Where I expose my ignorance of elemental economics

[laughing dog]

You are right that you don't have to wait forever. But the government can throw out multiple economic nets and one or two of them can be problems. SS doesn't just mean tax cuts, but it's come to mean that and the laffer curve is that the taxes are too high so with Kansas the 1% wasn't going to make a difference. However as dismal pointed out, the only way to know about Kansas is to have a wormhole and find out what happend in Kansas that didn't have a tax cut.

Kansas's SS tax cuts did not generate the outcomes that the Governor claimed they would.

It's also interesting that the economists who do look at the supply side look at what happened during Reagan's time. So he came into office with a horrible economy, inflation over 2% and things turned around by the time he left.

It is also interesting that much of Reagan's policy was more demand side than supply side - something Reaganauts seem to ignore.

 

[SimpleDon]

There is a lot there, and I am not sure how many people will go through each ltem with you.

But dismal had a disagreement with you when you said that in increase in price of a worker would have no change in the demand for workers at the new price.

I have had issues with you saying that the 4% effective tax rate change from 1980 has had that much bearing on the economy over the last 25 years. As unter said, we do thousands of things for the economy and they've all had an affect.

The top marginal income tax rate was 71% in 1980. It is what, 39% today after the Obama increases? This is not a trivial change. Not to mention the cuts in the capital gains tax. If by effective tax rate you mean after deductions are you saying we had more deductions in 1980 then we have now?

What you are saying is that your brand of economics was sufficient in 1980 to determine that the economy was starved of investment and that the economy would benefit if we increased income inequality but it is not able to do the exact same thing today to explain why supply side economics failed to increase investment and growth. Because there are too many unknown and apparently unknowable factors and you are confused by all of them?

No, you and dismal said that I had no understanding of basic, elemental economics that is taught in high school. I am simply presenting my understanding of the basic neoclassical economics. I am asking you to point out where I misunderstand neoclassical economics and the fundamentals of the free market.

I don't believe that you two understand neoclassical economics. Dismal's instance that the price determines both the supply and the demand, as an example. In fact, according to neoclassical economics supply and demand set the price and the price determines the quantity.

To understand neoclassical economics is to understand its weaknesses and its failure to explain the economy that we have today. A failure that you freely admit in this post.

Yes, neoclassical economics says that a wage increase will result in workers having to be laid off. But it is not because the demand for labor is reduced as dismal constantly maintains. In neoclassical economics you would have to lay off workers because their wages exceed the cost of the marginal product, the very last product that the production facility can produce.

It is crazy for a profitable business to lay off workers because their wages increase. If you lay off workers you can't produce as many products as you did before the layoff. If you lay off the workers whose wages increased you will lose the entire sales volume of the laid off workers lost production. You lose all of the sales volume, including fixed cost coverage for that sales volume, making the remaining production's costs increase.

 

[coloradoatheist]

Kansas's SS tax cuts did not generate the outcomes that the Governor claimed they would.

It's also interesting that the economists who do look at the supply side look at what happened during Reagan's time. So he came into office with a horrible economy, inflation over 2% and things turned around by the time he left.

It is also interesting that much of Reagan's policy was more demand side than supply side - something Reaganauts seem to ignore.

I don't disagree with you. Reagan's policy is probably the best example of Keynesian thought actually working. Bush's W keynesian policy failed.

 

[coloradoatheist]

The top marginal income tax rate was 71% in 1980. It is what, 39% today after the Obama increases? This is not a trivial change. Not to mention the cuts in the capital gains tax. If by effective tax rate you mean after deductions are you saying we had more deductions in 1980 then we have now?

Reagan also closed a lot of loopholes and tax payment is tax base * tax rate. The whole point of the laffer curve is that though the tax rate changes the tax base changes too. And at high rates it will because people will hide it, not earn it based on the high marginal rates. The change from 5% to 4% wouldn't change the tax base as much.

What you are saying is that your brand of economics was sufficient in 1980 to determine that the economy was starved of investment and that the economy would benefit if we increased income inequality but it is not able to do the exact same thing today to explain why supply side economics failed to increase investment and growth. Because there are too many unknown and apparently unknowable factors and you are confused by all of them?

The issue is that the government will do a lot of policy changes that affect things. A base tax cut is both supply and demand side policy though some tax changes are strictly one or the other. But the government was veery much trying to steer a demand side recovery with the loose monetary policy. It's interesting, Reagan had a strong dollar policy. Reagan raised rates to slow down inflation while the opposite happened under Bush.

No, you and dismal said that I had no understanding of basic, elemental economics that is taught in high school. I am simply presenting my understanding of the basic neoclassical economics. I am asking you to point out where I misunderstand neoclassical economics and the fundamentals of the free market.

The argument is that as price goes up, demand (whether use the word or use quantity bought at a price) goes down. So in the case of workers then as the cost of workers go up, then demand for workers goes down. The counter example is veblen goods.

I don't believe that you two understand neoclassical economics. Dismal's instance that the price determines both the supply and the demand, as an example. In fact, according to neoclassical economics supply and demand set the price and the price determines the quantity.

Partially yes when all factors are known, that a firm should price something where MR=MC

To understand neoclassical economics is to understand its weaknesses and its failure to explain the economy that we have today. A failure that you freely admit in this post.

Yes, neoclassical economics says that a wage increase will result in workers having to be laid off. But it is not because the demand for labor is reduced as dismal constantly maintains. In neoclassical economics you would have to lay off workers because their wages exceed the cost of the marginal product, the very last product that the production facility can produce.

Yes and a business owner understands it as cash out becomes greater than cash in, things have to change.

It is crazy for a profitable business to lay off workers because their wages increase. If you lay off workers you can't produce as many products as you did before the layoff. If you lay off the workers whose wages increased you will lose the entire sales volume of the laid off workers lost production. You lose all of the sales volume, including fixed cost coverage for that sales volume, making the remaining production's costs increase.

Yes and no. Your making the wrong assumption that because profits are up generally, all businesses are profitable. And that is not the case.

 

[Cheerful Charlie]

Did SS work well over 8 years of Bush's administration? Clinton left us with a good economy, Bush left us a smoking crater. Doubled the national debt and CBO gave his tax cuts 30% of the blame for that.

Sorry, but moving the goal posts like this is part of the problem. How many years do we have to wait for Brownback's economic program to bear fruit.?

CBO has stated that now, 24% of our deficits are due to Bush's tax cuts that Obama was unable to phase out due to GOP opposition. They howl and shriek about deficits unless its deficit creating programs of their own creation.


It's like the old Reagan joke.
“Next the psychiatrist treated the optimist. Trying to dampen his out look, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. 'What do you think you're doing?' the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist. 'With all this manure,' the little boy replied, beaming, 'there must be a pony in here somewhere!'”

We are still looking for that supply-side pony.

You are right that you don't have to wait forever. But the government can throw out multiple economic nets and one or two of them can be problems. SS doesn't just mean tax cuts, but it's come to mean that and the laffer curve is that the taxes are too high so with Kansas the 1% wasn't going to make a difference. However as dismal pointed out, the only way to know about Kansas is to have a wormhole and find out what happend in Kansas that didn't have a tax cut.

It's also interesting that the economists who do look at the supply side look at what happened during Reagan's time. So he came into office with a horrible economy, inflation over 2% and things turned around by the time he left.

Inflation reached a high of 12% briefly under Carter. Paul Volker of the fed knocked out the wage-price spiral with very high interest rates. This is why Reaganomics, in part failed. Read David Stockman's book "The Triumph of Politics". SS worked on paper because the high inflation rate was feeding the government ever increasing amounts of money, a "conveyer belt" in Stockman's words. When Volker's tactic worked, it cut the legs out from under Reaganomics. Stockman admits he realize this 40 days before the election. Instead of balancing the budget by 1983, Reagan's promise based on Stockman and others analysis, Stockman admitted that Reaganomics would result in "A sea of red ink as far as the eye could see".

Dole's TEFRA raised taxes by $500 billions which is the only reason the deficit blowout wasn't as bad as it could have been. Reagan's term started out with a recession and ended with a bad recession that went on to sink G.W.H. Bush's re-election.

Stockman herein also debunks other GOP claims. That Reagan balance the budget but the Democrats ruined it all with spending. No, the difference between what Reagan asked and got was $40 billion which does not account for $200 billion + deficits.

Unless one has read Stockman carefully here, one really cannot be said to understand what happened and why. Much of what is said about Reagan's economics from the right is pure mythology. Dumping $1.89 trillion in debt on an economy can goose the economy. In the short term. But you get problems later on when you have to deal with that debt.

It took Tip O'Neill dragging Bush into a deal to cut the deficits, and later Clinton, to help correct the problem. The Bush upset the apple cart again, and we are still digging out. Bush had 10 Nobel laureate economists warning him of that, but who needs economists when you have ideology?

And this is my problem with economics. The inability to admit failure and learn from failure.

 

[SimpleDon]

This questioning of the theory based on empirical knowledge is the reverse of what most neoclassical economists do, for them the preservation of the theory is the most important thing because the whole theory only makes sense if it is accepted whole. It is a house of cards, the interlocking theories support each other. It is intellectual sunk capital.

This is untrue. Economics - neoclassical, Post-Keynesian or otherwise - is about using models to describe and analyze market activity, human activity or the economy. Good economics of any school understands that models are, by definition, simple tools that need to be adapted to the specifics of the situation in order to be effective. Good economics in any school uses empirical analysis to either adapt a model or refine it.

Much of the "economics" on the internet is poor economics, because it takes the simple theoretical models as exact descriptors.

I wasn't thinking the use of models when I wrote this. You are correct that that models have to be and are tested against historical data. But the models are built with a basic set of assumptions and the testing of the models doesn't test the assumptions, they test the output of the models. If you assume that a minimum wage increase results in unemployment your model is going to output that result every time.

My post-Keynesian economics says that models are of limited use to predict what the economy is going to do. Models help us to understand what happened after the fact. For example, we believe that what is called effective demand is very important to the economy. It is the basically the number of people who are working times the amount of per person wages percent of GDP paid in wages, the labor share, times a correction factor. It establishes a limit to growth and to profits , and it has held up to historical data predicting a recession about two years in advance. But this isn't any better than following the cycles of the economy and saying what has happened before will happen again. And there is nothing about it that tells us how serious the recession will be. Neoclassical economics on the other hand lives and dies on their models. The current one has 97 variables and doesn't yet account for debt, banking or money!

I was thinking about the theory as a whole and how it doesn't seem to be intended to apply to the actual economy that we have today. They believe that prices are determined by supply and demand for example, the basic addition to classical economics, where prices were said to be set by the value of the labor it took to make the product,. the Labor Theory of Value. In today's economy prices are administrated prices based on the average, not the marginal product costs. Costs plus pricing. Supply and demand are minor constraints on the pricing, supply and demand don't set the price, the price target is a major factor in planning the investment.

 

[laughing dog]

I wasn't thinking the use of models when I wrote this. You are correct that that models have to be and are tested against historical data. But the models are built with a basic set of assumptions and the testing of the models doesn't test the assumptions, they test the output of the models. If you assume that a minimum wage increase results in unemployment your model is going to output that result every time.

That is untrue. For example, the work of David Card and Alan Krueger on the minimu wage do not get that result at all.

My post-Keynesian economics says that models are of limited use to predict what the economy is going to do. Models help us to understand what happened after the fact. For example, we believe that what is called effective demand is very important to the economy. It is the basically the number of people who are working times the amount of per person wages percent of GDP paid in wages, the labor share, times a correction factor. It establishes a limit to growth and to profits , and it has held up to historical data predicting a recession about two years in advance. But this isn't any better than following the cycles of the economy and saying what has happened before will happen again. And there is nothing about it that tells us how serious the recession will be. Neoclassical economics on the other hand lives and dies on their models. The current one has 97 variables and doesn't yet account for debt, banking or money!

Um, I actually helped build a neoclassical model of the economy over 25 years ago that did account for money and debt, so I am not sure what you are talking about. We took the basic neoclassical model and adapted it - which is the entire point of economics: taking the models with the basic insights and modifying/adapting them to real world.

Dani Rodrik in his short and informative Economic Rules: The Rights and Wrongs of the Dismal Science provides a lucid explanation of good economics. I heartily endorse the book - it is nontechnical in nature and very readable.

 

[Horatio Parker]

That is untrue. For example, the work of David Card and Alan Krueger on the minimu wage do not get that result at all.

My post-Keynesian economics says that models are of limited use to predict what the economy is going to do. Models help us to understand what happened after the fact. For example, we believe that what is called effective demand is very important to the economy. It is the basically the number of people who are working times the amount of per person wages percent of GDP paid in wages, the labor share, times a correction factor. It establishes a limit to growth and to profits , and it has held up to historical data predicting a recession about two years in advance. But this isn't any better than following the cycles of the economy and saying what has happened before will happen again. And there is nothing about it that tells us how serious the recession will be. Neoclassical economics on the other hand lives and dies on their models. The current one has 97 variables and doesn't yet account for debt, banking or money!

Um, I actually helped build a neoclassical model of the economy over 25 years ago that did account for money and debt, so I am not sure what you are talking about. We took the basic neoclassical model and adapted it - which is the entire point of economics: taking the models with the basic insights and modifying/adapting them to real world.

Dani Rodrik in his short and informative Economic Rules: The Rights and Wrongs of the Dismal Science provides a lucid explanation of good economics. I heartily endorse the book - it is nontechnical in nature and very readable.

Put a hold on it at NYPL.

Thanks, LD

 

[Bronzeage]

When one studies Econ 101, which in most universities, is Macroeconomics, there is a fundamental principle which must be acknowledged.

In it's simplest form, the principle states, "There will always be more of us, than there are of you."

All economic systems tend to accumulate more wealth, property, and power in the hands of fewer people. This doesn't matter if it's a King, a Corporate CEO, or a Communist Party Boss. Economics is a social science, because it is the study of cooperation between people. For any society to exist, the people must be relatively content. The great threat to any society is the possibility that discontented people may decide to stop cooperating. This gets very messy. Doors get kicked in, rich people get killed, and all their stuff gets scattered all over the place.

For this reason, economies are regulated. Economic regulations are intended to maintain and equitable balance between those with little power and those with a lot.

Capitalism is attractive, because it is very efficient at collecting resources and distributing them through out the population. It is based on the concept of private property. I can own something and spend little of my wealth protecting it, because we all agree that is mine. If someone steals from me, I can count on society to back me up when I want to get it back.

This is a problem for people who own nothing. They have to work for me and I pay them a portion of my increase in wealth. If there happens to be more workers than I need, it sucks for them. They just have to make do with less. Of course, if I exploit their numbers and decide to keep more of my increase, I run the risk of losing their cooperation.

It's easy to forget, the only reason I have so much stuff, is because they said I could keep it. Economics is not theology. There is no God in economics. Given the choice between starvation and killing me and taking my stuff, the latter always wins.

As I said, there are always more of them, than there are of me. If I want to keep my stuff, I must maintain a balance between getting as much stuff as I can, and having so much stuff, other people will kill me for it.

 

[Deepak]

When one studies Econ 101, which in most universities, is Macroeconomics, there is a fundamental principle which must be acknowledged.

In it's simplest form, the principle states, "There will always be more of us, than there are of you."

All economic systems tend to accumulate more wealth, property, and power in the hands of fewer people. This doesn't matter if it's a King, a Corporate CEO, or a Communist Party Boss. Economics is a social science, because it is the study of cooperation between people. For any society to exist, the people must be relatively content. The great threat to any society is the possibility that discontented people may decide to stop cooperating. This gets very messy. Doors get kicked in, rich people get killed, and all their stuff gets scattered all over the place.

For this reason, economies are regulated. Economic regulations are intended to maintain and equitable balance between those with little power and those with a lot.

Capitalism is attractive, because it is very efficient at collecting resources and distributing them through out the population. It is based on the concept of private property. I can own something and spend little of my wealth protecting it, because we all agree that is mine. If someone steals from me, I can count on society to back me up when I want to get it back.

This is a problem for people who own nothing. They have to work for me and I pay them a portion of my increase in wealth. If there happens to be more workers than I need, it sucks for them. They just have to make do with less. Of course, if I exploit their numbers and decide to keep more of my increase, I run the risk of losing their cooperation.

It's easy to forget, the only reason I have so much stuff, is because they said I could keep it. Economics is not theology. There is no God in economics. Given the choice between starvation and killing me and taking my stuff, the latter always wins.

As I said, there are always more of them, than there are of me. If I want to keep my stuff, I must maintain a balance between getting as much stuff as I can, and having so much stuff, other people will kill me for it.

I was with you till the very end where I would reverse the phrasing - it's generally not a problem if you have so much stuff as much as it's a problem if they have so little.

 

[arkirk]

When one studies Econ 101, which in most universities, is Macroeconomics, there is a fundamental principle which must be acknowledged.

In it's simplest form, the principle states, "There will always be more of us, than there are of you."

All economic systems tend to accumulate more wealth, property, and power in the hands of fewer people. This doesn't matter if it's a King, a Corporate CEO, or a Communist Party Boss. Economics is a social science, because it is the study of cooperation between people. For any society to exist, the people must be relatively content. The great threat to any society is the possibility that discontented people may decide to stop cooperating. This gets very messy. Doors get kicked in, rich people get killed, and all their stuff gets scattered all over the place.

For this reason, economies are regulated. Economic regulations are intended to maintain and equitable balance between those with little power and those with a lot.

Capitalism is attractive, because it is very efficient at collecting resources and distributing them through out the population. It is based on the concept of private property. I can own something and spend little of my wealth protecting it, because we all agree that is mine. If someone steals from me, I can count on society to back me up when I want to get it back.

This is a problem for people who own nothing. They have to work for me and I pay them a portion of my increase in wealth. If there happens to be more workers than I need, it sucks for them. They just have to make do with less. Of course, if I exploit their numbers and decide to keep more of my increase, I run the risk of losing their cooperation.

It's easy to forget, the only reason I have so much stuff, is because they said I could keep it. Economics is not theology. There is no God in economics. Given the choice between starvation and killing me and taking my stuff, the latter always wins.

As I said, there are always more of them, than there are of me. If I want to keep my stuff, I must maintain a balance between getting as much stuff as I can, and having so much stuff, other people will kill me for it.

I was with you till the very end where I would reverse the phrasing - it's generally not a problem if you have so much stuff as much as it's a problem if they have so little.

The failing of free market economics is that it does not differentiate between beneficial production that helps society flourish and unnecessary growth of production of useless polluting products that end up a gross negative in terms of our environment. A dollar is a dollar perhaps, but some dollars buy things that are good for us and some buy things that ultimately make us sick, are unsafe, and inefficient regardless of how cheap the item may be, some production is a gross negative for society and skews free market values toward things like warfare, hoola hoops, strip mining, and sky scrapers. Just think about what I am saying here. GNP can be good or it can be gross national pollution.

All free market calculations under classic economic theory lack a moral or social responsibility assessment. Economics is a subsystem of nature and not the other way around. To regard the world as simply one big supply system that gives her raw materials to us at no cost it to engage in a crazy half cocked notion that man rules the planet and there are no physical laws he cannot violate at will if he is clever enough. Also, if you are in the investment class, there should be no sector of the planet that cannot be turned into a profit center. This free market bullshit has been repeated and repeated over and over again and it is just plain short on REALITY.

 

[Will Wiley]

I'm reading "Debt" by Donald Graeber, from that it appears there's a lot of myth in economics.

That is a very interesting book by a very interesting thinker. Isn't it "Debt the first 5000 years"? He has so many interesting historical stories about debt in the book. Its a great book, if that's the one.
And it's interesting to look at the IMF in the light of his extensive research

 

[Will Wiley]

I was with you till the very end where I would reverse the phrasing - it's generally not a problem if you have so much stuff as much as it's a problem if they have so little.

The failing of free market economics is that it does not differentiate between beneficial production that helps society flourish and unnecessary growth of production of useless polluting products that end up a gross negative in terms of our environment.

The champagne corks had barely hit the floor before the problems emerged

 

[Bronzeage]

I was with you till the very end where I would reverse the phrasing - it's generally not a problem if you have so much stuff as much as it's a problem if they have so little.

The failing of free market economics is that it does not differentiate between beneficial production that helps society flourish and unnecessary growth of production of useless polluting products that end up a gross negative in terms of our environment. A dollar is a dollar perhaps, but some dollars buy things that are good for us and some buy things that ultimately make us sick, are unsafe, and inefficient regardless of how cheap the item may be, some production is a gross negative for society and skews free market values toward things like warfare, hoola hoops, strip mining, and sky scrapers. Just think about what I am saying here. GNP can be good or it can be gross national pollution.

All free market calculations under classic economic theory lack a moral or social responsibility assessment. Economics is a subsystem of nature and not the other way around. To regard the world as simply one big supply system that gives her raw materials to us at no cost it to engage in a crazy half cocked notion that man rules the planet and there are no physical laws he cannot violate at will if he is clever enough. Also, if you are in the investment class, there should be no sector of the planet that cannot be turned into a profit center. This free market bullshit has been repeated and repeated over and over again and it is just plain short on REALITY.

If that is a failing of free market economies, I haven't seen any examples of controlled market economies which did any better.

 

[SimpleDon]

responses to free market fundamentals

Supply side economics is a part of market fundamentalism, because its base assumption is that the modern, industrial economy is supply side driven. That it was always and always will be that capital is a rare resource that must be allocated among competing uses, that there is no growth without investment, and that largely means investment in the stock market.

All of these are wrong. In the modern industrial economy capital is just money, the economy creates as much of it as required. It is hardly a limited resource. The economy is demand driven, there is no investment without unsatisfied demand. Business investment in the real economy of providing the goods and services that we depend on to live and that 99% of us depend on for jobs have almost nothing to do with the stock market. The investment decisions are made by the professional management of the company largely with retained earnings, the proceeds from corporate bond sales or bank loans, with little to no regard for what the investors in the stock market think.

Every economy since the beginning has been about it's desire to consume. The economy is to distribute scarce resource resources to the end consumer. But what seperates our economy from the past and from the poor ones is not our ability to consume, it's our ability to produce.

Yes, you are correct, the modern economy has dramatically improved our ability to produce. What I am saying is that there is no production without consumption. No one will invest money to produce product just to fill warehouses.

The industrial revolution was as much about removing the constraints to production, to the supply side, as anything else. The agrarian economy was limited by the availability of suitable, arable land. To increase production on the limited available land required working the land harder, dedicating increasing amounts of labor to it to increase yields.

It is no accident that the industrial revolution occurred primarily in the two countries, England and the US, that had solved the problems of limited land available for agriculture, colonization in the case of England and the westward expansion in the case of the US.

Our ability to produce is far greater than our ability to consume. Our limits on growth in the economy is now our limits to economic demand. And the primary limit to demand is the amount of money in the hands of the average consumer. Money that comes from their wages.

The very basis of supply side economics is that the economy is still limited by the supply side, the capital available to invest.

And you are confusing economic demand with desire. It is not sufficient for consumers to desire products, they have to have the money to act on that desire.

 

[Horatio Parker]

I'm reading "Debt" by Donald Graeber, from that it appears there's a lot of myth in economics.

That is a very interesting book by a very interesting thinker. Isn't it "Debt the first 5000 years"? He has so many interesting historical stories about debt in the book. Its a great book, if that's the one.
And it's interesting to look at the IMF in the light of his extensive research

Yes it's the same one. I'd heard of it by that title, but my ebook only has "Debt" on its "cover". YMMV

He suggests debt is the or one of the primary basis for society.

 

[SimpleDon]

I note the Laffer curve as a rationalization for steep tax cuts aimed at the wealthy has never worked as promised. But Laffer is still around peddling his own brand of snake oil. The promise is that the tax cuts will pay for themselves by boosting the economy. But that nevr works. Again, Kansas. Brownback told us that his SS type tax cuts would be like adrenaline to the heart of Kansas's economy. It ain't. Its a disaster. How many such failures do we have to see like this before Americans abandon Laffer's curve?

This is what discourages me, the fact that ideology trumps facts and obvious truth's. Economics is often the triumph of ideology over facts and common sense. What is Trump offering? More of the same and his followers eat it up. Even if sober analysts tell us his plans will create $10 trillion in debts over 10 years. For these sorts of people, studying economics simply arms them with more irrelevant ideas to us a rationalizations at why failed ideas like SS economics is not really a failure. "Kennedy cuts taxes and his economy did well!". But never mind SS economics has failed repeatedly since Nixon adopted trickle down theory which morphed into SS.

And one of the biggest problems of economics is finding a way to measure the variable changed, the time period for it, and what you define as being a success.

Yes, you are correct. It is very hard to come up with ways to accurately measure the economy. But it is more important and much easier to measure the economy in exactly the same way over time. It is the difference between accuracy and precision.

Our economy maybe a 15 or a 20 trillion dollar economy, depending on how you measure it. But no matter how measure, it within reasonable limits, you know how much the economy has grown from year to year by applying the same method of measurement in all of the years.

Your complaints are all hand waving though. The proponents of supply side economics claimed that both business investment and growth would improve. This clearly hasn't happened. It is disingenuous to blame the tools, the measures of growth, for the failure of the policies. The same tools that were used in 1980 to prove the perceived failure in the previous policies.

 

[Cheerful Charlie]

The GOP after winning the house, tried to mandate the CBO use different measurements in an attempt to get several results allowing them to pick and choose results to avoid the problem of well developed tools that gave them answers they did not want to see.

http://www.nytimes.com/2015/01/07/b...alculating-economic-impact-of-bills.html?_r=0

 

[SimpleDon]

Did SS work well over 8 years of Bush's administration? Clinton left us with a good economy, Bush left us a smoking crater. Doubled the national debt and CBO gave his tax cuts 30% of the blame for that.

Sorry, but moving the goal posts like this is part of the problem. How many years do we have to wait for Brownback's economic program to bear fruit.?

CBO has stated that now, 24% of our deficits are due to Bush's tax cuts that Obama was unable to phase out due to GOP opposition. They howl and shriek about deficits unless its deficit creating programs of their own creation.


It's like the old Reagan joke.
“Next the psychiatrist treated the optimist. Trying to dampen his out look, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. 'What do you think you're doing?' the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist. 'With all this manure,' the little boy replied, beaming, 'there must be a pony in here somewhere!'”

We are still looking for that supply-side pony.

You are right that you don't have to wait forever. But the government can throw out multiple economic nets and one or two of them can be problems. SS doesn't just mean tax cuts, ...

Yes, it is also about increasing regressive taxes on everyone else, increasing sales taxes, payroll taxes, etc. The holy grails of movement conservatism are either the regressive flat tax or eliminating the progressive income tax completely and going to some form of national sales tax, like the so-called fair tax.

Supply side economics is also about intentionally suppressing the wages of the non-rich by suppressing the unions, by letting the real value of the minimum wage decrease, by exposing American workers to wage competition from illegal immigration and from low wage countries, by undercutting defined benefit pensions, by undercutting overtime pay, by preserving the forty hour work week, by increasing the retirement age, and a hundred smaller other ways.

It is also about mindless, knee jerk deregulation, like that caused the savings and loan fiasco and the similar but much more damaging Great Financial Crisis which lead us into the massive recession of 2008.

... but it's come to mean that and the laffer curve is that the taxes are too high so with Kansas the 1% wasn't going to make a difference.

I don't understand this.

However as dismal pointed out, the only way to know about Kansas is to have a wormhole and find out what happend in Kansas that didn't have a tax cut.

More hand waving. We can compare the results today with the results before the changes. We can compare the results today with the results today from other states. The results have been so poor that it doesn't take any imagination to declared as such.

It's also interesting that the economists who do look at the supply side look at what happened during Reagan's time. So he came into office with a horrible economy, inflation over 2% and things turned around by the time he left.

Macroeconomic changes take a long time to manifest themselves. Income inequality didn't have anything to do with the recovery from the Volcher recession, which started when the head of the Fed, with Reagan's approval, drove interest rates up to close to 20% following the first of many bad ideas from Milton Friedman, that the money supply should be kept constant.

 

[coloradoatheist]

I was with you till the very end where I would reverse the phrasing - it's generally not a problem if you have so much stuff as much as it's a problem if they have so little.

The failing of free market economics is that it does not differentiate between beneficial production that helps society flourish and unnecessary growth of production of useless polluting products that end up a gross negative in terms of our environment. A dollar is a dollar perhaps, but some dollars buy things that are good for us and some buy things that ultimately make us sick, are unsafe, and inefficient regardless of how cheap the item may be, some production is a gross negative for society and skews free market values toward things like warfare, hoola hoops, strip mining, and sky scrapers. Just think about what I am saying here. GNP can be good or it can be gross national pollution.

All free market calculations under classic economic theory lack a moral or social responsibility assessment. Economics is a subsystem of nature and not the other way around. To regard the world as simply one big supply system that gives her raw materials to us at no cost it to engage in a crazy half cocked notion that man rules the planet and there are no physical laws he cannot violate at will if he is clever enough. Also, if you are in the investment class, there should be no sector of the planet that cannot be turned into a profit center. This free market bullshit has been repeated and repeated over and over again and it is just plain short on REALITY.

The biggest problem with capitalism is that it's so successful. It's given us time and resources to worry about these problems where we never did before. It's hard to say Columbus cared much about other people if we go by the story that he intentionally used small pox to try and kill off the native population.

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The GOP after winning the house, tried to mandate the CBO use different measurements in an attempt to get several results allowing them to pick and choose results to avoid the problem of well developed tools that gave them answers they did not want to see.

http://www.nytimes.com/2015/01/07/b...alculating-economic-impact-of-bills.html?_r=0

Both sides have played that game. If one party wants to say that unicorns will come about from their legislation, then CBO has to score it that way. CBO is just a guess.