Post #332,078
8/31/10 10:25:07 AM
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Think they may have causation a bit wrong
basic chicken or egg argument.
Lots of immigrants come when job growth is hot and unemployment is dropping.
Immigrants must stimulate job growth...
OR the more likely scenario...
job growth stimulates increased immigration.
Think the second is more likely..and increasing immigration would likely simply increase unemployment or drive down wages.
But, of course, you assume that all of these immigrants would be highly educated doctors, engineers, etc and state that they wouldn't like the competition...which kind of shows you didn't read or understand that part where they said immigration would INCREASE everyones wages..not decrease the income of doctors.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,083
8/31/10 11:08:22 AM
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The biggest problem now is the housing bubble.
I think the main underlying argument is this:
The housing bubble popped, so people are underwater, can't move, can't buy new stuff, etc. Demand has fallen way too much.
The answer isn't to artificially pump up housing prices, but to increase formation of new households to increase demand for housing. Meaning people have to move out of their folks' basements. (CalculatedRisk often beats this drum.)
A few million new immigrants would increase the need for housing due to new household formation. That would help a lot.
They would also increase demand (need food, clothing, etc.).
There would be downsides as well, of course, due to increased labor in the market. But demand is what's needed now. Lots of problems are fixed by increased demand. Job growth will quickly follow. Whether it would be enough in the short term is of course a debatable topic.
So yes, it's a kind of chicken and egg problem. But the feed for the chickens is demand.
Cheers,
Scott.
(Who didn't assume the kind of immigration - just pointed out that there will be various consequences depending on the details. And there will be details (we know that unfettered immigration will is not in the cards).)
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Post #332,084
8/31/10 11:31:48 AM
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increased demand for housing?
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,085
8/31/10 11:46:13 AM
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You know what I mean...
http://www.calculate...-august-28th.html
There's a huge demand for help with housing costs - no doubt. But home sales, and new household formation, is very weak. There's a huge shadow inventory waiting to come on the market when the market eventually picks up that will keep prices low or falling.
There's no easy way out of this mess; muddling through is going to hurt a lot of people for a long time.
Cheers,
Scott.
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Post #332,091
8/31/10 1:28:00 PM
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take the inventory of fannie and freddie
lottery those empty houses
everyone with a social gets a chance. Get those homes off the market and it will help a lot.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,093
8/31/10 1:47:24 PM
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Depends on how it's done.
While F&F have a huge part of the mortgage market now, and lots of foreclosures - http://www.calculate...tory-doubles.html - there's a lot of the market that isn't mortgaged. And a lot of it that isn't in trouble at the moment.
You don't want to get in a situation where you destroy the rest of the market. Auctions that reduce values of comparable houses by, say, 30% won't make you happy with voters who are presently above water. Why continue to pay on your mortgage if you can get the same house for 30% less?
I think the best way to handle this is probably through bankruptcy. But the Senate killed the ability of a bankruptcy court to modify mortgages on primary residences (aka "cramdown" that was possible until sometime in the 1980s, IIRC). Alternatively, maybe the IRS could somehow make it easier to write off huge losses on single-family, owner-occupied homes such that people could bite the bullet without being completely wiped out. I dunno. There must be some way to make a dent in this problem other than waiting it out...
Cheers,
Scott.
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Post #332,094
8/31/10 2:22:20 PM
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Re: Depends on how it's done.
Apparently the mortgage companies are changing their stance, they were anti-cramdown back in 2008 but BofA and Citi are in support of it now.
http://www.huffingto...-fr_n_536283.html
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Post #332,096
8/31/10 2:36:18 PM
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Interesting. Thanks.
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Post #332,100
8/31/10 3:46:02 PM
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"As we've gone through the lessons that we've learned ..."
In other words: "When we pushed to get mortgages excluded from bankruptcy, people said that we'd end up foreclosing -- which we don't want -- and financially destroying our customers at the same time.
"But we were looking about multi-million dollar bonuses that depended on us not believing that. Somehow, we managed to not believe it. Funny, that.
"Now that we've squeezed as much blood out of that stone as we can, we find it's in our current interest to now believe what those people said."
And in a real quote, Rep. Brad Miller, responding to a Wells Fargo rep saying there are other alternatives: "We're trying to do other alternatives now, and have been for three years, and without much to show for it." Give that man a prize.
--
Drew
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Post #332,099
8/31/10 3:02:52 PM
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thats why lottery, no money involved
create a new class of propertied people, many of which would sell them immediately. Frenzy bad prices but all of it in private hands again in at most 2 years.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,095
8/31/10 2:35:42 PM
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I'm finding this very funny...
not with you in particular, but with a wonderful group of folks, including the econ analyst who came to speak with us last week who keep mentioning that the only way out is to increase demand...but don't glue the fundamentals together to realize that this is NOT going to occur given the basic fundamentals of the market.
Household formation via immigration is, given the current market, a truly horrible idea. One, immigrants do not impact that housing market the same way. Studies show they move in and overcrowd...meaning they do not rent for man, wife and child...and others go into another unit. They move in en masse.
Also, studies show that, yes, impact on the NATIVE population is a net positive for wages but a net negative on non-skilled. A simple recovery in housing will NOT create enough jobs to fill the void.
Some examples from our talk...
Construction down 25% from 2007. Yes, there's room there..BUT...
Non-residential construction is off 36%
Gen Manufacturing is off 16%
Printing is off 20%
Motor vehicles and parts of 26%
textile and apparel both off 20%
I pick these because they are NOT housing start based.
Combine this with the fact that consumers have gone net savers AND!!! corporations have also become net savers.
This is not your garden variety recession. This was a full on reset of demand behavior. It is NOT going to come back except via growth...and growth has to be in areas outside of the US.
Problem with this is that we are not the feeder market to growth markets and the dollar is net strong.
The quickest fix is to get the dollar down, invest in basic export industries and push them hard. Thats where government money should be going.
You are NOT, no matter what, going to do anything to impact the market long term with items like the home purchase credit or cash for clunkers. The demand pattern has reset. How anyone can be "surprised" by the collapse in housing after the credit expired is completely beyond me. Anyone surprised by that is living in a fantasy.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,097
8/31/10 2:42:53 PM
8/31/10 2:43:08 PM
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And just in case that is too rosy a forecast
I forgot to mention the capacity utilization figures for US industry, which are with only limited exception, still far below where they need to be.
The most capacity being used is in petroleum and coal at 82% utilization...
Almost universally, everything else is 70% or lower utilization rate...which means (to your demand equation) that things have to improve in those industries by 20-25% before they start to make capital expansion plans. Growth like this cannot be generated with the fundamentals in the domestic market being what they are...unless you are thinking of importing some 100million people and making sure they have jobs when they get here.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Edited by beepster
Aug. 31, 2010, 02:43:08 PM EDT
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Post #332,119
9/1/10 8:01:00 AM
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Why would a business invest if there's no demand?
You're caught in the same bind as those on my "side". Money is cheap (if you qualify), and it makes sense to invest when your competition is afraid to, labor is cheap, inflation is low, why not invest now? Because there isn't enough demand. You've got to be able to generate the cash flow to pay down the loans, even if the loans are cheap. Without sufficient customers, you're not going to invest in your business.
So investment isn't going to magically happen on its own.
I'm not saying invest in housing and try to reinflate the bubble. We both agree that more needs to be spent on infrastructure. Lots of other things need to be bought which will get money into the economy and help things recover sooner. That'll gradually build a floor under housing and increase the rate of recovery.
It's not going to be easy to increase demand, but it's not going to happen on its own. Krugman was right - the stimulus/recovery act spending needed to be bigger because the federal government is the only entity that can increase demand now.
FWIW.
Cheers,
Scott.
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Post #332,122
9/1/10 8:13:28 AM
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true statement
You've got to be able to generate the cash flow to pay down the loans, even if the loans are cheap. printing money isnt going to do it either. Government employment for everyone isnt going to stimulate demand or pay off the debt Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,134
9/1/10 10:35:39 AM
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You're getting there
you've almost figured out how dismal the forecast really should be for the US.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,137
9/1/10 11:08:08 AM
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Eh?
I've been with Krugman with our hair on fire for a long time. I haven't been yelling as often as he has, though.
Cheers,
Scott.
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Post #332,138
9/1/10 11:11:33 AM
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Krugman is wrong :-)
Start your own camp.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,127
9/1/10 9:42:01 AM
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Companies are not "industry"
What I mean is, when you say utilization is at 70%, that doesn't mean that each individual company is at 70%. And definitely not that each plant is at 70%.
Some companies are probably at 100%. Others at 50%. Some have old plants completely shut down that they're reporting as idled capacity, but they know they'd build a new plant before trying to retrofit the old one.
If there's too much capacity, supply and demand says some plants should be shut down. When demand increases (a separate problem) it should be up to the market to decide what they want to buy. Focusing on how to increase utilization at existing plants is central planning. How do supply-siders never realize that's what they're talking about?
--
Drew
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Post #332,136
9/1/10 10:42:25 AM
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Seriously?
How did that turn into a "supply siders" point for you.
Of course an average is the sum of its parts. But do you think Ford is going to build new in US before they retrofit? Really?
I said nothing to promote any position of "centrally planning" anything. And certainly there will be individual cases of capital expansion. But as a whole, there is HUGE excess capacity right now in core industry that will need to be used up before significant capital expansion occurs...and the market will do that all by itself.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,142
9/1/10 11:55:56 AM
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Where you stand ... where you sit ...
My point is that when people talk about excess capacity, that's focusing on the companies. They look for solutions to the excess capacity problem, and explain that employment will rise as a result.
I prefer to look at employment first. Would it be possible to increase employment without increasing the utilization of existing plants? Sure. I'm not saying it's likely or preferred, so don't push that strawman.
What I'm saying is that employment should not be viewed as a side-effect or a likely consequence of increased utilization. Employment should be the first goal. And if increased utilization of existing capacity leads to that, then it's a good thing to pursue. Utilization should not be a goal in itself.
--
Drew
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Post #332,145
9/1/10 1:23:25 PM
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Not at all the same. They're only tangent linked
Employment can be a goal by itself. Excess capacity at the industry level, in order to be utilized, will require hiring.
The problem is, that all of that hiring will be recovery and not growth. Its getting back to where we were, not expanding. Also, hiring is generally never one to one back based on productivity enhancement, process change and conservative corp management (anyone here overworked and underpaid???)
The further problem is that it will be slow. Painfully slow.
I'm not looking for a solution to excess capacity. That's not a problem to be fixed...thats a problem that will fix itself during recovery. Its not a root cause.
So, I guess the short answer is that you have me lumped in with "people" and seem to be arguing against them instead of reading me in my posts oooOOOooo.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,146
9/1/10 2:08:06 PM
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I did
Almost universally, everything else is 70% or lower utilization rate...which means (to your demand equation) that things have to improve in those industries by 20-25% before they start to make capital expansion plans.
That was you in your post wasn't it? That sure looks like you're saying that utilization is linked -- via employment -- to demand. --
Drew
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Post #332,163
9/2/10 2:01:42 AM
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Different causation
to create demand for industrials...industry has to expand, not simply recover. That point highlights how far we have to go before we get there.
Its not a point that says business won't hire until they hit 100% capacity. They have to hire to get to that capacity.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,166
9/2/10 7:55:29 AM
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You seem to be making a Supply Side argument.
(Reviewing the thread, I think you're being more specific, but you're using the Supply Side language. But I want to post this anyway.)
to create demand for industrials...industry has to expand, not simply recover.
?
"What's the most important thing for a business to have?
a) Good Management.
b) Good Workers.
c) Good Facilities.
d) Access to cheap Capital.
e) Low Taxes.
f) Low Regulations.
g) Strong and Diverse IP."
The answer? (Scroll down...)
None of the above. The most important thing for a business to have is a Customer. Someone who will give them money for a good or service.
As a general principle (which can be taken too far): Supply doesn't create demand. Demand creates Supply. To create Demand, you have to create Demand. In the wake of a burst bubble, that means getting money into the economy to pay for non-bubble things (keeping teachers, police, fire, librarians from being laid off; continuing road construction and other infrastructure; paying for long-delayed improvements; extended unemployment insurance; etc.).
Why do you think that industry has to expand first? The Great Depression taught us that Demand has to come first.
Earlier, you asked above whether Ford would build a new plant before retrofitting an old one. That has happened many, many times in the US auto industry. Remember Saturn. There were lots of things going on with Smith's creation of Saturn, but big companies quite often do start up something new rather than retrofitting an older place. It's about more than taking advantage of sunk costs.
As a general proposition, I reject the idea that a recovery is going to happen this time "on its own". We're very close to a deflationary trap. With housing prices continuing to fall, boomers approaching retirement, etc., etc., if we're lucky we're going to just muddle through and not "recover" without stronger government action. 10 years of muddling with 9-10% unemployment would be a disaster. We can't start growing from where we are now by continuing to cut government budgets. We don't need to inflate a new bubble; we need to raise employment and keep S&L governments from shrinking and counteracting expansionary efforts at the federal level. And we need to raise taxes on those who continue to get outsized rewards for various unproductive shenanigans. A millionaires tax won't hurt the economy and will help raise needed revenue (yes, it really will).
I may not be able to reply much over the next couple of weeks. If that turns out to be the case, don't think I'm ignoring you. ;-)
Cheers,
Scott.
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Post #332,168
9/2/10 9:30:33 AM
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Who is the customer?
My point through all of these posts has been that just throwing money at people (creating domestic end point demand) is going to take a VERY LONG TIME to get through the system.
That is what you say will fix things. Well, eventually (many many years from now) get us back to where we were 10 years ago.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,170
9/2/10 9:39:12 AM
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What does that mean?
"... a VERY LONG TIME to get through the system."
Poor person gets a check. Poor person cashes the check. Poor person buys something. Money is into the system on Day 1.
What do you mean by "through" the system? Do you mean it will take a long time for that money to circulate enough times that it ends up allowing a manufacturer to increase capacity? Because that would be viewing increased utilization as the goal.
If not that, what do you mean by "a VERY LONG TIME to get through the system"?
--
Drew
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Post #332,171
9/2/10 9:44:38 AM
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dunno if you noticed, it aint the poor getting the checks
if you aint a banker, financier car maker or government employee all you are getting is a tax
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,182
9/2/10 1:41:09 PM
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sigh
It means that not all "demand" begins and ends at the consumer. It means that a huge portion of big D is, to create a word to clarify for you, "intra-industrial", and if end demand doesn't grow beyond capacity then the "intra-industrial" demand won't kick in.
The whole point is, you can't just throw money to people and expect this economy to recover with any speed.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,191
9/2/10 4:04:00 PM
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Why should I care about intra-industrial demand?
First, I'm not an industry, I'm a person. So I care what people have to spend.
Second, if you directly spur intra-industrial demand somehow, you are necessarily choosing which industries and companies to favor. That's central planning. I thought free-market supporters were supposed to oppose that?
Third, there's not just one economy. There's the workers' economy and the owners' economy. The owners' economy is the one that gets reported in the finance press. The workers' economy is the one with high unemployment. As long as the owners' economy is at odds with the workers' economy, I'm at best indifferent to the owners.
I don't mind if owners are helped by a rise in the workers' economy. But most of the issues I see suggest that in the short term helping one comes at the expense of the other. The pendulum has been on the owners' side long enough. It needs to swing back a bit.
--
Drew
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Post #332,209
9/3/10 7:59:39 AM
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Oh, and by the way ...
A report on the unemployment situation told listeners that the real problem in the economy is not a lack of demand, but rather inadequate investment. Actually investment in equipment and software has been growing at almost a 20 percent annual rate over the last three quarters. While it might be desirable to see investment grow even more rapidly, demand is a major determinant of investment growth. If the economy grew more rapidly as a result of a spur to consumption, it would almost certainly lead to more rapid growth in investment.
http://www.cepr.net/...100-percent-wrong--
Drew
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Post #332,225
9/3/10 12:57:48 PM
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Software?
sigh.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,228
9/3/10 1:26:43 PM
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Of course, focus on the *least important* part of that quote
--
Drew
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Post #332,230
9/3/10 2:44:08 PM
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What,
that they lump asset and IP together in an expansion category?
You are clearly not getting it.
Recovery. Thats the word. Recovery means jobs. Recovery will be FASTER if you focus on all aspects of demand.
Just throwing money at joe consumer WILL NOT DO IT.
Its not a supply side argument. Its pure straight down the middle econ, regardless of your thinly veiled attempts at baiting by introducing communist planning and voodoo economics.
You have had 3 huge failed attempts at demand spurred growth in the past 12 months and you still don't seem to understand. Cash for clunks, housing credit and the tax withholding credit.
Additionally, the "stimulus" that was focussed on all the wrong parts of the economy (and they wonder why it didn't work, gee, go figure).
And you are still here saying that we should continue down that path because it will create more jobs.
Guess what?
We're nearly 1.4T down that path and unemployment is still rising. Hmmm.
Feel free to talk about it amongst yourself. It appears that you have little desire to pay attention, instead you keep trying to paint this as a supply side communist agenda. I'm done with that.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,232
9/3/10 4:59:02 PM
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"Recovery means jobs"
Remember when I said there are two economies? That wasn't a tangential point. A recovery for the owners' economy is almost completely unrelated to a recovery for the workers' economy.
So no, recovery does not mean jobs. Jobs means jobs.
The housing credit was a payment to the banks. You can blame whoever you want for passing what they did, but I don't consider that stimulus targeted at helping workers.
Cash for Clunkers might have helped, if they had required that the new cars were American. Or at least built in America.
Both those credits were targeted at specific industries, which is what I keep calling central planning. They were designed to help preserve the status quo.
The tax withholding change, which at least didn't favor a specific industry, was good for an estimated $65/mo for a family -- http://taxes.about.c...ew-tax-credit.htm That's enough to make a big number for the (owners') economy, but won't make a huge difference in most people's lives.
I also notice you didn't include the huge amounts of money sent directly to the banks via TARP and other off-the-books instruments. Even if that money were fully paid back, the round trip from the discount window to the bond market and back meant that huge (and mostly undocumented) amounts of money were shoveled to banks in the form of interest on the money we were loaning them.
But let's suppose every dollar that has been categorized as "stimulus" spending went directly to workers. The "big" number you keep quoting is $1.4 trillion. Considering the crash of the housing bubble represents a $6 trillion hole in the economy, how is that 1.4 supposed to do anything other than slow down the rate of decline? --
Drew
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Post #332,234
9/3/10 5:14:43 PM
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Re: "Recovery means jobs"
according to whom? recovery is gdp gains as opposed to losses it doesnt have squat to do with the unemployment rate. Now our economy is sorta ok at 7% unemployment, pretty decent at 5% but over 9 means we are fucked for a while. The wife and I were talking about our early years in marriage when the Alaskan economy had 9% unemployment and we lived week to week in shit trailers. Its bad, but jobs are not going to come back in the same places. Companies have found ways to get along with less and as you love to point out workers are a commodity. So demographics will change, those that can will move to the jobs, those who cant get left behind in grinding multigeneration poverty
If I lost my gig within 90 days I will be in deep kimchee and if I have to walk away from the 40k cash I have in this house I will do it, no choice it isnt easy pickins any more and hasnt been since 2001.
thanx,
bill
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,235
9/3/10 8:44:02 PM
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That was Bill's line
recovery is gdp gains as opposed to losses it doesnt have squat to do with the unemployment rate.
That sounds a lot more like what I'm saying. When the financial press -- and the financial reporters for the mainstream press -- talk about "the economy", they mean the owners' economy. And when they talk about recovery, you're exactly right that they're talking about GDP.
That's what I meant when I said, "A recovery for the owners' economy is almost completely unrelated to a recovery for the workers' economy." --
Drew
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Post #332,239
9/3/10 9:17:04 PM
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bill is right
a decently paid fully employed work force is a byproduct of an overheated economy on the verge of popping another bubble. There is no such thing as a workers economy. Now workers have a standard of living scale but it doesnt have anything to do with an economy.
We could stage nationwide work to rule strikes and fight for living wages, cheap education, decent healthcare but november will show us the country would not be in the mood at all. but that really hasnt worked very well in the past, doubt it would work this time. The grocery unions are about to go on a major strike in the northwest, that may show us how things stand nationwide.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,240
9/3/10 9:24:30 PM
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With a line like that...
it is quite clear that you will never grasp my point.
There are NOT 2 economies.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,224
9/3/10 12:55:34 PM
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You want jobs, correct?
http://www.businessw...the+business+week
Maybe this will help you understand.
Maybe not.
The rest of your rant about central planning will be ignored...because you simply aren't getting the point..and in so seem to want to bait.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,229
9/3/10 1:41:53 PM
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That's not a point, that's an article
What's your point, that I'm not getting? I don't see the words "job" or "employment" anywhere in that article.
As for that article, I don't have the statistics handy, but I've seen Baker tear enough of these apart to know where to look.
They face meager expectations for growth and profits, costlier and scarcer credit, and a glut of production capacity and commercial buildings created by the recession.
...
And business construction, off a stunning 44% last quarter, will continue to suffer from past overexpansion, rising vacancy rates, and tight credit.
So is the cause the recession, or is the cause the inevitable slump after a period of overexpansion? He's claiming both.
Which points to the next issue: Construction is off 44% ... compared to a period of acknowledged overexpansion. Just like housing prices went too high and have to fall, commercial construction overshot the market. It should fall. And comparing this quarter, when it's working through a glut, to the quarter when that glut was being built, of course it's a big loss.
And you don't want to address the central planning issue. What I'm saying is that supply-side economics, by focusing on the companies instead of the employees and customers, has the same benefits and problems as central planning: It's great at making the status quo more efficient. It's lousy at responding to changes in the market. --
Drew
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Post #332,250
9/4/10 2:43:16 AM
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Get this through your head.
I'm not talking about supply side economics.
I'm talking about DEMAND. BIG D.
Your talking about demand. little d.
Until you figure out the difference, this conversation is pointless.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,255
9/4/10 10:54:30 AM
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Quit with the shorthand
You're the one who's so proud of his econ degree. I don't have one. "Big D Demand vs. little d demand" doesn't mean a damn thing to me. And if the difference between those two is the big point that I need to get into my head, then you're going to have to spell out what the hell it means.
You know, like I keep asking: What is your point? No shorthand, no buzzwords. Explain it to me like I'm a reasonably intelligent person who doesn't know the "correct" terminology for typical econ discussions.
If you tell me what your point is, there's a much higher chance it will actually make it into my head.
If I don't know the definition of the terms you use, how will I ever "figure out the difference"?
--
Drew
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Post #332,258
9/4/10 5:24:49 PM
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Re: Quit with the shorthand
You cannot create the demand necessary to recover this economy by simply relying on giving money to the people. Thats little d.
A HUGE portion of the economy relies on companies selling to other companies or to governments (or to foreign countries). Add people, industry and government together, thats big D.
THAT is why it is important 1) to weaken the dollar to help exports 2) to worry about excess capacity and address ways to utilize it effectively and 3) to ensure that recovery money from the government is focussed on infrastructure almost exclusively.
The economy has reset. You CANNOT expect consumers, who have become net savers AND who still have debt to pay to create enough demand to pull us up. When you asked anyone a year ago what would they do with their "extra" money from tax credits, what was the thing you heard 99.9% of the time? "I'm going to pay off some bills". That is NOT creating demand. Thats paying for historical demand.
Nothing in any of my points is anywhere near supply side economics. I've not mentioned cutting taxes once. (although it would help, along with some very strong build local incentives)...but everything I've said is about creating Demand. Big D.
All of this uncertainty in Obama's policies have done something very bad to this economy. Its made corporations become net savers as well. That demand has to be released or we are going to see 10-12% unemployment for a very long time. (in case you missed jobs report..the summer hiring season went by with net job losses...thats some effective "stimulus")
Hope this helps. Thought that article articulated the point fairly well. Thats why I posted it.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,260
9/4/10 8:22:46 PM
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So you completely disagree with the "two economies" premise?
Divide the population somewhere between the 95th and 99th percentile. I guarantee that any mainstream financial coverage that talks about "good for the economy" or "bad for the economy" or "recovery" or any or a dozen other qualitative descriptions will be accurate for the top group.
Hell, they even talk about a "jobless recovery". If there's no jobs, that's not a recovery most people care about. That's what I mean by two economies. (Edwards' "Two Americas" was mostly right, but too broad. It's the economy, stupid. :-/ )
THAT is why it is important 1) to weaken the dollar to help exports 2) to worry about excess capacity and address ways to utilize it effectively and 3) to ensure that recovery money from the government is focussed on infrastructure almost exclusively.
I totally agree on your first point. But it would hurt the owners' economy. That's why the visible lobbying is all opposed to it.
Your other two points depend on defining "the economy" as a single thing, ignoring the two economies premise. If you keep ignoring that, then yes, we're going to keep talking past each other.
Oh, and consumers have become net savers. You forgot a word: again. Historically consumers have always been net savers. It's an anomaly of the housing bubble-driven credit boom that they weren't.
And speaking of that ... "consumers, who have become net savers ... made corporations become net savers as well." Why is it when you're talking about saving, consumers and corporations are two different groups. But when you talk about recovery there's only one economy, and one definition of what "recovery" means? --
Drew
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Post #332,265
9/5/10 12:15:57 AM
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Absolutely
positively and without a doubt.
There are not 2 economies. I don't care what the press says. If they say that, they're wrong too.
Whenever someone bows to one group or another...THE economy suffers.
And more than 30 years ago people were savers. That isn't what the driver is any longer. 30 years and more ago when consumers were savers there was a solid underlying manufacturing base that we've since pissed away.
Oh, certainly, there are those that will tell you we still have a solid manufacturing base..to which I will say I want what they're smoking.
And to the last question..did I not just explain to you that there are multiple components to demand? Did I break them into 2 economies? No. Why do you insist on this? Its all the same system. Its all THE economy. There isn't more than one. Its all the same system. It either works or it doesn't. It is singular.
If it doesn't work for the owners, it doesn't work for the workers. And I'm not sure who came up with the term "jobless recovery"...but I'm sure they had a lobotomy before they did.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,267
9/5/10 8:45:07 AM
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You're half right
If it doesn't work for the owners, it doesn't work for the workers.
But it is possible for it to work for the owners even when it's not working for the workers. --
Drew
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Post #332,269
9/5/10 12:22:08 PM
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No, its not.
short run it could be either way. Could be good for workers, bad for owners and vice versa. Long run it has to be good for both or it won't work.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,270
9/5/10 12:30:17 PM
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You're kidding, right?
Show me any evidence that long-run thinking was responsible for the real-estate bubble, the credit boom that it spawned, or the "creative" instruments (properly called "fraud") that capitalized on it, and I'll think you've got a point.
Owners can make short-term bets with enough upside to keep them in style for generations, and any downside covered by government guarantees. There's nothing available to workers that compares.
You can say that downside shouldn't be covered by the government, and that owners should be exposed to personal risk if they do a bad job, and I'll agree with you all day. But that isn't the current system.
--
Drew
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Post #332,273
9/5/10 6:26:44 PM
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welfare food stamps unemployment compensation
social security, medicare, supplemental social security, workmans comp naw the workers dont get a fucking thing.
what caused the tech bubble.
yuppies pouring dollars into their 401k by the armload created a easing of credit so firms that didnt have an idea could sell to idiot money brokers and a company that had no way of seeing a profit was worth bajillions.
that bubble burst so the same dribbling yuppies loaded their money into realestate because unlike stocks realestate doesnt go down. Why wait till Im old to enjoy retirement, I will borrow on my equity.
Now they are underwater and unemployed so that monthly jam of 401k money into the market isnt as bountiful as before so next bubble will be delayed until after citybank and boa are dismantled.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,349
9/8/10 1:37:22 AM
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Eh?
Drook is talking about the rich gaming the system to increase their wealth. SS, FS, etc., aren't wealth.
Gates and Buffett and Helmsely wouldn't have their billions without the system that permits them to accumulate those vast holdings.
Whatchotalkinabout?
Cheers,
Scott.
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Post #332,282
9/6/10 8:39:56 AM
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Big D.
Yes, a big part of the economy is not direct-to-consumer stuff. That is true.
However, the number that is usually bandied about in the press is "the consumer is 70% of the economy" (though some argue with that percentage - http://seekingalpha....he-economy-not-70 ).
Even if it were 50%, when that 50% falls off a cliff, there's a big problem.
Just about everyone in the US wants us to export more. Recall that Obama says he wants to double US exports over 5 (?) years (which many claim is a pipe dream). How do you propose that the US dollar fall while people are running to the dollar as a safe haven? China obviously isn't going to cooperate with the RMB increasing in value by, say, 30% in the near term, and the Germans are pushing exports as well.
Everyone can't massively increase exports simultaneously...
Like it or not, there is no single solution to the problem, but having millions of people out of work will make things worse. Checks from Uncle Sam is much better than the alternative.
AFAICS, Krugman's presented a stronger case than you have. (His latest summary (without many numbers) is here - http://www.nytimes.c...gman.html?_r=1&hp ) Give us more numbers if you want us to believe you. ;-)
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Post #332,299
9/6/10 8:19:01 PM
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To be honest
I'm not worried if you believe me or not :-)
If the recent demand spurring failures haven't convinced you otherwise, and you're still quoting Krugman..then there isn't much hope of convincing you anyway.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,300
9/6/10 8:57:35 PM
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cheese
you want a lower dollar start selling them by buying other non pegged currencies until you get the price you want. Thats what central banks are for. If it goes too low you start buying.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,304
9/7/10 1:40:53 AM
9/7/10 1:58:39 AM
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Talk to Sorros about that.
[Central] Banks can't beat the market.
Cheers,
Scott.
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Post #332,308
9/7/10 8:42:49 AM
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Central Banks >are< the market.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,318
9/7/10 10:32:10 AM
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<Boggle> I guess that's how George never made his $1B...
IOW, more words please.
Tell me how the Treasury is going to lower the value of the dollar when people around the world are rushing to buy dollars. It's the same sort of problem (in reverse) that the Crown had - if the market doesn't agree with your Central Bank about the value of your currency, there's little the Central Bank can do about it.
Cheers,
Scott.
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Post #332,321
9/7/10 11:00:46 AM
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piggybacking a market isnt brilliant
you just need a lot of money to play with.
People are rushing to buy dollars true.
We can sell them by buying a basket of solid currencies until the flow reverses. We also could artificially peg to the Renminbi at a rate we would like but that would piss our landlord off.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,333
9/7/10 3:24:22 PM
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He made it playing the market..
..that the central banks make. Specifically, he sold the UK central bank short..betting (yes, gambling), that the UK central bank was not going to surrender to the EU currency system. He was correct, and he made a couple billion.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,335
9/7/10 3:34:29 PM
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And...?
http://en.wikipedia....Wednesday#Prelude
The market said that the UK government couldn't support the pound at the previously agreed-upon level. Soros saw that the UK government was not stronger than the market. The market "won", so Soros made a lot of money.
(Your short-hand "the central bankers are the market" doesn't seem to match history.)
Now translate that into your suggestion that the dollar needs to be weaker. I ask again: How can that happen when people are running to dollars as a safe haven? Do you agree with Box's suggestion that the Treasury sell dollars for a basket of other currencies? If so: What happens when that doesn't lower the dollar significantly?
More words, please. ;-)
Cheers,
Scott.
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Post #332,336
9/7/10 4:17:16 PM
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Would he have made that money without central banks?
no.
They are the market. (not central bankers, central banks)
He played in their market.
Had the UK agreed to stay in the EU system, he would have lost everything.
He placed a bet and he won.
Certainly flooding the market with dollars could weaken the currency. Reducing the effective yield of treasuries to zero would make other investments more palatable and also take pressure off of the dollar.
The "what happens if" just means we are in this rut that much longer.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,350
9/8/10 1:47:59 AM
9/8/10 3:47:00 AM
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You're not getting it.
You're telling me about abstract econ things from textbooks while ignoring what has happened over the past 2 years.
The Treasury has flooded the system with trillions of dollars to try to fill the vast pit in the economy. In spite of that, contrary to what many on the right have said, the value of the dollar has increased.
Interest rates are already effectively at zero and can't go lower.
When we're up against the zero bound, things are different and too many (apparently including yourself) don't want to recognize it.
We're talking past each other. I'll quit.
[edit:] Some thoughts by Karl Smith on something to try - a payroll tax holiday: http://modeledbehavi...ope-calculations/ I think it might be worth a short, but as a commenter points out, it does nothing for the presently unemployed. As part of a package that includes: 1) Extended UI benefits (including those 99ers who have hit that limit), 2) a tax surcharge on, say, those with AGI > $500k-$1M, 3) a phased-in resumption of payroll taxes as unemployment falls in steps, I think it makes sense. And I think it's more likely to get things moving than trying to force the dollar lower by the Fed and Treasury playing the currency markets.
FWIW.
Cheers,
Scott.
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Post #332,358
9/8/10 8:38:26 AM
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how very conservative of you :-)
herman Cain and others on the right have demanded that for a long time. Treasury is not the fed. What money they have printed went straight to American banks and sits there. That has nothing to do with central banking and foreign currency.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,360
9/8/10 10:02:29 AM
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This has nothing to do with the "Fair Tax".
It's hard to know what you're agreeing with there, but I assume it's about the payroll tax holiday.
Cain seems to be a fan of the "Fair Tax" (sic). Different animal.
There are lots of reasons to be skeptical of a payroll tax holiday, and all proposals aren't equal. I doubt that Cain would be a fan of Reich's proposal from August 2009 - http://robertreich.o...propose-a-peoples
[...]
Republicans understand the art of tax demagoguery: Put the other side on the defensive by forcing them to explain why a “tax increase” is warranted and they lose regardless.
So instead of playing defense, Democrats should go on the attack.
Accuse Republicans of being shills for the rich.
And don’t stop there. Do tax jujitsu. In addition to ending the Bush tax cut for the rich, put forward another proposal for growing the economy that cuts taxes on lower-income Americans.
Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000.
This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, it’s likely to be spent.
It would also give employers an extra incentive to hire because they’d save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers – who have taken the biggest hit on jobs and pay during the recession.
It wouldn’t add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesn’t apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years.
Call it the People’s Tax Cut, and let Republicans explain why they’re against it.
Yeah, the Treasury and the Fed aren't the same. They work together though. E.g. from October 2008 - http://www.econbrows...ance_sheet_o.html
But how did the Fed acquire all that stuff, with "only" a $160 B increase in reserve balances and a $30 B increase in currency outstanding? The answer is to be found in a new entry on the liability side described as "Treasury supplementary financing account." This was announced by the U.S. Treasury through the following somewhat obscure release:
The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.
The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives.
Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.
Here's what I take that to mean. I gather that the Treasury auctioned off some extra T-bills to the public, in addition to their usual weekly auction, and simply kept the receipts as deposits in an account with the Fed. If that were the end of the story and the Fed kept its total liabilities constant, it would result in a huge (completely infeasible technically) drain on reserve balances and currency in circulation, as banks sought to deliver reserves to the Treasury's account to honor their customers' purchases of the T-bills. So the Fed offset the supplemental Treasury auction with a matching purchase of private assets, such as the PDCF and AMLF, thereby temporarily delivering reserves to banks which the banks in turn could hand over to the Treasury supplementary account. The net result of such dual Treasury/Fed operations is that the newly created "reserves" would just sit there in the Treasury supplementary account doing nothing other than standing as an accounting entry. In other words, the device allowed for a huge expansion of the Fed's balance sheet without causing any change in currency in circulation or reserve deposits.
Getting closer to the original topic - If the US exchange rate were fixed, and the US decided it wanted to devalue the dollar by, say, 30%, it would be the Treasury's job - http://en.wikipedia....y_of_the_Treasury Since the exchange rate is not fixed, that means nudging the market (and in this case the headwinds are due to a hurricane of buying of dollars, so moving it the other way won't be trivial).
Cheers,
Scott.
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Post #332,361
9/8/10 10:38:49 AM
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from October 12, 2009
http://www.wnd.com/i...php?pageId=112634
Suspend the payroll tax for one year. This gives an immediate 7.65 percent increase in take-home pay to all workers. It also lowers the payroll costs for all employers by 7.65 percent for one year. A total of about $900 billion would be injected directly into the economy immediately, rather than through the inefficiency of the federal government.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,364
9/8/10 10:53:09 AM
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Interesting. Thanks. (The rest of it is bogus, of course.;-)
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Post #332,359
9/8/10 9:33:24 AM
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Oh, I am
they haven't tanked the long term rates yet..still over 3.
Also, "what he said" in the other response.
Additionally, they've done nothing on the other side of my equation..which is focus nearly 100% of the stimulus on asset or export producing endeavors. Seems you ignored the post of yesterday where Pres is asking for more money for infrastructure. Simply put, that should have been where the stimulus went.
State & Local need to learn that they cannot expand services and expenses beyond the bounds of per capita growth rate or inflation. (yes, it would have been an extremely painful lesson this go around but all we've done is set the expectation that there is no real risk, since the Fed will come in with cash and/or extend the pain because the come to papa moment is next year instead of this one).
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,363
9/8/10 10:51:07 AM
9/8/10 10:59:53 AM
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Hmmm.
Maybe it's the time difference...
they haven't tanked the long term rates yet..still over 3.
The trend has been down since the spring. http://research.stlo...ed2/data/GS30.txt The lowest rate was 2.87% in December 2008. I think it's a very safe bet that 30 year T-bill rates will continue to drop over the next year or longer. It obviously takes longer for long-term rates to fall.
Additionally, they've done nothing on the other side of my equation..which is focus nearly 100% of the stimulus on asset or export producing endeavors. Seems you ignored the post of yesterday where Pres is asking for more money for infrastructure. Simply put, that should have been where the stimulus went.
"Nothing"? - http://webcache.goog...&client=firefox-a
Due to the combined effects of inventory rebuilding, benefits from the ARRA and exports, manufacturing production increased 8.4 percent over the past year. Still, while the current recovery has been stronger than the initial year of growth following the 1990-1991 and 2001 recessions, it has lagged behind the recoveries that followed the 1981- 1982 and 1974-1975 recessions.
The ARRA was full of compromises, and had to be spent in 2 years. Obama's latest proposal is different, and has to be paid for. (I haven't ignored it.) http://iwt.mikevital....iwt?postid=35427 I agree it's long overdue, but your fellow travelers who yell about "TEH TAXES!!!!111" would have tried to scuttle it, and may still try[*]. It's not going to be effective if the Republicans put up roadblocks so he can't get it passed.
State & Local need to learn that they cannot expand services and expenses beyond the bounds of per capita growth rate or inflation.
S&Ls are cutting bone, not fat. Police and Fire are being cut in several areas. The "easy" cuts (turning off lights, closing libraries, closing recreation facilities) have been done already. In my area, the county has around a $1000 (yes, one thousand dollar) budget for road repairs on secondary roads - http://scottsurovell...nding-paving.html .
FWIW. ;-)
[edit:] [*] Speaking of which - http://www.washingto...010_09/025571.php
Cheers,
Scott.
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Post #332,109
8/31/10 7:42:50 PM
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It's the same most places in First World countries.
Including Australia/NZ, the UK and much of Western Europe. The basic problem is that it's cheaper (often much cheaper) to make things in countries with lower standards of living and import them.
It's too easy to ignore the horrible conditions that existed in manufacturing in the last 200 years, ironically without which the Industrial Revolution would not have happened. So a lot of those problems have been "exported" to countries who didn't get to have an IR the first time around: South-East Asia.
Maybe we need to wind back some of the "improvements" that have been made in manufacturing laws...?
Wade.
Q:Is it proper to eat cheeseburgers with your fingers?
A:No, the fingers should be eaten separately.
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Post #332,111
8/31/10 10:22:06 PM
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This "free trade" mantra is a relatively new development.
I hadn't appreciated until recently how much of US history included substantial "protectionist" elements. E.g. US customs duties as a percentage of imports over time - http://www.cato.org/...share-imports.gif
http://www.dailykos....c-History-to-1901 is a good summary, (though it uses a lot of loaded language):
[...]
The Anatomy of the "Race to the Bottom"
To make any sense of this issue, we must first competently identify the reasons free trade was initially promoted, and continues to plague humanity to this day. The standard story, which is also the only acceptable position amongst academic economists today, is that cheap is good. "If we can buy a widget from China for $10, but it costs $15 to produce it here," they tell us, "who is the government to say we can't? Why should consumers have to pay more for widgets?"
While this is a plausible argument, it is ultimately bankrupt, as it is founded on an incompetent understanding of the nature of economic wealth - namely, the idea that wealth is monetary in nature. By this thinking, it follows that every time government involves itself in the economy, it merely takes money from one actor and transfers it to another. Since this supposedly zero-sum transfer entails overhead costs, it cannot result in more wealth being produced, it can only destroy what wealth currently exists.
Yet, wealth is clearly not monetary in nature. It is a tautology that "what is not produced cannot be consumed;" thus, it is plain to see that the ultimate source of wealth is not money, but the production of basic commodities and manufactured goods. Financial wealth assets are merely conceptual claims on the real, physical productivity of the economy. Without production, the value of all financial assets would fall to zero, as there would be nothing of value to redeem for money, financial securities, government debt, etc. Productive power, not the holdings of financial assets, is the ultimate source of a nation's prosperity.
[...]
As a counterpoint, in 1998 Bruce Bartlett addressed similar arguments made by Pat Buchanan - http://www.cato.org/....php?pub_id=10983 I find many of Buchanan's positions repulsive, but even a stopped clock is right twice a day.
Life is complicated. Mantras like "Free Trade == Unconditional Good" are like most categorical statements - trivially wrong. History tells us that trade between the first world and the 3rd world is complicated, and must be managed to spread the benefits and control the costs to the societies. Economics isn't Pure Mathematics, and it's not real life. It's a model of a more complex system.
I suspect (as I've said before) that as transportation costs increase over the next few decades that the world will get larger again, and then manufacturing closer to customers will become much more cost-effective again.
FWIW.
Cheers,
Scott.
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Post #332,112
8/31/10 11:33:48 PM
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The kos artlcle
is overly simplistic, correctly described as "loaded language" and wrong on my levels.
It overly simplifies "free trade" with the same zeal that people categorize the tea party.
Those that understand know that free trade /= no tariffs. It means that supply and demand should allocate resources to locations of comparative advantage.
So, if it is determined that lax regulation (sweat shops) create advantage for country x, it is perfectly acceptable within the definition of free trade for a country to exact a tariff on that good that levels the playing field. What is not acceptable is to slap a 5000% tariff on that good simply because you want to ensure that country y's base has no competition.
When China began dumping tires in the US, it was perfectly acceptable to put a halt to this. There were and still are serious questions about the validity of the pricing that was used vs cost. (ie, was the pricing predatory or not)
And to use late 1800s industrial revolution growth as a validation of protectionism is a bit silly. Who were we protecting ourselves from? Who cares that there was a 200% duty on train engines? Who were we going to import them from? Not like you could drop one of those on a schooner.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,117
9/1/10 7:24:29 AM
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I guess you missed the rending of garments about the tires..
E.g. http://www.washingto...009091103957.html
[...]
The tire tariff will amount to 35 percent the first year, 30 percent the second and 25 percent the third.
[...]
Marguerite Trossevin, who represents a coalition of U.S. tire companies that import Chinese tires, said the tariff decision is "very disappointing." She predicted price increases for U.S. consumers and losses for U.S. tire importers.
"For the U.S. tire distributors and consumers, there's going to be a heavy burden to bear," she said. "It sends the message that special interests will get protection if they ask for it -- regardless of what that means for broader trade policy."
China's Ministry of Commerce said in a statement early Saturday that the move violated WTO rules. "China strongly opposes this serious act of trade protectionism by the U.S," the ministry said, according to the Associated Press.
Not surprisingly, there were conflicting predictions about what effect the tariff might have on the U.S. industry.
Supporters said the measure would have only a negligible effect on the price of tires and would lead U.S. manufacturers to invest in their U.S. plants.
The tariff's detractors said higher tire prices could lead some consumers to wait longer before replacing tires, creating a safety risk. Moreover, they said, the tariff won't result in more jobs. Tires will simply come in from other low-cost countries, they say, and U.S. manufacturers, keep making their cheaper tires in China.
[...]
"It'll kill people! It'll kill jobs! And it won't matter anyway!"
You have some people who disagree with you about what's "perfectly reasonable". ;-) While in practice there may be no fully "free-trade" the short-hand stands for a regulatory mindset that has dramatically reduced tariffs in the last 60 years.
Yeah, the DK piece was over the top in the language used. But the underlying point is important, if perhaps overstated - there are significant consequences to removing tariffs when your trading partner does not operate in a similar arena (due to differences in costs, regulations, corruption, etc.). It is not an unconditional good to trade with someone who can provide goods at lower prices. Lower selling prices is not the only important metric.
Oh, and I don't understand your comment about locomotive imports. The US imported them from Britain - e.g. http://books.google....onepage&q&f=false
Cheers,
Scott.
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Post #332,123
9/1/10 8:18:14 AM
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tires
I go thru Gadsen Alabama occasionally. Before the tariffs the parking lot of the goodyear plant was always empty. After the tariff it appeared to have a lot of cars there. Now those wages arent great but they are marginally better than McDonalds.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,131
9/1/10 10:05:45 AM
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No, I didn't
I ignored it as noise, which it is.
What I spoke to was >real< free trade, not the definition the folks who want to make some point are calling it today.
And in that post I also noted, and you seemed to miss it, that tariffs are acceptable in a free trade environment as long as they are used to balance against non-S&D market imbalances (regulation differences, labor differences, etc). There is no incongruity with my statement and your statement that complete removal of tariffs can have significant consequence.
My point on locomotive imports...is that in that day and age there was no possible way we could fuel the infrastructure development going on in the US without developing that capability domestically. The world at that time was too large (even between US and UK. Sure they could supply some. But the cost to move them here would automatically create a profitable market for domestic manufacture, tariffs weren't necessary. The folks using "protectionism" as causation for the build-out of the United States infrastructure and industrial engine are stretching very thin to make that case.
PS: I have people disagree with me all the time, on both sides..especially in economic endeavor. I was educated truly in the "dismal" science. Both sides are wrong...
often ;-)
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #332,124
9/1/10 8:20:25 AM
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Not sure if you are advocating the article
By this thinking, it follows that every time government involves itself in the economy, it merely takes money from one actor and transfers it to another. Since this supposedly zero-sum transfer entails overhead costs, it cannot result in more wealth being produced, it can only destroy what wealth currently exists. why are you always wanting the guv to try to krugman our way out of financial difficulties? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #332,129
9/1/10 9:51:05 AM
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He's saying that argument is wrong.
Contrary to the "free trade uber alles" advocates, he's saying that government action in the economy (esp. during a time of lack of demand) not a zero-sum. I agree with that.
Cheers,
Scott.
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