ajwps
Active Member
Huckleburry said:Awjps,
You completly misunderstood major componenets of my argument. To begin with my argument has its foundings in Keynisian economic theory (Standard classical economics). Economists the world over have used standard classical theory as the basic framework of their anaylisis since about Adam Smith. If you would (and Regan did) like to argue against Smith that is fine, but understand that from an economic standpoint your's is the upstart and liberal theory. This is not to say that it may not someday prove to be correct (in my view unlikely) but rather that it is a new theory whose first go around under Regan failed. These are not my views alone, these are also the views of the greater economic community, including the boys in Chicago and the boys in New York.
Huckelburry you really are a funny guy. I think I understand the major componenets of your argument. The problem is that 'standard economic models' are much like 'standard world weather models.' Economics like the weather somehow have natural regulating laws that men try to theoriize by many standard models. None of which is understood by reality.
It was not only Reagan that agreed with lowering everyone's tax burdens but also President John F. Kennedy with the eventual resulant increase in disposable American incomes. All economic models are, after all, just theories of men and do not reflect the natural complexities involved in both. It really matters little about the boys in Chicago or New York or even Allan Greenspan, the man who thinks that he can control economics by increasing or decreasing interest to the Federal Reserve banks. He does more damage to American economics than if he was a natural catastrophic disaster to the earth's biosphere.
The permanent-income hypothesis was proposed by Milton Friedman in 1957 (who also a leader of the Chicago monetarist school of economics and won the Nobel Prize in 1976 for his work on the money theory and analysis on consumption behaviour).
The central idea of his permanent-income hypothesis was simple: people base consumption on what they consider their "normal" income. In doing this, they attempt to maintain a fairly constant standard of living even though their incomes may vary considerably from month to month or from year to year. As a result, increases and decreases in income which people see as temporary have little effect on their consumption spending.
The idea behind the permanent-income hypothesis is that consumption depends on what people expect to earn over a considerable period of time.
In order to test the theory, Friedman assumed that on the average people would base their idea of normal or permanent income on what had happened over the past several years. Thus if they computed permanent income as the average of the past four years, and income had been $13,000, $10,000, $15,000, and $8,000, they would consider their permanent income as $11,500,1 though our expectations of future income do not depend solely on what has happened in the past.
Both the permanent-income and life-cycle hypotheses loosen the relationship between consumption and income so that an exogenous change in consumption and investment may not have a constant multiplier effect.
This is more clearly seen in the permanent-income hypothesis, which suggests that people will try to decide whether or not a change of income is temporary. If they decide that it is, it have a small effect on their spending. Only when they become convinced that it is permanent will consumption change by a sizable amount. As with all economic theory, this theory does not describe any particular household, but only what happens on the average.
An increase in income should not immediately increase consumption spending by very much, but with time it should have a greater and greater effect.
A change in spending changes income, but people only slowly adjust to it. As they do, their extra spending changes income further. An initial increase in spending tends to have effects that take a long time to completely unfold (reveal).
The existence of lags also makes government attempts to control the economy more difficult. Policies taken do not have their full effect immediately, but only gradually. By the time they have their full effect, the problems which they were designed to attack may have disappeared.
A lefward/outward shift in the market demand curve reflects a real increase in disposable income! Read my argument.
Read and understood. But your argument on a leftward/outward shift is nothing more than theory.
Innovative tech affects marginal production costs but has no (at least in a direct sense) effect on the demand curve.
Have you any verifibable evidence that technology or quality has only minimal effect on demand curve?
Unlike a private firm the government retains no profits. All of its revenues, with the exception of foreign debt payments, are in some form (think government purchases and employee paychecks) returned to the economy.
Then what was Clinton claiming when he spoke about having a potential 2 trillion dollar plus surplus when he left office? A balanced budget would in effect have the government retaining profits for every income tax dollar after the federal budget was cleared?
No, Shifting market demand outward (Macro) has implications on the Micro level. The two are not interchangable.
If macro market shift demand has IMPLICATIONS on micro levels, then exactly how can you say they are not interchangable or in effect do not affect one another? Contradictory....
While GDP is not a measure of jobs and technically an increase in jobs in any sector have equall potential to affect GDP, I think I know what you are trying to say and I agree moreover my argument agrees as well. Why then are you arguing for a fiscal policy that is contrary to that end.
I think you misunderstood my statement. The Gross National Product, all national goods and services are definitely a potential and real measure of job formation and a function of demand and supply. Domestic and foreign consumption of American goods and services is a major marker of capital accumulation in the public and goverment sectors. It seems obvious that more of the American public agrees with me as demonstrated in the last Presidential election.
Competition makes quality increase.
Agreed with the codicil that improvements in technology increases quality because of demand based on production of newer, more efficient, decreased human effort and space saving products.
I know that tax cuts increase spending. No one who knows what they are talking about has ever argued against that, we all know it to be true.
Are you kidding? The Democratic party platform argues the opposite. The leftists like John Kerry argued, to no avail, that large tax increases on the RICH class who pays the majority (90%+) of the tax base increased public spending. The problem was that he considered anyone with an income of $199,999.01 to be middle to lower class and if .01 cent more earned, then that person was among the RICH. In other words, class envy and division was the direction to go. You don't like to mention the old Russian system but that is exactly what happened in the old USSR. Those rich folks are the ones who utilized our system of government to improve themselves. Anyone who desires to better themselves automatically become that despised class which is an anachronism to the American system of government.
The question is tax cuts for whom? In answering that you have to adress the marginal propensity to consume, and in turn the expansionary effect.
Are you trying to say that tax cuts for those $200,000.00 + income class are not an equal part of the consumption public? Who do you think creates jobs and goods for consumption? Take excessive taxes from those who produce goods and services, and you increase the US unemployment statistics that is always good for the leftists who need to create the dole for those unemployed they created with their fiscal policies.
Also Russia is not a good example of anything when discussing american economic policy because their economic structre was not based on the standard classical model. Leave russia out of the debate because in the economic world (unlike the political) they are a useless comparision. Except to say that Marx's theory does not work as well as Smith's.
Unfortunately that Russian bad example of anything was also an economic model which must be compared to other theories for more accurate observations of models that work more or less efficiently.
Oh really, my trickle up theory has guided our economic policy since the nations inception. Interesting.
Very funny. Then you are taking credit for the economics of the beginning centuries of this country which did not bode well for America as a world monetary power until WW2. Your trickle-up theory was then a major cause of the great depression of the 1920s. Now that that the trickle-up theory has demonstrated a history of an inferior economy, the trickle-down theory of Presidents Jack Kennedy, Ronald Reagan and G.W. Bush is just now beginning to demonstrate efficacy in our major world economic power.
Nope. Investment does not automatically translate into more wealth for everyone. That is not how the stock market works. Actaully the stock market is a function of our greater theoritical framework and is usefull becuse it is a robust and somewhat stable capital market. On the other hand increased consumer demand does automatically translate into increased supply, which may require firms to expand, which may be reflected in positive gains in the stock market as firms seek additional capital.
Now you are the one arguing for a fiscal policy and growth market that is contrary to your trickle-up theory of economics.
Your the one politicizing this. I am arguing for a sound fiscal policy, and my argument is one that most republicans agree with.
Which is trickle-up voodo economics???? I doubt the Republicans agree with your knowledgable assessment.
Again this statement is entirely false. A buisness succeeds only when people consume their product. Without consumption there can be no revenues and without revenues a buisness can not suceed. All buisness owners want revenues yet buisness' still fail. The natural conclusion then is that developing an attractive product and successfully marketing that product is more important than the wants of the particular buisness owner. Of course I am an economist not a buisness man so I could be mistaken on the latter point.
Your statement is just a bit confusing. You say that the wants of business owners are somehow different than making the greatest profit based on something other than attractive products and successful marketing? Many businesses fail for reasons other than decreased revenues alone. Changes in public demands, technology improvements making owners products or services obsolete, poor location choices, outsourcing foreign cheap labor, larger WalMart type discounting and of course on-line consumer purchases have caused failure of many industries and businesses. Without capital in the public sector in the form of reduced taxation levels exacerbate business failures.
That statement did not make sense because you do not understand how the fed interacts with the Government. Do a bit of reading (I recomend the economist) and you will see the correlation between government debt and scarcity of capital. What I will say now is that money like all things in our economy is a scare resource. When the government engages in huge spending programs they begin to consume large quantities of the availble money supplied (and no printing more does not allieviate the problem). When deficit spending begins the government litterally goes in to debt, that is what a treasury bond is, a piece of debt. Indviduals, institutions, and especially the central banks of other countries buy that debt, at a promised rate of return. As economists we assume that the people who invested in national debt would have invested else where had that option not been availible. Thus the damage to the economy is two fold. The government restricts the amount of capital availible to private enterprise, and limits the amount of additional capital that would have gone to private enterprise.
You say that government debt is somehow related to a scarcity of capital. To whom do you think the federal government has greater debt to in the form of those IOUs (treasury bond notes). Is it foreign purchasers or simply Americans who hold the greatest proportion of those interest bearing treasury notes? Which country in this world has the greatest accumulation of capital in its banks and institutions?
Why is that foreign capital flows into the United States? Is it possible that foreign investors consider the US to be the safest place for their assets because of the stability of the US economic system that now develops with the largest accumulation of the stable dollar even though the Euro has increased lately in value in comparison to our dollar.
I am talking about the welfare state not the welfare system. Know the difference if you want to argue about economics.
You are correct.
"The idea of the "welfare state" means different things in different countries.
An ideal model. The "welfare state" usually refers to an ideal model of provision, where the state accepts responsibility for the provision of comprehensive and universal welfare for its citizens.
State welfare. Some commentators use it to mean "welfare provided by the state". This is the main use in the USA.
Social protection. In many "welfare states", social protection is not delivered by the state at all, but by a combination of independent, voluntary and government services. These countries are still usually thought of as "welfare states".
In reading your argument a few things are pretty clear. The first is that you are not an economist. The second is that what little knowledge you do have of the economy comes from the popular media who in an effort to make things easier to understand skip over the more nuanced parts of economic debate. If you want to debate me fine. But in doing so you are going to need alot more than a hodge podge of economic catch phrases that you heard on the evening news. You should understand the MPC and what the GDP measures and why that measure is important, know how the money supply works and how the fed opperates. I am not spewing liberal sewage, quite the contrary my argument is increadibly conservative. And unlike your's argues for less government intervention not more. The propents of your fiscal plan have thus far refused to acknowledge reality, and the proof is in the pudding. For all of the boasting the "comeback" has been quite modest and has come at a abnormally high price. In the coming year we are going to witness the continued slide of the dollar against other world curriencies, this has nothing to do with muslims or terrorism, this is not because the EU is plotting against us or using dirty tricks. The demise of the dollar is a direct result of our own fiscal lunacy, lunacy which you support even though you can't articualte why. Our postion as the worlds reserve currency will continue to slide as investors seek higher rates of return and greater stablity else where. This will limit our ablitlity to carry on spending and will make deficit spending increasingly more expensive (through a rise in interest rates). Probably, you will answer this post with some witty remark about my intelligence, sexual orientation, or physical appearence. What you are far less likely to do is respond with a sound economic argument, beacuse that would require educating yourself, and if that is achieved you will not have any reason to post a response other than to say "oops my mistake, you are correct our fiscal policy is ludacris. Happy hunting
HUCK
No I am not an economist and you apparently are one. Therefore I am at somewhat of a disadvantage. And you as an economist are apparently mired in theories and models instead of that economic reality in which you find me lacking.
You seem to prophecise the inevitable slide of the American dollar because of the lunancy of the current adminstration's fiscal policies. You, as a learned economist, seem to believe that the world will seek higher rates of return and more stability for their assets and bring the American dollar down because of an outflow of foreign investments.
Obviously I disagree. I choose not to use invectives or deride your self super-opinion ideations and concepts about things that cannot be explained precisely in models or theories of economics. There are external and internal events that can change financial events to come. Therefore I choose not to foretell future events of changes in world monitary ebbs and flows.
You place a great deal of weight on your own education in the field of micro and macro economics. Ultimately I do not feel that US fiscal policy is lunacy but is now on track for having an even greater role in the world as the instabilty in the major nations of the world are based on monetary policies ultimately to end in collapse. A prime example is the Euro which is based on the common denomiation of a group of European nations with very weak and some more powerful monetary producing nations. The common denominator will ultimately be a very weak currency based on conflicts between the haves paying the load for the have nots.
Your judgement about the US economic policy of growing federal deficits being a zero-sum-gain is wrong on its face. You just might find yourself rechecking your models in the event that the US remains the world monitary center.
You are the expert, not me.