Poll Of Economists - Trump Tax Plan Won't Work

[laughing dog]

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

Nice to hear these names from someone else.

To which I'd add Warren Mosler, Bill Mitchell, Stephanie Kelton, and Randy Wray.

There's plenty of money for investment. What there is not is money for consumers to buy additional product.

Mosler regularly posts the credit charts and they've been low and flatlining for some time.

Actually this is false. The reason the US has such a large trade deficit is because it receives alot money for investment from foreigners. There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending. Foreign investors make up the short fall, which is what causes the trade deficit.

I have always wondered about this. To me, it is a chicken and the egg problem. Did the trade deficit cause the foreign investment or did the foreign investment cause the trade deficit?

The tax cut will make the trade deficit worse. It will allow for even more consumption, meaning foreign investors will have to make up the difference to prevent domestic investment from falling. While some of the tax cut will be saved by domestic firms and individuals, which can be used for domestic investment, no where near 100% of it will be.

Given the nature of tax cut, I doubt much of it will go to consumption.

 

[Horatio Parker]

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

Nice to hear these names from someone else.

To which I'd add Warren Mosler, Bill Mitchell, Stephanie Kelton, and Randy Wray.

There's plenty of money for investment. What there is not is money for consumers to buy additional product.

Mosler regularly posts the credit charts and they've been low and flatlining for some time.

Actually this is false. The reason the US has such a large trade deficit is because it receives alot money for investment from foreigners. There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending. Foreign investors make up the short fall, which is what causes the trade deficit.

The tax cut will make the trade deficit worse. It will allow for even more consumption, meaning foreign investors will have to make up the difference to prevent domestic investment from falling. While some of the tax cut will be saved by domestic firms and individuals, which can be used for domestic investment, no where near 100% of it will be.

Won't a rising trade deficit increase the capital account? If you think we need more foreign dollars invested here, we should buy more of their products, not less. Assuming the tax cut will spur consumption(I doubt it, mostly it's going to those who spend the smallest portion of their incomes), that should be a good thing, no?

Where do you think they get the dollars to invest?

But we're not importing because we want sellers to invest in the US. We're importing because they want dollars and we want their products. It's a good thing.

I think you've reversed cause and effect...the capital surplus is due to our trading partners earning interest on the dollars we've given them for their products. I don't think it's true that if trade were balanced or in surplus we wouldn't be able to sell our treasury issues. I suppose it might depress yields.

If you have a cite, I'd like to see it.

 

[SimpleDon]

http://www.igmchicago.org/surveys/tax-reform-2

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[h=6]Tuesday, November 21st, 2017 9:47 am[/h] [h=2]Tax Reform[/h] [h=3]Question A: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — US GDP will be substantially higher a decade from now than under the status quo.[/h]---------

Out of 42 economists surveyed, only one agreed. But the GOP will charge ahead anyway.

Unfortunately, facts won't deter the republicans.

Opinion polls measure opinion not facts.

Is it your opinion based on your understanding of economics that this tax cut will boost the economy?

Do you support it?

 

[Canard DuJour]

There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending.

Ah, the ole loanable funds fallacy..

How does consumption mean less money available for investment? The money isn't consumed. Say you have $100. If you spend it on widgets, the widgets are consumed and Widget Co then has $100 it can invest. If you forgo the widgets and keep the money in the bank, Widget Co then has to borrow minus interest if it wants to invest, which it's less likely to given dwindling sales. In any case, banks don't really lend out depositors' money. And gov't spending is pumping money into the private economy, not taking it out.

 

[Horatio Parker]

There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending.

Ah, the ole loanable funds fallacy..

How does consumption mean less money available for investment? The money isn't consumed. Say you have $100. If you spend it on widgets, the widgets are consumed and Widget Co then has $100 it can invest. If you forgo the widgets and keep the money in the bank, Widget Co then has to borrow minus interest if it wants to invest, which it's less likely to given dwindling sales. In any case, banks don't really lend out depositors' money. And gov't spending is pumping money into the private economy, not taking it out.

Loans create deposits
and
investment creates savings

 

[Canard DuJour]

There is not enough national savings to provide all the funds needed/desired for domestic investment, to the tune of $500 billion per year, because of excess consumption and government spending.

Ah, the ole loanable funds fallacy..

How does consumption mean less money available for investment? The money isn't consumed. Say you have $100. If you spend it on widgets, the widgets are consumed and Widget Co then has $100 it can invest. If you forgo the widgets and keep the money in the bank, Widget Co then has to borrow minus interest if it wants to invest, which it's less likely to given dwindling sales. In any case, banks don't really lend out depositors' money. And gov't spending is pumping money into the private economy, not taking it out.

Loans create deposits
and
investment creates savings

Yep.

Doesn't sound that huge a deal, but it means the kind of supply-side arguments which sway electorates aren't even wrong. They're on about some hypothetical economy.