Bzzzz, sorry. You don't know jack about the Phillips curve.

Post #164,824 by orion 7/17/04 12:31:33 AM Reply	Bzzzz, sorry. You don't know jack about the Phillips curve. [link\|http://en.wikipedia.org/wiki/Phillips_curve\|http://en.wikipedia....ki/Phillips_curve] It is a relatioship between inflation and unemployment, not supply and demand. The reason why it got out of wack in the 1970's and 1980's, etc was that there were other factors it did not deal with like technology that threw it out of wack. In mainstream economics there are two types, the classicals and the keynesians. Classicals, are very supply side oriented. They believe in a hands off the economy by the government, they feel the market can work out any problems by itself. They focus on the long run, and follow Says law. They try to promote growth, and encourage savings. They feel inflation is bad, and that unemployment is over-rated. Keynesians, are very demand side oriented. The believe that the government should control things, or the markets will get out of hand. They feel a little inlfation is fine. They try to have small deficits if any. They focus on the short run. They do not think that people should save, and that saving does not stimulate the economy. They believe in POT (Paradox Of Thrift) which says that if the supply side is given tax cuts, they would save it rather than spend it or create jobs with it. They believe that unemployment is understated, and many more people should be counted in it. Marx, in my opinion, was a madman. The failure of Russia is a prime example of why socialism does not work in the real world. Labor does not have to move to where Captial is, labor can be anywhere, even India, and the Capital can be elsewhere. Also the workers never did rise up and overthrow the US government as Marx had predicted. Marx had many other things wrong, but it is getting late, and my knowledge of Marxism is limited. Pop-quiz hotshot: Are Republicans following the Classic or Keynesian economic theory? The Republicans use Reaganomics, yet Reaganomics failed to produce the Laffer curve as promised. Why was this? Explain the way Reaganomics works. What are the Principles that Reaganomic followers believe? Most Republicn fiscal policies tend to create a deficit, is this good or bad and why? Where does the government get the money from when it goes into debt? Name the four types of Unemployment studied in macro and micro economics. What is the formula behind Quanity Theory? Describe the difference between Classical and Keynesian economics. *"What's the use of saving life when you see what you do with it?" - Corbin Dallas "The Fifth Element"* [link\|http://www.xormad.com:4096/district268\|I am from District 268].
Post #164,882 by bepatient 7/17/04 4:02:18 PM Reply	What are you talking about? Reaganomics >did< bolster Laffer, as had Kennedy before (and quite possibly GWB after). The problem with Reagan policy wasn't tax revenue, it was spending. Why the "pop quiz hotshot" crap? You got a term paper you want us to write or something? If you push something hard enough, it will fall over. _{Fudd's First Law of Opposition} [link\|mailto:bepatient@aol.com\|BePatient]
Post #164,884 by broomberg 7/17/04 4:33:49 PM Reply	Term paper? Nah. He just learned a bunch of stuff. Since he's so insecure he has to strut around, trying to sucker people into arguments. No matter what they say, he'll find a simple contradiction or mistatement, ignore the whole point of the conversation, and hammer on that point. Which actually can be fun sometimes.
Post #164,890 by ChrisR 7/17/04 5:39:24 PM Reply	Short answer Think of supply and demand in terms of labor and wages. As the demand for labor increases, the price of that same labor increases (inflation). As the supply of labor increases (unemployment), the price of labor decreases. The Phillips Curve is but one generalization of the principles of Supply & Demand, as applied to unemployment (excessive supply) and inflation (excessive demand). The break down of Economics is more along the lines of Monetarists and Keynesians. The Laffer Curve crowd has never really gotten a foothold in the academic world of Economics.
Post #165,278 by gdaustin 7/21/04 12:26:22 AM Reply	Phillips curve may not work in a global economy.... unless you measure the entire economy. Interest rates can mess up the Phillips Curve. If rates are too high for companies to make investments, then they don't hire, or worse, lay off. Stagflation occurred because interest rates were too high to make many investments. Phillips curve doesn't take into account the fact that most companies need to borrow money to grow. With our crazy economy, and drives for market share, and the Chasm (read some Geoffry Moore), large investments (read, debt) are required to establish one's self as the dominant player in an industry. Funding growth out of earnings means that it will take a company 30-40 years to grow to be a dominant player in an industry. Companies have become addicted to the fast growth provided by the debt. Geof Moore says that you need to capture mind/market share and become THE established player, the standard, so to speak. The reality, you don't have 40 years, maybe 2-3 years if you're lucky. Phillips curve also assumes a stable-sized labor market, and assumes away the problem of unqualified workers who will take a job at a lower wage by lying. It doesn't account for a huge worldwide labor market, where companies now use computers to scour the ends of the earth looking for people who claim they can do the job for a lot less money. Phillips assumes stable (read American) labor/benefit laws. Phillips doesn't account for slave labor in North Korea, Sudan and other parts of the world. Don't get me started on Keynes. Keynes' theories were perfectly valid, however, Keynesian theory would tend to indicate that the government would run surpluses "at some point" sufficient to pay off the debt. Our government just borrows and never repays. Most Democrats and Republicans are Keynesian because they want us to continue to run deficits and "stimulate" the economy. But, like an addict on amphetamines, there will be a judgement day. The government creates debt out of thin air, by selling treasuries. But here's the real question. What would happen if noone showed up for the auction? What would happen if the debt rating of the U.S. Govt was bad enough that noone wanted to buy treasuries? I don't know much about the Laffer curve, but I do remember a concept called "trickle down economics". The idea was that if you give tax breaks to the rich, the benefits would "trickle down" to the lower levels of the economy. It was BS then, it is BS now. As for the Laffer curve, Reagan believed that the U.S. with the higher tax rates was close to the point of inflection in the curve. He thought that lowering taxes would put us on the other side of the curve and net more revenue. The problems with Laffer are that it doesn't account for ALL TAXES in the economy. If you add up your income, sales tax, property tax, phone taxes, hotel tax, car tax, etc. you would discover that most people are taxed at 30% or higher. My personal perspective is that we would be better served to enforce immigration laws, and ensure that all participants in the economy pay taxes. Many companies get away with tax murder in this country by using illegal workers, paid by the job, with no taxes withheld or paid. Imagine if they were required to pay for every worker the taxes equal to at least minimum wage. We could put billions back into the tax coffers. This is one big reason I'm against income tax, but in favor of a national sales tax. Everyone (even illegals) pay it if they buy stuff. I don't remember the four types of unemployment. It's been too long. One is structural. I know that the unemployment rate doesn't meaure all four, in fact, it probably only measures one. I don't remember Quantity Theory. I think it might have to do with how fast money "turns over" in an economy. Hint: The poor turn over money much more quickly than the rich. I had 12 hours of Economics in College, but that was 17 years ago. All I can say at this point is that as much as I hated Bill Clinton, at least he got the budget balanced for a year or two. We need not only balanced budgets, but surpluses for about 5 years until baby boomers retire, then we'll need to run deficits to pay their SS and Medicare benefits. At some point, we have to pay all that off. It makes me want to invest in gold and silver again, just like my dad did in the 1970's. I may just do that. Money out of the market and into non-perishable commodities.

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