Capital in the 21st Century by Thomas Piketty

Giles' criticisms have been debunked.
http://equitablegrowth.org/2014/05/30/daily-piketty-may-30-2014/

Seeing he keeps being proven right in his approach to economics, and the right has seen their various economic ideologies fall apart in the face of facts, I'd stick with Krugman over those guys who keep getting it wrong.

YMMV

 

Read post 99. I give examples of banking in societies unknown to Jews. To add the obvious, few people know enough history to address the question. But it's easy to document the universality of loans at interest.

 

Regarding recoveries, there is a lot of historical evidence that financial crashes tend to destroy a great percentage of the wealth held by the middle and lower classes and relatively less of the well off. In general the crash and recovery cycle increases wealth concentration. In a crash asset prices fall, wiping out much of the savings and accumulated wealth of the middle and lower classes. After the crash those with wealth are able to buy assets cheaply. Those whose accumulated wealth is in a house or retirement fund that has lost a huge percent of its value are not.The only exceptions can be found in nations with high tax rates on the wealthy, more specifically on capital gains income.

Over time an economic recovery can return the property values and retirement funds of the middle class to where they were before but that also means that all economic growth above the peak before the crash has gone somewhere else. For example, in an economy that loses 2% of its wealth in a year long downturn and then experiences 2% growth over the next five years it would be expected that general asset prices would quickly recover and begin to increase. However, if that downturn has an especially adverse effect in certain markets where the middle class concentrates their wealth, like residential real estate, it will result in a permanent decrease in their share of the national wealth.

The nature of markets is to respond to the marketplace. The nature of capitalism is to concentrate wealth in order to gain control of markets. It is a fundamental mistake to assume that capitalism conforms to market economics.

 

It sure feels that way,
( )0( ) bobov has government numbers that tell us
everything is great. The economy is growing. The GNP is up. Etc. Etc.

He would further tell YOU it is NOT the government's fault you can't earn a good living,
while we know it is the government and their RepubloCratic corporationist policies.
Yup, that's what bobov would say. Verbosely


Moi


r > g

No ​

 

The lower classes have little or no wealth and live largely hand to mouth. So when assets tumble in price they lose little so long as they keep their jobs or other sources of income. People dependent on public assistance are vulnerable to inflation but largely immune to changes in asset prices.

Would you cite some instances of the "lot of historical evidence" showing financial crashes are harder on the middle class? Suppose that asset prices decrease 25% across the board in a crisis. Someone starting with $100M will now have $75M, so he's still rich. Someone starting with $100K will now have $75K, and that's a more meaningful loss because it flirts with a fall out of the middle class. But both people have still lost 25% of their assets, and the rich person has lost far more money than the middle class person - $25M vs. $25K.

Now you might argue that the rich and middle classes invest in different asset classes, with those of the middle class more susceptible to loss. One supposes that the rich, having more to invest and being more sophisticated investors, are more broadly diversified in their holdings, which might mitigate the worst losses. But there's nothing preventing access to most asset classes (excluding only investments deemed highly risky, such as some hedge funds, and restricted by law to provably rich people) other than the knowledge of the investor. In investment as in all other things, brains and effort pay off. That's not a systemic flaw of capitalism or the marketplace. What has made modern industrialized economies the richest known to history (able therefore to afford the greatest munificence and public benefaction) is their insistence on linking riches to performance. The alternatives - feudalism and socialism - largely sever the connection between what people do and what they receive. That makes for emotional security - serfs and clients of the welfare state needn't feel pressured - but poverty and mediocrity are the price.

The middle class is exposed because its resources are limited, so its members may easily revert to poverty, but there is no systemic obstacle to their investing with the same percentage returns as rich investors. No one need not invest, except the utterly destitute. So long as a person has surplus cash - even as little as a few hundred dollars - there are investments to be made. The number of zeroes is the only difference.

Members of the middle class are typically uneducated about investment, which takes an awful toll. The fault is with our schools, which teach academic subjects at the expense of the practical. Most of the losses in financial crashes are felt by the ignorant, who've put money into things without knowing what they were doing, and made painful blunders as a result. Most often, ignorant investors are from the middle class, but that doesn't mean the system is stacked against the middle class. It means most people in the middle class have never been taught how to handle money. It's very true that buying assets while their prices are low is a basic investment principle - "buy low, sell high." Sadly, most people only feel an investment is good when it's price is already too high, and then they panic and sell at the bottom when there's a crash. Again, that's no fault of capitalism or the marketplace. Feudalism and socialism protect people against their own incompetence by not letting them do anything. Should we not drive cars or buses or ride trains or fly planes because crashes occur? It seems obvious that great social goods can be achieved only by the acceptance of some degree of risk. The overall gains far outweigh the losses. The many countries that have experimented with socialism over the last century have all found that they must abandon socialism to be prosperous (like Russia and China) or abandon prosperity to cleave to socialism (like North Korea).

About capital gains taxes, see the following table comparing tax rates in various countries. http://taxfoundation.org/article/capital-gains-rate-country-2011-oecd The table shows both individual capital gains taxes and combined individual and corporate rates. You can see that the US has a lower individual rate than places like Italy and Denmark, but a much higher rate than places like Mexico, Austria, (South) Korea, and Switzerland. Factor in corporate taxes, and the US emerges as one of the most highly taxed countries. Since the rich hold much of their assets in corporate equity and debt, our tax structure is about as unfriendly to wealth accumulation as socialists might hope.

"The nature of capitalism is to concentrate wealth in order to gain control of markets. It is a fundamental mistake to assume that capitalism conforms to market economics." Easily proven wrong. Look at the chart on page 17 of this report from the US Census Bureau - http://www.census.gov/prod/3/98pubs/p60-203.pdf The real median income of Americans rose 58% from 1947 to 1997, even though it cycled up and down. Now take a look at real GDP from 1929 to 1998 (see page 16 of http://www.census.gov/prod/99pubs/99statab/sec31.pdf) In 1929, US GDP was $790.9B 1992 dollars. By 1998, it was up to $7,551.9B 1992 dollars - an increase of almost 1,000%. If real GDP and real incomes both rose, it's hard to defend a claim of wealth concentration. In fact, the very term "middle class" is indicative of the social transformation occurring in the 20th century. There was enough surplus wealth to endow millions of people who might once have been peasants; people left farm country to become first factory workers, then increasingly skilled white collar workers. The history of the 20th century was one of increasingly broad participation in the economy, despite the Depression and several recessions. There has been a terrible falling off in the last six years, with perhaps decades of progress reversed. That's a subject for another thread, but I believe the increasing turn of our government toward socialism has been contributed to the decline, rather than being the panacea some imagine.

 

Thanks for the assist, good buddy, but I just posted my own reply, and it's as verbose as you hoped.

Things are obviously not going well in our economy, and I'd say the government shoulders a big part of the blame.

The other side of the story is that by the end of the 1990s, the US middle class was a large and as wealthy as any in history. But the middle class has never been taught how to handle money. All these millions of newly prosperous people made one tragic blunder after another, squandering what they had accumulated. That's not an indictment of capitalism or a market economy. The key fact is that the middle class grew so large and so wealthy in the first place. That disproves the notion that wealth concentration is inherent to capitalism.

What's sad is that the middle class was utterly unprepared to cope with its new affluence. Our school curricula should include investing. Now we hear the same rebukes of capitalism that have been circulated by socialists since the 19th century. They're less true now than ever, but the socialists exploit people's dismay over the last six years by inverting the truth: the very system that enriched the middle class is said to be the cause of its troubles, while the socialism that has impoverished country after country is said to be the answer.

 

As long as they keep their jobs???
A defining characteristic of economic downturns is a lot of people losing their jobs, which hits hardest at the low end of the wage scale because that is where the least skilled workers are and they can be more easily replaced when business picks up again.

Right up to the Great Depression the general fate of middle class strivers was that they would lose all their savings in an economic downturn. Banks would fail en-mass, closing their doors and leaving depositors without a cent. The average home mortgage term was five years with a balloon payment at the end of the term. These mortgages were refinanced as a matter of course when the economy was doing well but refinancing was refused and the property foreclosed in bad economic times.

This was a general and repeating pattern in the US economy from the mid 1800s into the 1930s. Fannie and Freddie were instituted in order to relieve the middle class from this regular destruction of their accumulated wealth by creating the 30 year mortgage.

The middle class is exposed because its income sets real limits on the scope of its investment opportunities. For the middle class a large percentage of their income will go to housing them and their families. Owner occupied residential real estate is their only significant investment opportunity. Other investments are certainly open to them but the fact remains that very little of their income is available to pursue them while quite a bit is already allocated for housing as a matter of necessity.

The fault of middle class naivety with investment is not the fault of educators or schools but of a continuous high pitched concerted media propaganda campaign that continually misinforms and misleads people about how the economy actually functions.

While there is certainly some risk involved in an economy driven by market capitalism, there is absolutely no reason for the faults of its speculative excesses to be born by those who had nothing to do with them.

There is official tax rates and then there is the rate that taxes are actually paid at. US capital gains taxes, as paid, are among the lowest in the world.

If you want to measure the progress of the wealth of a nation the best way to do that is by measuring real median income growth, which has been slowly declining in the US since the 1970s. GDP growth over the last 40 years has come with a decline in the share of the national income for most people in the US. Since 2000 all of the growth in GDP has gone to the top 10% of income earners. The long term trend is that median incomes will continue their slow decline and with that the consumer driven economy will continue to stagnate.

There is no way for the US economy to return to high growth if people cannot buy more stuff, which can only happen if median incomes rise.

 

People at the economic bottom have always been vulnerable to displacement. Marx wrote about it in the 1840s! That's still true, but probably less so than ever before because so many more jobs are skilled. Undifferentiated manual laborers are easily replaced, skilled workers much less so. US employers have long complained of the increasing shortage of skilled workers. Many job vacancies go unfilled because there are too few people with the necessary skills. There's a global shift away from interchangeable laborers and toward "knowledge workers." The US has not been keeping up. Again I fault our education system, whose aim is to produce 19th century "gentlemen" rather than skilled workers. Part of the reason is the complicity between politicians and "educators." The young are taught to support the political establishment, which in turn sells the idea that education in useless skills is a ticket to advancement. You look at the wrong villain when you indict capitalism. It's socialist politicians and their educator clients who are at fault.

Pre-1930s history is interesting but not relevant to today's economy. I'd add that it was the wealth created by capitalism that made the post-1930s protections for the middle class affordable.

The middle class is mistaken about the investment value of its homes. Take a look at this chart - http://4.bp.blogspot.com/-kjOHoEKbH7A/ULQgiAZ45RI/AAAAAAAABh4/8U-RJx1-pGg/s1600/Inflation-Adjusted+U.S.+Home+Prices+Since+1900.jpg You'll see that except for the recently deflated bubble, US real estate prices in constant dollars have been stable since 1950. At best, middle class homes have held their value against inflation. Add the costs of real estate and other taxes, insurance, energy, repairs, etc., and most middle class homes lose their owners money. That so many millions pour their disposable incomes into these money traps is perhaps the best example of middle class financial miseducation. Warren Buffet is praised for still living in the comfortable but modest house he bought in the 1950s. What people don't understand is that Buffet knows residential real estate is a bad investment once one's need for housing is met. I ran a financial advisory service for years; I never recommended residential real estate, and I've never owned any myself. I'm a middle class person who's lived his investment life entirely in securities, and done very well that way. My point is that the middle class holocaust we both lament is the result of a bubble induced by cynical political calculations, victimizing a badly misinformed public. Again, the trouble was not inevitable and not necessitated by capitalism or the market. If the middle class took just part the money it poured into irrecoverable "improvements" to its homes and put that money into better investments, the result would have been far different, so it's not true that they can't afford to invest. To repeat, people can start with as little as a few hundred dollars - certainly within reach. A person of modest means who began intelligent investing in his mid-twenties should, without much luck or trouble, be financially secure by his mid-fifties. That so many people think this is impossible instead of routine is the problem - turning acquired incompetence into fate.

I must differ strongly about the fault. The fault lies with millions of people wholly ignorant about investment, and with a political/educational establishment which profits from that ignorance. Blaming "the rich" is a dangerous evasion because it says you and I are helpless, that our only hope is to turn to political Robin Hoods for redress. That's what those slick Robin Hoods want us to think. Working people have been falling for that line of hooey since the 19th century. But like Lucy pulling the football away from Charlie Brown at the last moment, the Robin Hoods never deliver, except to themselves. We need to stop finger-pointing and take responsibility for our own lives.

"There is official tax rates and then there is the rate that taxes are actually paid at. US capital gains taxes, as paid, are among the lowest in the world." Would you please document this?

I showed you the data proving that real median incomes grew until the recent past. (See my last post.) If real median income has faltered under Obama, that's because socialism aims at stasis rather than growth. We suffer not from an excess of capitalism, which made us the richest people in history, but from an excess of socialism, which is swiftly sinking the boat on which the middle class sails, all the while proclaiming its concern for the middle class.

 

How wronger can bobov be ?
Witness, "I showed you the data proving that real median incomes grew until the recent past."
Witness, when was this recent past when working folks incomes grew ? Did you see it? I missed it.

And bobov expects Moi to read his whole sermon of corporationist economics with government data to prove it's correct. Ignore personal observation & experience.


Moi

r > g

No ​

 

If mon ami Moi was personally observant and experienced instead of the Sleeping Beauty that he is, he would have noticed the middle class boom that lasted until 2008.

The unemployment rate is a good index for the health of the middle class. Look at Bureau of Labor Statistics data to see the long-term trend of unemployment was down from the early 1980s until about 2007 when the Great Recession started. It has just now fallen back to its highest point under Bush. Put mouse over image and click to enlarge.

 

Since the bicentennial, the Middle Class has lost ground.
No Middle Class boom here in California. Wasn't that, 2008, the foreclosure time ?
Less & Less Job Security.
More expensive health care.
No real retirement because of pan market melt downs. No more wise diversified portfolios.
No real pensions because it was pawned off on IRA's and KEOGHS.
Home ownership down.
Vacations, down.

From Moi's experience, the Clinton Recovery never came to the Middle Class and none since.


Moi
Take the last upload on how great the Middle Class is doing, I won't reply.

r > g
bobov likes it that way

No ​

 

There were always middle class travails, even in the "good old days." It wasn't until well into the 1950s that refrigerators, private phone lines, TV, and automobiles became majority possessions. When I was a small child, we had an ice box, a 5-party phone lie, no TV, and no car. That was usual in working class homes. People went to cheap movie theaters in the summer to get air conditioning. The Kennedy Administration boasted that most Americans at last had indoor toilets instead of outhouses. Employer-provided health insurance only became common during WW2 as a ploy to evade government-imposed wage freezes during the War. So it's never been easy. The problem now is that high expectations are being disappointed. People expected things to get better and better, but now they're getting worse, even though objectively they're still better than the past.

The question is WHY are things getting worse. And Moi is right that many things started getting worse around the Bicentennial in 1976. What happened?

I believe there were two causes more important than any others -

First was the OPEC oil embargo of 1973. That sparked an across the board rise in energy prices that has eroded our prosperity. Fuel for heating, gasoline, electricity - all began a long rise. Energy underpins everything in the economy. Every product or service consumes energy. Expensive energy makes everything else expensive.

We responded by looking for ways to save energy. That meant automation. Millions of jobs depended on our tolerance for relatively slow and inefficient work methods. But when energy becomes expensive, businesses want to do things as quickly and efficiently as possible. Businesses bought high-tech machinery to save energy. Payroll cuts were an unplanned result. So we wound up with higher prices and fewer jobs. See the Inflation Adjusted Oil Price Chart here - http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp You can see the huge disruptive price spike in the 1970s. Prices stayed relatively low and stable until 2005, when OPEC abandoned its $28 per barrel price ceiling, citing high demand and a shortage of supply. Once oil's price was no longer limited by OPEC, it rose to where inflation took it. Newly expensive oil has dragged down the economy since 2005.

Second was going off the gold standard for good in 1973. The US Treasury didn't have enough gold to cover its debts, so we ended convertibility of dollars into gold, silver, or any other tangible assets. This made the dollar a "fiat currency," meaning the government could print as much money as it wanted without limit.

The short-term effect was easing credit, which fueled economic growth, but politicians couldn't resist the temptation to please voters by buying them things with printed money, which spurred devastating inflation. This chart from the Federal Reserve Bank of inflation from 1947 to the present shows how it exploded in the early 1970s - within weeks of the gold standard ending. http://research.stlouisfed.org/fred2/series/CPIAUCSL By March, 1980, inflation reached a peak of 14.8%, and banks paid as much as 18% interest.

So there you have it - high prices, high unemployment, a cheapening dollar - a lethal combination for the middle class. And it all started in the 1970s.

The villains are OPEC and politicians printing money - not the "usual suspects" nit-wit leftists inveigh against.

 

The energy embargoes excuse doesn't add up. When executive compensation is rising as it has, and the tax policy has allowed the wealthy to keep or grow wealth without having to take risks, and the middle class sustaining wage has fallen, it goes far past energy costs.

And we had de facto been off of the gold standard for decades before 1973. The gold standard is a terrible way to run currency. Gold is nothing more than giving a fiat number to dollars. And then, it can't rise or fall in value as needed for different economic conditions. Want to see a moderndaygold standard crisis? Look author Greece, Ireland, Spain, etc are tied to a virtual gold standard of currency, and not being able to have the flexibility of addressing inflation of deflation because the currency is out of their control.

 

I said the two most important causes, not all.

The usual appeals to envy and resentment are wrong, as usual. My neighbor's good fortune takes nothing from me.

"The tax policy has allowed the wealthy to keep or grow wealth without having to take risks." The only way to get rich is to take risks. "Safety" makes people middle class or poor. And without risk-taking, there'd be no jobs for anybody.

1973 was the final and conclusive break with gold. Roosevelt took us off gold in 1933, but it was restored later, at least for international debts. De Gaulle harassed the US by demanding our foreign exchange bill to France be paid in gold. The point to any fixed standard is to prevent politicians from doing what they have been - printing money without limit to fund their posturing before voters, destroying the purchasing power of the dollar, on which the poor and middle class depend. True emergencies such as WW2 can always be accommodated by special legislation. "Flexibility" has been a flimsy pretext for abuse.

Please learn some history and some economics before joining these discussions.

 

Fact is, the US government does not issue currency, that is done by the Federal Reserve Banks, which are owned by their members, which are private banks. The government has very little oversight and no control over Fed actions, only the ability to appoint the chairmen of the regional banks boards of directors and the chairman of the national board of directors that is made up of the regional bank chairmen.

The Fed contracts with the US Treasury to print the Federal Reserve Notes that are the nations currency. The Federal government is not allowed to, and does not issue currency directly, and the Fed does not give the government money.

The Federal government is required to do all its borrowing through a public auction of US Treasury bonds and notes. The notion that the government can just print money without limit exhibits a serious ignorance of the basic economics of the government and the Fed's function in the economy.

If anything leaving the gold standard allowed the government to vastly increase its funding through debt. This is because the main remit of the Fed is to insure that the money supply is sufficient to maintain economic growth. The Fed is obliged to increase the money supply to ensure that massive government borrowing does not suck up all available funds and strangle economic growth, which it would, and has in the past when the US was on the gold standard.

So really, the fault of all this excess money sloshing around the economy is the abject failure of the government to be fiscally responsible, which can be placed squarely on anti-tax fanaticism, which disregards reality and denies the consequences.

The history of the US under the gold standard is something you might like to become familiar with, it was a long period of boom and bust, with the economy booming as new gold was found and then slowing and coming to a screaming collapse as the effects of new injections of money backed by gold played out. It became increasingly obvious to observers that if the amount of money circulating in an economy is entirely dependent on the unpredictable scarcity or abundance of some random commodity the entire economic system is inherently unstable, which is completely irrational, nuts.

You should reconsider your wish for the US to return to the gold standard since 80% of the world's gold is held privately in Asia and the Middle East, over 40% of the planets gold is in private hands in India alone. There is also $Trillions of $US in foreign hands, since the US would be obliged to redeem its current money for gold this would deplete the nation's feeble gold reserves even if the exchange rate rose to $10,000 an ounce. A US currency pegged to gold would collapse at the speed of light, allowing the foreigners with all the gold to buy up everything in the US for next to nothing before the government could react.

But that will never happen because way too much of the world economy is vested in the relative stability of the $US and everyone who thinks about how economies actually work knows it.

 

There's no evidence either has contributed to stagnating wages or the incredible rise of wealth in fewer hands. This is an economics forum. Not a conspiracy theory forum. You seem to have gotten them confused.

Maybe, maybe not. If he's one of the overpaid CEOs who are doing damage to the economy, he may be. And what I mean by that is that executive compensation in the US for the largest companies has no relation to company performance.
http://www.huffingtonpost.com/dean-baker/corporate-cronyism-the-se_b_4805560.html

there's not much evidence to support that, especially in light of corporate welfare via indirect means, and inheriting wealth, has been the largest growth for the wealthy in recent decades.

Fiat has been more stable than gold as a currency. Again, conspiracy theories should be in conspiracy theory threads. Not in economics discussions. Perhaps you know nothing about economics, but that's no excuse for posting ignorant stuff like this.

I'm not the one making a fool of myself by saying coming off specie based currency as the reason for government spending and tax policies that enable the wealthiest to be the most expensive group of welfare recipients.

 

The operations of the Fed and Treasury are all well known, or should be. But you're naive to think the government has no influence over Fed policy, or that the Fed could really restrict the Treasury's monetary policies. The Treasury "prints" money by borrowing from the Fed, which prints the money the Treasury borrows. This may legally sanitize what's happening, but it's a de facto printing of money by the Treasury. The "loans" are never really repaid because the Treasury just "borrows" again to repay the old loans in a string of endless roll-overs. Of course, the Treasury could actually lower the money supply by really repaying some of the loans, but Obama's Treasury would never do that. The Fed-Treasury relationship is just legal flummery anyway. Bernanke, and now Yellin, wouldn't rock the boat. You're right that we can't restore the gold standard now, but that's because successive administrations have crawled to the end of the tree branch and are now sawing it off. Having committed to a policy of radical inflation, our economy can now stay afloat only by continuing to inflate - until the day that inflation itself becomes unsustainable and becomes hyperinflation. The economy faces collapse from either deflation or inflation, but inflation lets the pols kick the can down the road. Bernanke and Yellin both believe the Fed can eventually raise interest for a "soft landing," but a review of the last 60 years shows the Fed has never been able to control inflation without precipitating a recession, but this time the excess is so much greater. Some mechanism to force a slow and gradual increase in the money supply (gold is only one way among many) could have prevented all this, but profligate devil-may-care politicians wouldn't have it. The middle class has been the casualty.

 

You're so deep down the rabbit hole of envy and resentment that it would be misspent effort to try to bring you back up. "The incredible rise of wealth in fewer hands" is not a serious problem, either economically or politically. Poll after poll shows that very few people list it among public issues of importance. Yet left-leaning publications almost daily tell us that it is. Why this incongruity between the public and "enlightened opinion"? Either the American people are boobs who need Democrats to rule them, which is what the left believes, or the people are right, and the left is just angling for undemocratic power, as always.

I won't bother to debate your economics, which are just groundless constructs to justify your power-quest. The effects of rising energy prices and the rise in the money supply have been discussed by economists since the 1970s and are well known. You discredit yourself by confessing ignorance.

 

while your feeble attempt at a non sequitur was you're only shot, it went far wide of the target. It's not resentment that has me saying anything. I'm more than comfortable where I am. If I wanted to go back into business for myself to be rich, I can do it. If I want to keep on doing what I am now, I can. In the meantime, you arguing against economic reality is just so much misinformation. Whether it was taught to you and you bought it like a sucker, or are just here to try to push misinformation on others, I can't say for sure.

Because most Americans do not understand the economics of it, most likely. Let's take, you, for instance, and we can assume you'll make incredibly ignorant and disconnected arguments that don't take reality into consideration at all. It's not a matter of the US needing the left to rule them. It's a matter of educating people, and getting past the misinformation the MSM puts out there for the right. So, to lead people who are educated in how it all works is far smarter than the right (*)(*)(*)(*)ting on them, treating them like mushrooms, while saying if they take some more manure on them, they might become a beautiful flower.

It's probably smart for you to quit when you're so far behind.

When the empirical data points to a leading to b, and not c, and you're still arguing that c is the result, even though it never got close to it, I'm glad to see when you quit. Look... when you and other right wing nuts use fallacy as your truth, and misdirection to keep people in line, who's really looking for power? Obviously the misinformation brigade of the right. They know if people wake up to the truth. they lose elections.

I can't discredit myself by admitting your ignorance. Energy price were low through much of the early 1980s-about 2003. Yet, wages were still stagnant for all groups except the top 1% of wealthiest Americans. That, in spite of gains in productivity by American workers. So, you're premise is marked by a real ignorance of facts and numbers.

Here's energy prices from the 1950s to now, in real (2009) GDP dollars, showing an overall lowering of energy prices.
http://www.eia.doe.gov/beta/MER/index.cfm?tbl=T01.07#/?f=A

 

You offer plenty of clever invective, plus assertions that you're right and I'm wrong. None of that proves anything. You could have saved yourself trouble by composing 1-2 sentences of invective, as I did. I suppose you leftists are as profligate in invective as in all else.

You're only statement of substance is to show the history of energy prices. Perhaps you overlooked it when I linked to the same information and discussed it in my original post. What the data shows is a huge spike in energy prices after 1973; lower prices starting in the 1980s, after OPEC applied a price cap; and another price spike after OPEC ended its price cap in 2005. This history matches ordinary people's experience. Low energy prices coincided with prosperity; high energy prices coincided with economic distress. You reassert my point even as you deny it.

The remedy for the non-problem of inequality usually favored by the left is confiscatory taxes. But such taxes do nothing for workers. If the government confiscates the earnings of businesses and their owners, nothing is restored to workers. They won't see an extra penny in their pay. But as the old saying has it, "it's an ill wind as blows no one good." The political class is the beneficiary of confiscatory taxes. The government, the nation's biggest corporation, gets the money to spend on itself - the compensation of its employees, its consumption of goods and services (enriching government contractors, who will also favor high taxes), its actions to magnify its own power. Since the accumulation of power is the government's organizational objective, similar to a business's pursuit of profit, exercising its tax muscles increases its power. (Please don't bother trotting out the notion that government is inherently benevolent, so any taxes are always a good thing.) So those high taxes you want are a transfer of money and power away from workers and businesses and to government. That's nice if you're on the receiving end, but society's productive people - both workers and managers - will never be.

One other thing. In this age of mobile capital, if the US makes the cost of doing business here too high, the big businesses that are big employers can easily move capital overseas. Since you claim to know so much about economics, you must know that if you raise the cost of doing something, people will do less of it. The US has the highest corporate income taxes in the world. No surprise that the S&P 500 companies earned 46% of their revenue outside the US in 2010; in 2000, it was only 30%. (See http://www.forbes.com/sites/rickferri/2011/08/14/going-foreign-with-the-sp-500/ ) If the means exist to go foreign, and the government punishes investors for doing business in the US, capital will move to where it's treated best. The left routinely inveighs against businesses for moving jobs overseas without acknowledging that this is largely a result of the left's own policies. So not only does the left take working people's money, it takes their jobs too.

 

Shanty

I have known bobov for years.

He does not get, nor will he ever get the concept of the role of
government to protect the rest of us from the economically elite.

I bet he would repeal the Sherman Anti Trust Act if he could,
although we see little evidence of its' use today


Moi


r > g
the way
bobov
likes it.

​

 

Thanks, but it gives bobov a chance to show the absolute failure of his ideas, if I can get him to post them, by highlighting the complete divorce from reality and lack of facts that right wing economics is based in

 

Oh come now,
bobov has government statistics to prove YOU are wrong !
Times have not ever been better for Americans.
Look at the Median Income charts. Ooops, don't calculate that after blocking out the top 10%.
bobov means averaged all out, WE are doing great. Aren't we. Never better.

Give it up, Shanty.
At least after one reply or three.


Moi


r > g

No ​

 

I'm of the opinion that to fight fire with fire with right wingers, match their campfire with nuclear explosions.

You haven't made any statements of substance.

Low energy prices can be overcome with higher wages, to add more consumer dollars into the economy. And no one at all points to the energy costs changing the fact that the Bush/GOP led government stood by feebly and watched (and cheered) as the housing bubble inflated.

Sure they do. The taxes can be put to work on infrastructure, education, and other known ways to grow the economy. Paired with raising wages, the middle class see more jobs and better outcomes.

You're forgetting that if the government spends it, it's not disappeared from the economy. and history shows that higher tax rates on top income earners does not hurt economic growth if the money is put back into the economy.

Largely, much of the overseas outsourcing can be thwarted by monetary policy. The strong dollar policies of the 1980s and 1990s and on have allowed companies to run to Asian and Latin American countries, at the cost of jobs to Americans. That said, even Chinese products sold here have a lot of value added in American costs.
http://krugman.blogs.nytimes.com/2012/01/16/not-so-global/

 

"Low energy prices can be overcome with higher wages, to add more consumer dollars into the economy." I assume you meant high energy prices can be overcome. Who will pay these higher wages? Where will the money come from? You're calling for an inflationary spiral without knowing it. Businesses can only pay higher wages if they raise prices or achieve other cost efficiencies. Higher prices hurt customers and suppress demand. Then there will be further calls to meet those higher prices with yet higher wages. The result is inflation and a falling standard of living. Employers will take every chance to replace costly employees with machines. Your prescription has been a disastrous failure every time it was tried. As to putting more cash in circulation, you know that was Democrat's 2009 rationale for massive pork-barrel spending - the "stimulus." How did that work out for the country? I know the party line - it wasn't big enough. Such injections of cash are inherently inflationary, besides being inequitable.If there's more currency but the same quantity of goods, prices just rise to sop up the excess currency. The money only reaches certain hands - the favored constituencies of pols, contractors who are big donors, etc. The majority - not in on the gravy train - suffers as it pays higher prices with reduced incomes. "Stimulus" is stupid at best, cruel and cynical at worst. Keynes, by the way, advocated an immediate injection of spending, not the doling out of money over multiple years as practiced by Democrats. Obama's "stimulus" was doomed when plans called for most of it to be spent over 4 years. Keynes also said that either more spending or cutting taxes would have the same effect, which is obvious. The difference is that tax cuts reach most people's pockets immediately, whereas "infrastructure spending" is unavoidably long-term and exclusive to selected recipients. So your program is not Keynesian at all. Democrats only invoke Lord Keynes to sanitize their cynicism and bamboozle the public into believing there's profound understanding behind their nostrums.

"The taxes can be put to work on infrastructure, education, and other known ways to grow the economy. Paired with raising wages, the middle class see more jobs and better outcomes." This must be directly from White House talking points. As I've explained, high taxes reduce business investment, leading to lower wages and fewer jobs. This is considered obvious by economists around the world. Only those on the payroll of the US government might say otherwise. Your solution works only in the macroeconomic abstract. An individual worker faced with job loss or a wage ceiling will not benefit from "infrastructure, education, and other known ways to grow the economy." This is the sort of idea that makes sense to affluent professionals who can't imagine the lives of the working poor, who must eat and pay the rent today, not in some nebulous theoretical future. The immediate effect of your program is to cut jobs and wages. I might add that the putative benefits of education, etc., have been promoted since the 1960s, to little good effect. The reality is huge money transfers to (largely Democratic) "educators." The recipients of this "education" seldom benefit. The country is replete with under-employed "college" graduates with degrees from government-funded diploma mills. Your program is again cruel and cynical.

"You're forgetting that if the government spends it, it's not disappeared from the economy. and history shows that higher tax rates on top income earners does not hurt economic growth if the money is put back into the economy." A capitalist economy left to its own devices will allocate capital to where it's most needed and wanted. These will be the economic activities producing the most sought after goods and services. People and businesses will spend their money in accord with their needs and desires. When government intervenes, it takes money away from essentials and reallocates it based on political priorities - what makes people feel good and what makes politicians look good, even if all this spending is misconceived and harmful, as it usually is when people's practical needs are ignored. It's not enough for money to be in the economy. It has to be where it can do the most good in meeting people's needs. Payoffs to political donors and pet constituencies won't get the job done. There's a reason why capitalist economies have exceeded all others in creation of wealth (including the wealth that funds social spending and charity). It's because capitalism harnesses the greed of individuals to the satisfaction of popular needs. A business that wants to make a lot of money must satisfy the needs of many people. Adam Smith explained all this in 1776 in "The Wealth of Nations." The Democratic program severs the necessary connection between earning and productivity, substituting political for economic considerations. The result, wherever it's been tried, has been poverty.That's why Russia, China, and many others abandoned socialism in all but name.

You're mistaken about our "strong dollar policy." See this chart of the US Dollar Index from the Federal Reserve Bank - http://research.stlouisfed.org/fred2/series/DTWEXM (The chart offers several optional time frames - 1 yr, 5 yrs, 10 yrs, max. Pick "max" to see the long-term trend.) The US Dollar Index is compiled by the Fed to track the exchange rate of the dollar against a basket of 10 major foreign currencies. As you see, the trend has been down since at least 1973, despite spikes in the 80s and 90s. This is no accident. The US is the world's biggest debtor nation. A "soft devaluation" of the dollar is the easiest way for the government to discharge its foreign debts. (I assume you know that much of the Federal deficit is funded by foreign purchases of Treasury debt.) During Obama's first term, his Treasury Secretary was met with hostility in Europe and Asia by finance ministers outraged at what they saw was a policy by the US of erasing their government's purchases of US debt. They would never say it in public, but our de facto policy favors a weak dollar. Most of the countries that export to the US do what they can to keep their currencies weak relative to the dollar, so that's it's easier for America to buy their products. For example, Japan's central bank has several times bought dollars and sold yen to weaken the yen against the dollar. Our competing weak currency policy has made things tough for them.

I sense you're well meaning. Pay more attention to real economics and less to the cynical pseudo-economics of politicians and it will take you far. The pols make plausible, but false, arguments to win elections among the uninformed. They don't care about the people.