it was back then, the Greatest Generation sent their children, the Boomers, into a conflict perceived one way by the older generation that had fought "the Good War (WWII)" but with the drawing out of the Vietnam War year after year it became apparent that this was not going to be a good war. A war that was lost although American combat troops never lost one major battle (and I don't think any minor battles).

This is a period that is indicative of a generation split. The Greatest Generation was a very cohesive generation, exceptional by contrast with most prior American generations, especially in politics, having come through two momentous events, the Great Depression and WWII, with a good degree of agreeableness to move forward on a lot of issues facing the nation. The Boomers have much less cohesiveness, more like what resembles most American generations, and it is reflected in our culture and inability for major accomplishments. That baton for progress was dropped by the Boomers when it was passed off by the Greatest Generation.

Manufacturing, Trade, and Automation

Manufacturing, Trade, and Automation

Economics Without The B.S.**: 

[**  Double entendre intended.]

Manufacturing employment and automation: Did NAFTA and China contribute to the decline in manufacturing jobs? Quick answer: NAFTA - No; China - Yes

If automation is taking manufacturing jobs then the productivity of manufacturing (output per worker, not the output per manufacturing sector) should be increasing as more automation takes over. But productivity peaked around 2003 and has mostly been in a downward trendline.

During most of the 1990s, under NAFTA, jobs remain steady (around 17 million) while the trendline for productivity has a slight increase. In the late 1990s, after the financial crisis in Asia, the Asian countries decide to become net exporters and it has an effect on the U.S. economy. And in 2001 China gets international trade status with WTO and you see the decline in U.S. manufacturing jobs from approximately 16 million to 14 million jobs up to the Great Recession starting in December 2007 and then another loss of 2 million jobs during the Great Recession (through June 2009); and, most of the trendline for manufacturing productivity since 2001 is flatlined to declining.

https://fred.stlouisfed.org/graph/?g=d9Y5

Industrial production (manufacturing output) and capacity utilization. Capacity Utilization of 75% to 80% is considered good; the 1960s, at over 90%, is the best peacetime performance in U.S. history.

Industrial Production growth is good each decade, 30% to 50%, from the 1960s to 2000; and, this is with employment steady at around 18 million in the workforce. After 2000 growth flatlines -- except for coming out of the recession of 2001 where it grows at 15% but only gets back to where we were in 2000. And keep in mind that duiring Bush's Administration we had two big tax cuts and the repatriation of U.S. corporate foreign profits back to the U.S. with little to show for the investment in our manufacturing sector.


https://fred.stlouisfed.org/graph/?g=d9ZM


Industrial Production and Manufacturing Jobs:

https://fred.stlouisfed.org/graph/?g=dafA





Quote for the day: from Bertol Breck

Economics Without The B.S.**

Quote for the day: from Bertol Breck

[**  Double entendre intended.]

https://twitter.com/tPfit87ter/status/832326896436146176



Bertolt Brecht, 1945: "Do not celebrate that we have defeated the tyrant. The bitch that bore him is in heat again."

Trump...On his special day

Economics Without The B.S.**

Trump...On his special day

[**  Double entendre intended.]

https://twitter.com/tPfit87ter/status/821066604729352192

Trump and his Twitter

Economics Without The B.S.**

[**  Double entendre intended.]

https://twitter.com/tPfit87ter/status/816020936516218880

If Trump wants to substitute Twitter for the 4th Estate he will not only run out of 140 characters but also real estate.