Can the market alone fix the economy?

[mheslep]

Yes, well obviously, my use of an absolute ("only") and the over-generalization of the term "tax cuts", was a mistake of phrasing on my part. But the general idea that it is demand that mainly creates jobs still stands IMO.

Alright, noting that tax cuts can create demand.

Indeed the billions in tax cuts you mention are targeted specifically for this purpose...along with incentives for growth and R&D.

Alright, noting that the payroll tax cuts were mainly chosen because they go into effect almost immediately (this week in fact) unlike most of the items in the Recovery Act which will take much longer.

 

[WheelsRCool]

I hear all the time that "tax cuts to business create jobs". Really? Do they? Where is the evidence for this?

Take a look at the job creation in the United States as opposed to Europe. Or in Switzerland and Ireland as opposed to Europe. Or in how states like Ohio, Illinois, Michigan, New York, and California are shedding jobs and businesses like crazy.

Businesses do not like highly-taxed areas.

That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

Businesses seek growth. They do not remain static.

This is also the reason why there are no tax cuts for the wealthiest 5% in the plan because that would not create more demand. (I would assume the rich buy whatever they want regardless of their taxes)

The "wealthiest 5%" are a good deal small businesses filing as individuals, and they are not "the rich." The truly rich make up a very small portion of this group. Most of these people earn in the hundreds of thousands of dollars, which while putting them in the top 5%, doesn't make them "rich" by any means, and yes taxes do affect their spending, just like everyone else.

The Administration right now is pursuing an anti-growth agenda while at the same time planning for an unprecedented amount of spending. You cannot claim you are going to raise taxes and implement things like a ridiculous carbon tax and union card check, and then expect the economy to begin decent recovery.

No economy has ever performed well under the policies it is following. They have destroyed the world's 7th largest economy, California, they have tanked Ohio, Illinois, Michigan, and New York, and they do not work in the cities such as Philadelphia, Detroit, Los Angelos, New York, etc...they didn't work in the 1960s or 1970s in either America or the UK, and they still to this day do not work in Europe.

And make no mistake, Obama's spending plans are going to be a huge boondoggle. His spending on "green" technology isn't going to work. People don't want to drive roller-skates and wind and solar and all that are not viable at all. His universal healthcare is not going to work, simply by the laws of economics. Rationing will occur. And his spending on education will not work. It will just be more money to the teachers' unions. Such spending is already at record levels, and the students see none of it.

 

[Astronuc]

Stimulus good in theory, not practice
http://marketplace.publicradio.org/display/web/2009/03/04/pm_economic_multiplier/

Kai Ryssdal: Treasury Secretary Timothy Geithner's been a busy guy today. As Steve Henn told us up at the top of the program, he released the details of the administration's mortgage-relief plan this morning. And he's been up on Capitol Hill defending the president's budget, too. It is a budget that is heavy on the expense side of the ledger book. The White House is betting government spending will be good for the economy and the country's long-term health. The idea here, something called the "multiplier effect," is another contribution from the theories of John Maynard Keynes. But commentator David Frum says, in this case, theory and practice are pretty far apart.

--------------------------------------------------------------------------------

DAVID FRUM: If you are under 40 and not a professional economist, I wonder whether you had ever even heard the phrase "economic multiplier" before this month.

The concept got its last big airing during the slow-growth 1970s. Since World War II, economists of the Keynesian school had argued that government spending exerted a bigger impact on stimulating economic activity than private spending, a bigger multiplier.

Government could borrow and spend -- and so long as it spent intelligently, the spending would actually go a long way to paying for itself by expanding the overall economy. The "multiplier effect" was the liberal equivalent of the Laffer curve -- the conservative promise that the government could cut taxes without losing revenue.

The Keynesian argument was not wrong exactly. It was just that we began to run out of good things to buy. An I-95 or an O'Hare airport: Yes, they probably added more to the economy than they cost. But public housing? Synthetic fuels? Boston's "big dig"? Not so much.

Through the 1970s, resurgent free-market economists showed that public spending typically yielded much worse results than private investment. Government still spent a lot. But more and more of that spending supported government's current operations: defense, health care, pensions.

. . . .

Maybe we just fire the entire US government and hire China to manage the nation at a fraction of the cost. :uhh:

 

[mheslep]

Stimulus good in theory, not practice
http://marketplace.publicradio.org/display/web/2009/03/04/pm_economic_multiplier/
Maybe we just fire the entire US government and hire China to manage the nation at a fraction of the cost. :uhh:

2nd

 

[Al68]

Inflation is essential in all circumstances. Btw, what exactly do the poor have to lose?

Not much, but it's a lot to them.

The cash reserves should be small in absolute terms, not relative.

I was only pointing out that they don't use their cash reserves to pay their tax bill. It's not my place to tell someone else how much of their money to keep in reserve instead of invest. Obviously the greediest will have the most invested, but that's their decision.

I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

So it's your place to say what someone else should do with their own money? It's no wonder we're in such danger of losing our freedom in the U.S. Too many people have been propagandized into believing society and private transactions between free people should be controlled by government.

 

[misgfool]

Not much, but it's a lot to them.
I was only pointing out that they don't use their cash reserves to pay their tax bill. It's not my place to tell someone else how much of their money to keep in reserve instead of invest. Obviously the greediest will have the most invested, but that's their decision.

Because you can't say it, I have to do it for you.

So it's your place to say what someone else should do with their own money? It's no wonder we're in such danger of losing our freedom in the U.S. Too many people have been propagandized into believing society and private transactions between free people should be controlled by government.

Hey, I'm not the one fighting a war (on terrorism), which does not have clear conditions for determining victory and therefore can continue for eternity. Nor am I spending billions waging second priority wars, giving US citizens a false sense of security by harassing foreigners at the airports, abandoning the founding values and making the world more totalitarian. If I'm not totally incorrect, it wasn't a Democrat who implemented these changes.

I believe in essential freedoms and that means that I can and I am obligated to point out the logical flaws of the system. I don't force anyone to do anything, but be prepared for a fight, if you come claiming the intellectual/moral high ground.

 

[Al68]

Hey, I'm not the one fighting a war (on terrorism), which does not have clear conditions for determining victory and therefore can continue for eternity. Nor am I spending billions waging second priority wars, giving US citizens a false sense of security by harassing foreigners at the airports, abandoning the founding values and making the world more totalitarian. If I'm not totally incorrect, it wasn't a Democrat who implemented these changes.

Since I haven't advocated any wars in this thread, I don't know what to make of that.

I believe in essential freedoms and that means that I can and I am obligated to point out the logical flaws of the system. I don't force anyone to do anything, but be prepared for a fight, if you come claiming the intellectual/moral high ground.

I would consider the right of someone to decide what to do with their own money an "essential freedom". Possibly the most essential in a free nation, since usurping private property rights/economic oppression has been the greatest source of oppression of people worldwide in the past century.
I absolutely believe libertarianism/economic liberalism is the intellectual/moral high ground.
(and I'm using the word liberalism in the classic sense, not the modern political sense.)

The cash reserves should be small in absolute terms, not relative.
I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

If you only meant this as advice for rich people, and not advocating "forcing anyone to do anything", then my apologies.

 

[misgfool]

Since I haven't advocated any wars in this thread, I don't know what to make of that.

Perhaps it tells that the arch-nemesis of a Democrat isn't a much better alternative.

I would consider the right of someone to decide what to do with their own money an "essential freedom". Possibly the most essential in a free nation, since usurping private property rights/economic oppression has been the greatest source of oppression of people worldwide in the past century.

Problem is that one man's/woman's freedom can be another's slavery. There are also other very important freedoms, which are hard to put in order such freedom of speech, assembly, movement etc.

If you only meant this as advice for rich people, and not advocating "forcing anyone to do anything", then my apologies.

I meant that if they want capitalism to work at optimal efficiency then they should do as I said. If they don't, then their opinions lose weight.

 

[Al68]

Problem is that one man's/woman's freedom can be another's slavery.

Well, no-one is enslaved by economic liberty. Unless you're using some weird definition of slavery.

I meant that if they want capitalism to work at optimal efficiency then they should do as I said. If they don't, then their opinions lose weight.

If you're referring to someone else's opinion about what to do with their own property, I'd say it's your opinion that is irrelevant (as well as mine).

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

 

[turbo]

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

It should be apparent to you (and to everybody else) by this point that "rich" people often don't invest in the economy, and that they sometimes bet against economic health by trading in derivatives that only pay off if the economy goes to hell.

The "rich people invest and create wealth for all" fiction died before Reagan was out of office (in our time), and it does us no good to resurrect it now. Looking back a ways, FDR inherited an economy that had been ravaged by robber-barons, and then strangled by do-nothing administrations stretching back far before his. Obama's situation is no less daunting, and I wish him well.

 

[misgfool]

Well, no-one is enslaved by economic liberty. Unless you're using some weird definition of slavery.

You are assuming that everyone starts from equal position where from they can compete. Economic liberty works when we have tabula rasa situation i.e. where no-one has an established foothold. After that it only serves the purposes of the first rounders and their offspring who won with skill, knowledge and luck.

If you're referring to someone else's opinion about what to do with their own property, I'd say it's your opinion that is irrelevant (as well as mine).

I'll interpret this so, that the rich don't want capitalism. That leaves a lot of room to maneuver between capitalism, state property and socialism.

That's besides the obvious fact that rich people already choose (out of self-interest) to invest in the economy (which matches what you said they should do).

Why has NYSE dropped 50% from 2007?

 

[Al68]

The "rich people invest and create wealth for all" fiction died before Reagan was out of office (in our time), and it does us no good to resurrect it now. Looking back a ways, FDR inherited an economy that had been ravaged by robber-barons, and then strangled by do-nothing administrations stretching back far before his.

Robber barons, huh. Someone's been reading the communist manifesto again.

 

[turbo]

Robber barons, huh. Someone's been reading the communist manifesto again.

That was the popular name for well-connected industrial titans and railroad owners who bought political influence and made fortunes. Perhaps you've not read any history books. As for my being a "Communist", I am far more fiscally conservative than probably 99% of the US populace. I mean real conservatism - not the neo-con model in which profits are privatized and losses are foisted off on the taxpayer.

Name-calling does not advance your argument.

 

[Al68]

You are assuming that everyone starts from equal position where from they can compete.

No, I'm, not.

Economic liberty works when we have tabula rasa situation i.e. where no-one has an established foothold. After that it only serves the purposes of the first rounders and their offspring who won with skill, knowledge and luck.

False and false. And I have the moral highground again.

I'll interpret this so, that the rich don't want capitalism. That leaves a lot of room to maneuver between capitalism, state property and socialism.

Huh?

Why has NYSE dropped 50% from 2007?

Well, I discussed this in another thread, but basically the biggest reason was the Community Re-investment Act.

That's the thing about having a mixed economy. Socialists will always blame the consequences of socialist policy on capitalism, then take credit for the benefits of capitalism. And back up each lie with other lies, and say "see, I told you so". And they rely on the fact that most people don't understand economics and don't want to, and will just believe what Dems say, no matter how absurd it is to anyone who knows what's going on.

As an example, it's logically impossible for anyone to be familiar with the budget numbers of the 1980's and believe that the deficit was caused by tax cuts. No problem for the Dems, though.

 

[Al68]

I mean real conservatism - not the neo-con model in which profits are privatized and losses are foisted off on the taxpayer.

The use of the word "privatized" implies that they aren't private to begin with. As far as being conservative, I won't argue. But it's clear you're ideology is very Marxist. It's not name calling, just an observation. And by communist, I didn't mean any official party or any relation to what regimes have done in the past in the name of communism. I just meant it as a reference to the writings of Marx, and a belief that the economy should be controlled by government.

And, I never claimed to be "conservative", mostly because the word is commonly used to mean the opposite of what I believe. I'm a libertarian and believe in (classical) economic liberalism. And absurd accusations about people who believe in economic freedom and their motives certainly won't cause me any shame.

It's amazing to me how many people are reverting back to pre-Enlightenment economic beliefs, and so obviously completely unaware of the lessons learned during the Enlightenment.

 

[misgfool]

False and false. And I have the moral highground again.

Exactly why do you have the moral high ground?

Well, I discussed this in another thread, but basically the biggest reason was the Community Re-investment Act.

What I was aiming at was that investors are selling more than buying. Considering that the rich control the vast majority of wealth, it means that your claim that rich people are investing into the economy is not accurate.

That's the thing about having a mixed economy. Socialists will always blame the consequences of socialist policy on capitalism, then take credit for the benefits of capitalism. And back up each lie with other lies, and say "see, I told you so". And they rely on the fact that most people don't understand economics and don't want to, and will just believe what Dems say, no matter how absurd it is to anyone who knows what's going on.

"Socialists/Capitalists will always blame the consequences of socialist/capitalist policy on capitalism/socialism, then take credit for the benefits of capitalism/socialism."

 

[misgfool]

It's amazing to me how many people are reverting back to pre-Enlightenment economic beliefs, and so obviously completely unaware of the lessons learned during the Enlightenment.

It should be very hard for you to argue about Enlightenment as long as religions are around. I also find it hard to believe that the ultimate unsurpassable truth was discovered then and there is no more room for development.

 

[Al68]

Exactly why do you have the moral high ground?

Because I'm on the side of liberty. I'm reminded of a famous quote (by Barry Goldwater?): "Extremism in defense of liberty is no vice." And one thing there is no doubt about, in today's political climate, I'm an extremist.

What I was aiming at was that investors are selling more than buying. Considering that the rich control the vast majority of wealth, it means that your claim that rich people are investing into the economy is not accurate.

I wasn't referring to now, specifically. I was referring to the general tendency of people with money who want more to invest it. I never said that they are investing more now than at some other time.

It seems strange that your complaint is that rich people aren't being greedy enough right now. (assuming that you consider the desire of the rich to get richer to be greed).

 

[Al68]

It should be very hard for you to argue about Enlightenment as long as religions are around. I also find it hard to believe that the ultimate unsurpassable truth was discovered then and there is no more room for development.

What does religion have to do with anything?

I wouldn't consider undoing the freedom and prosperity gained post-Enlightment to be "development".

 

[misgfool]

Because I'm on the side of liberty. I'm reminded of a famous quote (by Barry Goldwater?): "Extremism in defense of liberty is no vice." And one thing there is no doubt about, in today's political climate, I'm an extremist.

I try find a balance between liberty and general welfare. In today's political climate I'm a dissident.

 

[misgfool]

What does religion have to do with anything?

Again if you apply one method to one thing, it's reasonable to demand that you apply it to other things as well. If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

I wouldn't consider undoing the freedom and prosperity gained post-Enlightment to be "development".

lol. Well I would say that a couple of other things have happened as well since then.

 

[Astronuc]

TCF Financial Corp. is returning TARP funds to Treasury, since they don't need it.

http://www.yahoo.com/s/1039325

Cheers to Bill Cooper, Chairman and CEO of TCF Financial!

TCF is a Wayzata, Minnesota-based national financial holding company with $16.7 billion in total assets. TCF has 448 banking offices in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana and Arizona, providing retail and commercial banking services. TCF also conducts commercial leasing and equipment finance business in all 50 states and commercial inventory finance business in the U.S. and Canada.

http://www.tcfbank.com/About/about_bank_profile.jsp

http://www.tcfbank.com/About/about_chairmans_letter.jsp

 

[mheslep]

TCF Financial Corp. is returning TARP funds to Treasury, since they don't need it.

http://www.yahoo.com/s/1039325

Cheers to Bill Cooper, Chairman and CEO of TCF Financial!

http://www.tcfbank.com/About/about_bank_profile.jsp

http://www.tcfbank.com/About/about_chairmans_letter.jsp

Saw it, noted the the question about how the government could force them to take the money in the first instance. Response (approximately): "in the banking business when a regulator jumps, you say how high". Given the circumstances, what business does the government have telling this guy how much money he can make?

 

[mheslep]

Again if you apply one method to one thing, it's reasonable to demand that you apply it to other things as well. If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

http://en.wikipedia.org/wiki/Nirvana_fallacy"

 

[Astronuc]

Saw it, noted the the question about how the government could force them to take the money in the first instance. Response (approximately): "in the banking business when a regulator jumps, you say how high". Given the circumstances, what business does the government have telling this guy how much money he can make?

I get the feeling that we need to send a truckload of anti-anxiety medication to Congress and the Treasury.

 

[Al68]

A If the Age of Reason was unable to solve social problems like religions, wouldn't it be possible that it might have failed in giving perfect solutions to other problems like economics as well?

Give perfect solutions? The Enlightenment was not a religion. It didn't "give solutions". I don't know what to make of this.

I try find a balance between liberty and general welfare

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity. Economic oppression causes poverty.

 

[turbo]

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity. Economic oppression causes poverty.

I would like to see you back this up with some scholarly articles. Whenever economic "freedom" results in the rich having a disproportionate influence on our government, the spread between the incomes of the rich and poor increases. This is not conjecture, but historical fact. Real fiscal conservatism urges that we rein in such abuses so that wealth is not drained out of our businesses to the detriment of the taxpayers.

 

[Al68]

I would like to see you back this up with some scholarly articles. Whenever economic "freedom" results in the rich having a disproportionate influence on our government, the spread between the incomes of the rich and poor increases. This is not conjecture, but historical fact. Real fiscal conservatism urges that we rein in such abuses so that wealth is not drained out of our businesses to the detriment of the taxpayers.

Nonsense. The idea that a non-socialist government is the result of the "disproportionate influence" of the rich is not just conjecture, it's absurd.

 

[Al68]

I would like to see you back this up with some scholarly articles.

Try John Locke. Or Thomas Jefferson. Or Thomas Hobbes. Or Adam Smith. Or any non-socialist economist.

Or even just the common sense observation that the more people are forced to share, the less there will be to share. Or the simple fact that the U.S. went from literally nothing to the greatest economy on Earth in a very short time, but recently others caught up easily.

I suppose you have evidence of socialist policies causing prosperity?

 

[misgfool]

http://en.wikipedia.org/wiki/Nirvana_fallacy"

Thanks, I hadn't heard of this one. But I think you posted this to the wrong person, since I'm not the free market extremist.

 

[misgfool]

Give perfect solutions? The Enlightenment was not a religion. It didn't "give solutions". I don't know what to make of this.

The Enlightenment was a time period. You can learn more about it in

http://en.wikipedia.org/wiki/Age_of_Enlightenment

But please, do tell me what it provided?

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity.

Why? How?

Economic oppression causes poverty.

Why? How?

 

[misgfool]

I suppose you have evidence of socialist policies causing prosperity?

Perhaps the purpose of a socialist policy is not to directly cause prosperity, but enable the less fortunate sons/daughters to try to obtain it as well.

 

[mheslep]

The Enlightenment was a time period. You can learn more about it in

http://en.wikipedia.org/wiki/Age_of_Enlightenment

But please, do tell me what it provided?...

Science.

 

[mheslep]

Thanks, I hadn't heard of this one. But I think you posted this to the wrong person, since I'm not the free market extremist.

Forget about the politics for a second and just look at the structure of your argument here:
https://www.physicsforums.com/showthread.php?p=2104176#post2104176

 

[Al68]

Individual liberty and general welfare are not at odds with each other. Quite the contrary. Economic freedom results in prosperity.

Why? How?

Economic oppression causes poverty.

Why? How?

Well, if you don't understand that, I'll just have to refer you to some famous economists, many crucial figures of the Enlightenment: John Lock, Thomas Hobbes, etc. Of course there are many more modern authors, and any economics textbook written prior to schools jumping on the Marxist bandwagon explains the principles as well.

Even if you don't agree with the authors, understanding the economic principles involved is beneficial.