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Republican Economic Policies

Discussion in 'Economics, Business, and Taxes' started by imreallyperplexed, Feb 13, 2012.

  1. degsme

    degsme Council Member

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    So show us where it is "goofy" and "suspect math".

    You have yet to do so. I've sourced all my claims on econoics and math.

    No. Business decisions Routinely Focus Only on Current ROI and ignore tax considerations until after the fact.


    Since the Welfare Reform Act didn't pass until 1996 and did not take effect until 1997 - it requires time travel to make your statement valid.

    Last I checked, time travel was part of this genre called... Science Fiction
     
  2. degsme

    degsme Council Member

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    Which "them"? Greece cannot print its own currency.. that is its PROBLEM

    Um wrong. That's like saying that because amputation is the solution to gangrene - that with amputation there are no long term health consequences.... Its just ignorant
     
  3. degsme

    degsme Council Member

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    That's about as oxymoronic a statement as exists. WW2 Deficit spending was keynesian stimulusin the most classic manner. What extended the depression by 5 years were the "deficit austerity" that FDR engaged in in 1937 which caused a 2 year recession that only the keynesian stimulus of WW2 corrected. So that was essentially a 2 year failure to grow which extended the depression by 5 years.

    Well that is a "simple fact" except it isn't actually true.
    • First off Deficit spending does not "come out of the private sector economy". It CAN be structured so, but it does not NEED TO BE
    • If the Fiscal Multiplier of Government Spending is higher than the fiscal multiplier of private sector economy, then actually it INCREASES the size of the private sector economy. And.. guess what? Spending by the wealthiest Americans? Fiscal Multiplier of UNDER 0.7 in GOOD economies (worse in down economies). Fiscal Multiplier for Governmen Social Safetynet spending? OVER 2.0 in a down economy
    Look this is just empirical data. Its not ideology

    That presumes that the Fiscal Multipliers of those being taxed and those being spent on is the same. And that you are using taxation to pump water into the pool.

    NEITHER OF WHICH IS TRUE

    Actually no. They are empiricists. Unlike Austrian School ideologues who basically claim that you cannot refute their ideas since you cannot adequately model the economy, Keynesians use the same mathematical and experimental and observational techniques that allowed you to post this (because it is what is used in chipset design) to either validate or repudiate their theories.

    SO on one hand you have Austrians like you Lukey who CLAIM things but then also claim you cannot use any observations to support them (definition of an ideologue)
    otoh
    You have Kenesians who point to 250+ years of economic data that show Keynsian fiscal poliices WORK BETTER than anything else that has been tried or proposed.

    FACTS MATTER
    OBSERVATIONS MATTER
    "simplistic" explanations that are actually untrue? Not so much.
     
  4. degsme

    degsme Council Member

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    In 2005? the crash? Pretty much.
    • You had 50% of the "non conforming" mortgages already written. they had 3-5 year balloons that about 25% of the mortgage holders could not pay.
    • You had about 70% of the Credit Default Swaps written that crosslinked those mortgages in a way that guaranteed Gresham's Law contagion when the collapse took place
    • You had had 6 years of active deregulation of the securities markets:
      • starting with Gramm-Leach-Bliley (yes Clinton failed to undertand its consequences and played a "safe" political game with it)
      • Including Greenspan's overruling of Brooksley Borne's desire to regulate CDS's as the Futures Options they were
      • the overleveraging of investment banks via "waivers" on reserve requirements by various succesive SEC and Treasury heads under GWB
      • the active suppression of local state regulatory agencies enforcement of mortgage lending standards that the GWB admnistration took to court to prevent
      • reductions in SEC Fraud staffing driven by GWB Admin ideology
    and in July of 2005 the foreclosure rate in "non -conforming ARMS" see chart #4 http://www.kansascityfed.org/publicat/econrev/pdf/4q07Edmiston.pdf began an exponential climb.

    So your exercise is to explain
    1. What policies could THE REPUBLICANS (who controlled both ends of Penn Ave in 2005) have implemented in 2005/2006 that would have prevented the lending lockup in late 2007 and the concomittant crash in 2008
    2. what poliices the DEMOCRATS having taken control of the House and Senate in 2007 - could have implemented in 2007 that would have prevented the lending lockup that took place 10 mos later and the concomittent crash
      [/quote]

      And you claim to have an engineering degree? So you are saying that quantum mechanical effects are not statistical percentages? Are you claiming that putting a hot pot of water on a burning stove is not a matter of "percentages" when it comes to brownian motion collisions?

      Are you suggesting that Gravity is not a "rate" (ie percentage change) but instead an absolute steady state value?

      I guess engineers are all politicians


      FACTS MATTER
      Normalized, correlation adjusted, statistically superpositioned facts.
     
  5. degsme

    degsme Council Member

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    The economist matters. no doubt you've turned down multiple offers to write for this publication, so you're probably smarter than they are..but they thought there was a recession in '01... along with everyone else on earth.

    http://www.economist.com/blogs/freeexchange/2009/08/what_kind_of_recession_was_200[/QUOTE]
    Um from your link

    NOAM SCHEIBER continues the discussion on what might happen with the American unemployment rate, and he disagrees with Nate Silver; unemployment will probably increase to 10% or higher, he says​
    Hmm so who is Noam Scheiber. Does he work for The Economist??? No??? wait he works for The New Republic??? http://www.tnr.com/search/apachesolr_search/scheiber You mean the organization which regularly has conservatives as their columnists and takes no pains to hide its CONSERVATIVE approach?

    And do tell how anything Scheiber writes contradicts that the 9/11 recession was fairly short? He says he expects unemployment to continue to rise for a long time after the recession ends. Yet the BLS data shows http://data.bls.gov/pdq/SurveyOutputServlet that the unemployment rate was not affected by 9.11 and had plateaued within a few months. The LONG TERM high rate (2 years) was a plateau casued by FISCAL policies and not the origianl recession.

    Transfer $$ from the most efficient segment of the economy to the least efficient and you are going to see a plateau in economic activity.
     
  6. degsme

    degsme Council Member

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    You mean like Germany that outperformed US GDP growth prior to the Crash by 35%???
     
  7. degsme

    degsme Council Member

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    Nope. Taxes only harm the economy if your below claim holds true

    But since we know from EMPIRICAL DATA that

    1) the fiscal multiplier for the upper quintile earners of Reagan's marginal rate cut from 70% to 50% was a whopping 0.7
    2) the Fiscal Multiplier for government infrastructure spending is 1.5

    Then raising taxes on the upper quintile and using those say for infrastructure spending would cause a DOUBLING of GDP for the amounts collected and spent

    DATA MATTERS
    FACTS MATTER
    got any?

    I mean other than making ideological statments that the Government is an "unproductive sinkhole"?
     
  8. degsme

    degsme Council Member

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    The basic problem was that Reagan believed, as Lyn Nofziger put it, that members of Congress "wouldn't lie to him when he should have known better."[xxxi] As a result of TEFRA, Reagan learned to "trust but verify," whether he was dealing with a Speaker of the House or a president of the Soviet Union."
    http://www.reagansheritage.org/html/...dwards12.shtml[/QUOTE]
    No one lied to Reagan. But even if ALL of the tax cuts Reagan wanted in TEFRA had been implemented, you actually would have seen a GREATER ATTENUATION of GDP growth than if they had not been put aside.

    Why? Because the Reagan tax cuts primarily went to the ECNOMICALLY INEFFICIENT Spenders - ones with a Fiscal Multiplier of 0.7

    Meanwhile the spending cuts would have taken funds out of ECONOMICALLY EFFICIENT Spenders - ones with Fiscal Multiplers between 2.0 and 4.0 in their spending.

    So you if those cuts had taken place balancing the $98 billion. you would have seen a drop in GDP growth of roughly $270B-$330B. Now that still would have left the GDP in positive growth territory. So numbnut Supply Side ideologues would claim that this meant the cuts were "succesful in growing GDP"

    Except that if you are truly trained in engineering as you claim you well know that when you have an existing rising systemic rate, you have to normalize successive data for the CHANGE in rate rather than the rate itself. IOW if you are falling at 9.8m/sec/sec - and you open a parachute, you now are STILL FALLING, but your RATE OF INCREASE changes...

    So again, there is ZERO evidence that the tax cuts Reagan proposed in REFRA would have resulted in a balanced budget. Instead you would have seen about a 55%-60% drop in the rate of GDP increase. Which is rather catastrophic
     
  9. Lukey

    Lukey Senator

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    Perhaps that would be because the German's embraced "supply side" economic policies?

    A mere decade ago Germany was called "the sick man of Europe." It was still painfully digesting the unification of the former West Germany's relatively free and modern economy with the former Soviet-enslaved East. Ten years ago German unemployment was 8.2%—the same as Europe's overall—while U.S. unemployment was 5.7%. What did Germany do that allowed it to charge ahead and trade unemployment rates with the U.S.?

    Starting in 2003, Germany under then-Chancellor Gerhard Schroeder began to implement a program of long-term structural reform called "Agenda 2010." The idea was to transform Germany into an economy where business has an incentive to invest, and where labor has an incentive—and an opportunity—to work. This was pro-growth reform that would be very familiar to Ronald Reagan and Margaret Thatcher.

    The centerpiece were labor-market reforms designed by a former human-resources executive at Volkswagen AG. The power of unions and craft guilds was curtailed, making it easier for unskilled youth to enter the job market and easier for employers to hire and fire at will. Germany's lavish unemployment benefits were sharply cut back. An unemployed person in social-democratic Germany today can draw benefits for only about half as long as his counterpart in capitalist America.

    The immediate reaction was a brief rise in unemployment, as German business was allowed for the first time to optimize its labor force. And there was a backlash by powerful union and guild interests, costing Mr. Schroeder his bid for re-election. But Germany was transformed.


    http://online.wsj.com/article/SB10001424052970204792404577225301719346924.html?KEYWORDS=Luskin
     
  10. degsme

    degsme Council Member

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    Um Labor Market Reforms are not "supply side economics"

    You need to read up on what chnaged they actually made rather than rading opinion blogs in biased sources. Remember that if you decorrelate the "reunification costs" GErmany was not the "sick man in Europe".

    What the "labor market" reforms were, were essentially changes that enabled more hiring of "temporary workers" aka Contract workers. These workers still received the same 6 weeks vacation etc. but since they were hired for fixed contracts, the cost of "laying off" was not as high as for your average german worker.

    But pretty much everything else remained the same.


    So its not because of "supply side economics" in any way. Its simply doing some optimization of the existing labor market


    You really need to get yourself out of the echo chamber.
     
  11. wobblies

    wobblies Mayor

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    How do you define 'supply side'?

    Ronnie and supply siders argued that tax cuts would stimulate the economy by putting money into circulation. Ronnie studied economics when Keynes put out his theory that government spending would help stimulate the economy by putting money into circulation; the difference is that it is tax cuts for supply siders and government spending for Keynesian. What both have in common is that government policies are being used to stimulate the economy.

    Furthermore, tax cuts as a means of stimulating economy have also been used by Keynesians; for instance, JFK's economic team was made up of Keynesians when he proposed tax cuts.

    Willie raised taxes on upper income earners while lower them for others, so I don't understand why you consider him a supply sider. Please clarify.
     
  12. degsme

    degsme Council Member

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    Not quite precisely enough Wobbly. Supply Siders argue that tax cuts for the upper quintiles and corporations SPECIFICALLY stimulates the economy because it results in greater Capital Investment in the economy.

    This presumes that the reason the economy's growth rate is at the point it is at is primarily the result of capital investment. It ignores things like velocity of money and liquidity (in fact it denys the existance of a liquidity trap that Keynes demonstrated and described and which has not actually been refuted by anyone)

    It also presumes that tax rates are the primary driver in capital invesment decisions.

    And it presumes that higher income earners are "rational" and that their Marginal Utility of Income (ie how much they value the last $100 they earn) is the same as that of lower income earners.

    NOT ONE of these claims is empirically supported. IN fact EACH is refuted by the observable facts.
     
  13. wobblies

    wobblies Mayor

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    Excellent post. I would point out that Keynesian theory also anticipates that more capital investments will be a product of increased demand, but I doubt that I need to write that for you.
     
  14. degsme

    degsme Council Member

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    nah ... I kinda know that.. So Does Lukey. And Lukey also actually knows that for 120+ years (ie before Keynes even did his analysis) we have been using actual stimulus spending whenever we have been in a liquidity trap. And in the process cut the average duration of a recovery by a Factor of EIGHT and extended the duration of the business cycle by more than a factor of two.
     
  15. Lukey

    Lukey Senator

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    Anything that improves conditions for productive endeavors is "supply side." As I have repeatedly told you, the "lower tax rates on the rich" that you leftists keep claiming as the "essence" of supply side economics has much less to do with improving incentives to produce than the overall size and scope of the federal bureaucracy, regulatory overreach and a sound currency policy. I don't have to "decorrelate" anything. And, by the way, what is the minimum wage in Germany?
     
  16. degsme

    degsme Council Member

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    Then Keynesian stimulus - becuse it increases demand - is "supply side"..

    That's plain nonsense and you know it. "Supply Side" specifically refers to policies that reduce the cost of investment in the Supply as being a direct driver of demand.

    Supply Side DOES NOT refer to all changes in COGS that allow a RESPONSE TO EXISTING demand.


    The Labor reforms in the FRG are not "supply side" in that they don't claim to INCREASE overall market size - but simply focus on improving worker productivity.
     
  17. Lukey

    Lukey Senator

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    Anything that improves conditions and incentives for production is "supply side" economics. That can be regulatory relief, a rational energy policy that lowers the cost of obtaining and using power, or even rational education and immigration policies that increase the supply of workers with the skills needed by employers. The way taxes play into it is this - Spending = Taxes (current + deferred) so lowering marginal rates can be "supply side," but not if the government spending continues to grow, in which case you are just shifting the tax burden from current to deferred. And if you do that it's Keynesian because you increase the deficit (by definition, all deficit spending is "stimulus"), and therefor not supply side.

    Clinton cut capital gains taxes and (more importantly) implemented a credible effort to contain the size and scope (and cost) of government, while also maintaining liberal immigration policies for technology workers (and generally pro-business stance emanating from the West Wing). That was a classic supply side economic policy and it resulted in the best economy we have had in the past 50 years (and that wasn't a coincidence).
     
  18. degsme

    degsme Council Member

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    So stimulus spending that improves demand and thereby improves conditions and incentives for production is "supply side"

    And increasing tax rates on a segment of earners who's marginal utility of income has a fiscal multiplier of below 0.7 and spending it in a demand generation manner with a Fiscal Multiplier of 2.0 or higher is also "supply side".

    As is cutting tax rates on a segment of earners who's marginal utility of income has a fiscal multiplier of below 0.7 and thereby cutting demand generation manner with a Fiscal Multiplier of 2.0 or higher is also "supply side".

    RIGHTT...
    its all Supply Side if things get better as a result of the policy and Keynesian if not

    ROTFLMAO.

    Since a government has no life span, there is no requirement that a particular debt level EVERY be paid off. Thus your equation is simply WRONG.

    doubly so when a government has the ability to inflate or deflate money.

    You are making shit up.
     
  19. Lukey

    Lukey Senator

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    Um, no. By artificially (and temporarily) increasing demand, Keynesian "stimulus" just moves economic activity from sector to sector and from the future to the present. As such, it distorts the free market, increases the size and scope of government and is therefor the opposite of "supply side" economics.

    And, by the way, inflation is just another (regressive) sort of tax, isn't it?
     

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