How Will the Economy Improve?

[Loren Pechtel]

In your wordview, how does the US project strength when our military can not even source drones with parts not made in China?

These particular parts do not compromise national security directly (they aren't something that would allow China to spy or sabatoge the drone itself) and it wouldn't be that difficult to either work with our allies to develop alternative sources for these parts or pass a law subsidizing our own production or strategically tariffing those particular parts if they are critical to national security. This really is a minor issue that isn't too hard to solve in a few years time.

It's relevant in that they could cut off our ability to produce them.

I will also note as an aside that each state handled the pandemic differently. Some states stayed shut down for longer periods of time, kept schools closed longer, while others opened up much more quickly, and there was much public debate about the right approach. There were not edicts coming from the federal government forcing states to do one thing or another. That is how our federalist system works and I think that is the right approach. Each state needs to also have it's own investment in planning for future pandemics as well.

And note how the various states fared.

Your view of the US looks like some beautiful well appointed house but the reality is there are some huge flaws in the foundation and the living room is starting to list sideways now. And everyone except you knows this.

The flaws aren't nearly as foundational as you make it seem. What we need is much stronger reforms to address the problems in our economy and institutions than had been done in the past, along with rational policies to address them.

People want easy answers. Much more than people want unpleasant but correct answers.

The biggest problems as I see it are as follows:

-Unsustainable federal debt that needs a long-term solution. A federal deficit in the 2%-3% range of annual GDP is fine, 5%+ during peacetime is not. Tax increases are absolutely required here but they do not need to be overly dramatic as some on the progressive left would like them to be in my view. How the hell people believing the party of tax cuts for the rich was the right direction to go here, I have no idea. That will make it so much worse. And yes, cuts to federal spending seem wise as well. Maybe means test social security to some extent. Negotiate better prices for Medicare. Cut back on the federal bureauocracy in careful ways, and dial back defense spending (plenty of actual waste, fraud and abuse there. A 10% cut here cutting that does not seem unreasonable).

Agreed on taxes.

Disagree on the bureaucracy--what it needs is streamlining, not cutting. Too much duplication of effort.

And disagree on Medicare--negotiating drug prices is always about passing the buck. I think we need the opposite of negotiation--a same-price-for-everyone mandate.

-Income and wealth inequality: GOP obviously doesn't give a shit about that. Tax cuts for billionaires, cuts to Medicaid, SNAP, etc. If you care about this then Democrats are the only choice that make sense.

Seconded. They stand for the exact opposite of what they pretend to stand for.

-Better job opportunities for those in areas disrupted by globalism and technology. There are no magic bullets here. Capitalism is going to leave some people behind. But once again, Democrats were able to pass bipartisan bills to try to address this such as the CHIPS act and the infrastructure bill. In what way has Trump or MAGA or GOP done anything in this regard other than Trump's insane tariffs, which he is doing in a _completely_ unserious way. If your goal is to bring economic opportunity to these areas hit hardest by globalism and technology, tariffs could be part of that plan (although I think there are much better options than tariffs to do this), but it would need to be done in a very careful, precise well planned way targeting very specific industries.

I don't know where the answer is, but The Felon is trying to keep digging deeper. And is there any case where tariffs have actually produced a long term benefit??

-Reducing money in politics. Once again, Democrats have been the ones taking this far more seriously than the GOP.

I don't think it's possible. Too much of it will simply be done overseas.

-Tackling corporate abuse. Once again, can you with a straight face claim MAGA/GOP is better than Democrats on taking this issue seriously? Democrats are always better here with things such as negotiating drug prices, consumer protections, etc. Still more to do of course.

Yup--look at what The Felon is doing--gutting all the protections.

 

[Loren Pechtel]

Maybe means test social security to some extent.

This is already done in a roundabout fashion.

I looked into more straightforward means testing several years ago. IIRC at that time if you completely eliminated Social Security payments to the top income quintile (decile?) you wouldn't save all that much (some tens of billions per year, I think).

Yup. It's just a variation on eat the rich, and it wouldn't work. There simply aren't enough rich to eat.

 

[Elixir]

Maybe means test social security to some extent.

This is already done in a roundabout fashion.

I looked into more straightforward means testing several years ago. IIRC at that time if you completely eliminated Social Security payments to the top income quintile (decile?) you wouldn't save all that much (some tens of billions per year, I think).

Yup. It's just a variation on eat the rich, and it wouldn't work. There simply aren't enough rich to eat.

Depends on how big your bites are.
Put a 93% tax on incomes in excess of 20m$/yr and see how many elections get sold to Elons.

 

[Loren Pechtel]

Plus, about 70% of the shit we buy is made in China. Trump is such a moron.

In 2024, the US imported $438.9 billion worth of goods from China, representing 13.4% of all goods imports, according to Visual Capitalist.

Mapped: Which U.S. States Import the Most from China?

We show the U.S. states with the highest share of imports from China as the Trump administration imposes a 34% blanket tariff on the country.

www.visualcapitalist.com

Which says absolutely nothing about right or wrong. It does say a lot about how badly The Felon has shot us in the foot, though.

 

[Loren Pechtel]

It would be nicer not to lose what little honor we have left

You've gotta be drunker than a Defense Secretary to believe Trump is restoring US honour amongst the world.

By the way, doing nothing is infinitely better than putting out a fire with gasoline.

According to key performance indicators, doing nothing is worse than doing something now. China is ascending and the US is descending rapidly so if our "home foundation" doesn't get fixed now it never will.

Doing nothing is virtually certainly the right answer. The thing is it's a negative argument; something that's actually of value will have an argument in it's favor. The use of a better than doing nothing argument is basically saying that there is no valid argument for doing the thing.

 

[Elixir]

Which says absolutely nothing about right or wrong. It does say a lot about how badly The Felon has shot us in the foot, th

Tells me he thinks he can hurt CA without losing FL and TX. All else being equal, it’s a “win” for Donald.

 

[Loren Pechtel]

You mean a once in a 100 year pandemic,

I mean a bio war that could happen tomorrow given the proper and horrible circumstances.

There is no nation that both could do that and would be stupid enough to do that. The Felon would be but his fellow fascists wouldn't permit it.

 

[Loren Pechtel]

The wage of an unskilled worker in ancient Greece was about two grams of silver per day; the wage of an unskilled worker thousands of years later in late medieval Europe was about ... two grams of silver per day!

The absence of inflation in a commodity money economy is due simply to low economic growth rates, coupled with low rates of increase in the supply of the commodity in question.

You are thrashing about all over the place here; But you are not showing that gold is "intrinsically valuable". Quite the opposite. It's good for money because it's intrinsic value is close to zero. Just like fiat money.

Yeah. Look at what happened to Spain with the gold from the New World.

And note that you would expect the price of stuff like gold and silver to track with wages--because it takes wages to obtain. If they become too valuable relative to wages people will work harder at obtaining them. If they drop too low they won't put as much effort into mining them. Thus you have a feedback loop holding them relatively stable.

 

[Loren Pechtel]

1) The rest of the world has to have faith the US will not impose excessive and proliferate sanctions, incentivizing those other (BRIC) governments NOT to use our dollars. On that score I would give Biden the latest total failure for imposing ridiculous and ineffective sanctions on Russia. His Russia sanctions caused huge justifiable concerns from the other BRIC's nations desiring another reserve currency. You can actually measure this by how every central bank of the world is hording gold right now. Even if you are a country or an ally getting along with the US, Biden gave valid reason to wonder if dollars should be used in their future.... knowing what Biden just did to Russia. Their real fears that they might be next on a short list for the US seizing their dollars as will. Biden was certainly not the first US president to abuse our reserve status currency but what he just did has been about the worst.

And what The Felon is doing isn't excessive and proliferate sanctions??

And the world understands what's happening with Russia. Just because we elected the Manchurian Candidate doesn't mean the rest of the world doesn't see the problem. Note how many countries are providing aid to Ukraine.

2) The US has to remain big enough in world trade to justify using a currency that even makes sense for the world to use. That is what the Trump administration is at least trying to fix though that outcome admittedly remains to be seen. But in the final analysis, the US has to actually BE a major GNP producer and not just a currency manipulator who pretends to produce using debt to consume.

Not the meaning of "fix" you intended. He's trying to take us out of world trade.

 

[Loren Pechtel]

Your understanding of economics and the world political situation seems to be informed by Russia, Breitbart and pure ignorance.

If it is, it is not by design. I do admit that my sources of information is probably biased and faulty though. Mostly because I am too cheap to pay for media that might be better.

Then why do you think you can draw any conclusions from it???

And it's not even a matter of paying, there's enough free stuff out there. Look at what both sides are saying, by comparing them you can weed out most of the deception.

 

[Loren Pechtel]

That is what the Trump administration is at least trying to fix though that outcome admittedly remains to be seen. But in the final analysis, the US has to actually BE a major GNP producer and not just a currency manipulator who pretends to produce using debt to consume.

Who's "pretending"?

Anyone who borrows to consume is pretending. The neighbor buying a flashy car on credit is pretending to be rich. Because in order for that individual or nation to be able to consume, someone else had to actually produce that item for consumption.

Exhibit A: The Felon. Borrow, borrow, borrow. Don't pay the bills. Stick someone else with the debt when you go bankrupt.

Genuine people (like movie stars) who produce but also can afford to live high off the hog are not pretending though. In that same vein, countries like Singapore, Norway, and China who produce more than they consume are not pretending. Those are governments who will live long and prosper, out living pretender (borrowing debtor) nations (like the US)who fall into the ash of defeat. A debtor nation like the US has to fix its foundation or it will soon realize it can not consume more than it produces forever. Despite the crowing of the democrats, DOGE is precisely focused on fixing the spending part of our problems. But the tariffs are an important revenue boost component too, especially if other nations are cheating.

China not borrowing??? Evergrande is just the tip of the iceberg, They've been using Enron accounting.

Why China Has a Giant Pile of Debt (Published 2023)

A major lender abroad, China is facing a debt bomb at home: trillions of dollars owed by local governments, their financial affiliates, and real estate developers.

web.archive.org

They are in a heap of trouble.

This is nothing new, I've been seeing it develop for years. I'm seeing property renting for .1% of "value" per month--when it should be in the ballpark of 1%. I'm seeing people investing in real estate where the rent is a fraction of the mortgage payment. Bonkers.

 

[bilby]

Meanwhile, China and Xi are playing the long game, and they've been doing it for quite some time.

Trump has the attention span of a toddler, and can be swayed by a pretty blonde woman whispering in his ear or a sycophant in a blue suit telling him what will play well in the right wing press and social media tomorrow. Xi and the CCP are thinking "this is great! Our 50 year plan to become the dominant world economy has been accelerated by this idiot, and all we've gotta do is tell our people to tighten their belts (and roads) for a few years." Trump is acting like a bull in a (no pun intended) china shop, while China is ramping up a charm offensive to shift their business to other countries that the US has pissed off.

I heard Trump saying that "Xi is a very smart guy." Yes, he is. He's smarter than you, Donnie. You just don't realize it yet, and you probably never will.

Bold: Good luck with that. Countries make deals with China because they are easier to get than with the IMF or World Bank. Countries then complain about deals with China being a debt trap, China not using local labor, and a lack of reciprocity. Poorer countries are more likely to do deals with China than wealthier nations. They are like poor people having few options and being taken advantage of by a loan shark. I don't think China is exactly endearing themselves on the international stage.

It's easier to borrow from China because China wants it to fail. When they don't pay the loan China seizes whatever was funded with the loan.

France did the same thing with loans to the Tsar for railway construction in the lead up to the Great War. They figured that if (when) the Russian Empire defaulted, France would be able to profit from the lucrative transportation contracts shipping Russian wheat to Germany, and German manufactured goods to Russia.

And the very existence of those railways would enable rapid mobilisation of the Tsar's enormous armies, making it unthinkable for the Kaiser and his allies in Austria-Hungary to attack the French, or their allies in the Triple Entente.

It was a sound strategy. What could possibly go wrong?

 

[Loren Pechtel]

Despite the crowing of the democrats, DOGE is precisely focused on fixing the spending part of our problems.

It'll amount to diddly squat unless Congress goes after defense contractors and allows the DoD to function in the manner the active duty military does.
If you've ever wondered why there is always bipartisan support for defense spending...
View attachment 50155

Our current budget is not just sub optimal, it is not survivable.

And unless I am missing something, DOGE did not work since they have not come close to saving $1 trillion yet. There was some obvious savings but not near enough to save the country. I do still give Musk credit for trying and exposing himself and his company to vicious cruel attacks by the democrats however.

So I actually agree with you. Recovering waste and fraud out of the military appears the last hope at this point. We can't do $1.2 trillion deficits as far as we can see.

What am I missing? Do people just want to sit around and wait to die?

DOGE accomplished almost nothing beyond breaking an awful lot of stuff. What we are actually seeing is his approach to Covid: if you don't test it will just go away. Except he's taking apart just about everything the government does to protect people. Just like Texas: their abortion policy was killing women so they responded by not tracking maternal deaths anymore. Same thing some red states did about Covid: quit reporting Covid deaths.

And sit around and wait to die is exactly what they're after. Keeping people alive is expensive. Covid was a hell of a win for the Republicans, took a few hundred billion out of future Social Security spending.

 

[Loren Pechtel]

If DoD could do their job without interference from Congress, we'd be getting much cheaper and more efficient unmanned systems coming into the military. China spends nearly a quarter of what the US does and as near as I can tell is accomplishing a lot more, at least in shipbuilding they are.

Yeah, if we could shoot all the politicians and the unions we could probably balance the budget without actually cutting anything.

But every powerful politician needs a piece of the pie for their district which means everything is sliced into a bunch of little pieces, making the whole thing cost far more than if it were being done sensibly. And the unions make US ships something like 10x the cost of comparable construction from other first world countries. It's not so much wages per se as job protection and slicing things into little bits. This union does X, that union does Y etc. I've never worked in a union job, it's always been X is a problem, do I create more value by doing X or by finding the right person to do X? Workstation is flaky, do I look into it (I'm software, not hardware) or do the guys from two hours away come? Dive under the desk, promptly find the network cable is going under one of it's legs. (For those of you not used to dealing with data wires--things like that will damage the cables, causing them to be noisier. That makes any connection through them not as stable. The lack of visible damage proves nothing.)

 

[Loren Pechtel]

If Musk ran SpaceX the way he's trying to run the Federal government he'd be removing engines 5 at a time until Starship didn't move...

Yeah. Remember the first launch of the Super Heavy? The experts told him you can't fire a rocket of that size from concrete even if you don't care what happens to the concrete. Even amongst those of us who simply pay attention to the tech that was a major eyebrow-raiser. Burned right through the concrete, yeeted debris everywhere, including into the rocket. A variation on the Kzinti lesson.

 

[Loren Pechtel]

What am I missing? Do people just want to sit around and wait to die?

It was called "Bankruptcy 1995."

An excellent point I take seriously because like you I remember a lot of doom and gloom throughout the years.

But the predicted doom does finally seem to be arriving now. Look at how un-affordable and un-attainable housing is for young people today. Look at how young people can

Mostly this is a problem of expectations. Young people have always had a hard time affording housing. My parents, both with degrees, bought their first (and only) house in their 50s.

not find decent employment without an un-affordable college degree. Look at how those same young people can not afford to reproduce anymore as well. Look at how automated and digital our economy is, yet with all this tech our productivity is still so embarrassing low, a family can not survive without both parents working.

They need to pay attention to the market. So many of those degrees are in things that aren't valuable in the job market.

Look at how a divisive POTUS (Trump) that half the population can't stand got elected and then re-elected again.

Disinformation at work.

That kind of stuff just does not happen until an empire reaches it's doom loop crises phase IMO.

Fasten your seatbelts.

We were doing ok until we elected him. He's breaking the country.

 

[Loren Pechtel]

I agree losing unions was devastating to the middle class. I disagree with you who caused most of this. The Democrats hurt unions FAR worse than the oligarchs when they shunned all the manufacturing jobs that could support unions. Even today, they are attempting to bring down Tesla which is one of the few firms still able to support high wages and/or unions. Even today Democrats will do their best to make sure the US does not mine rare earth materials.

The Democrats didn't shun unions and didn't drive jobs overseas. Unions priced their products out of the market. Just look around, the only unions that exist are ones that can't be destroyed by competition. You are looking at the period where the vast majority of the world's industrial infrastructure outside the US was destroyed by WWII. The result was of course boom times for us, but that could not last.

I do agree we don't like mining rare earths--because it causes such a mess in the process. It's Chinese dying from the mining rather than Americans.

A lot of wildlife extinction comes about due to destruction of natural habitat. That is exactly what Democrats did to high wages and unions. Today they are doing everything possible to make sure Trump fails with bringing high wage high value manufacturing back to America. That's because Democrats want the US to be a poor country so they can better be elected with give away programs the government can no longer afford to pay.

The Felon isn't bringing manufacturing back, he's turning us into a shithole.

 

[Loren Pechtel]

Just musing here ...
I think any federal elected official should have to report any equity or derivative purchase in real time. I want to know when MTG &friends dump another wad into calls when Trump is expected to "speak" on lifting tariffs again.
Others should be able to see it live, for any or all of the elected officials. There should be an automatic alert that would be searchable by the public. They should not be allowed to benefit while in office from any transaction done outside their registration for automatic instant reporting of their activity. Might that curtail some of the corruption?

Following the leader doesn't work very well.

What I would like to see is that those holding office should be required to put their investments in index funds, except in situations where they are actually involved in managing the company.

 

[bilby]

Just look around, the only unions that exist are ones that can't be destroyed by competition business owners, media moguls, and their pet politicians.

FTFY.

If competition was what killed trade unions, then Germany wouldn't have them any more than the USA does.

American workers have been persuaded (both by manipulation and by violence and threats) that unionisation is bad for their interests, and as a consequence have worse pay, worse conditions, and worse protections, than their EU counterparts, in exchange for which losses, they get the massive benefit of living in a country that has lots of hyper-wealthy multi-billionaires, some of whom they might occasionally glimpse at a distance.

You genuinely believe that unions are a bad thing. While simultaneously believing that the United States of America is a good thing. So which is it: Is collective action to improve the lot of all, good, or bad?

I am absolutely certain that you don't know what unions actually do, and that you think their primary role is to go on strike in order to try to force the company to raise pay regardless of whether such raises are justified or affordable.

 

[Loren Pechtel]

I do agree we should be onshoring that which is needed for military purposes.

Personally,
I like seeing all the impediments to unilateral, preemptive, war put in place as fast as possible!
Less war is better.
Tom

But it's the bad guys who start such wars. What might look like that from the good guys is always preceded by quite a history of little pokes, to which they finally have had enough and punch back. The little pokes are not big enough to individually stand out and the news ignores them because they aren't a deviation from the status quo. For an extreme case, look at Israel. Gaza commits a military attack on Israel: it's a day that ends in y. It won't even be mentioned in anything beyond local news and generally not even that. Israel pastes a launcher, worldwide news.