What Is Wrong with "Trickle Down Economics"?
- Thread starter Knight Templar
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I don't comprehend what Mars is trying to say either. Unless this is just a "liberal spending binge" and "Obamacare and Food Stamps = the viral spread of mass socialism" argument he's trying to make to attack the current President's economic policies.
Its not derogatory by itself. Reaganomics for example is not derogatory because it works, Obamanomics might be considered derogatory because it doesn't work.
We don't know what would have happened if those industries were't rescued. Saving those companies creates a moral hazard and encourages them to take larger risks knowing that government will save them if things go wrong. A failure can have a positive effect on an industry, because people will know they are risking their own money and be suitably cautious about it.
If job growth is less than the population increase, it might as well be a decline.
If the stock prices were corrected for inflation, how much would those increases really be? Each company has some inherent worth to it, and if the government is printing more dollars the prices of those stocks would inevitably have to go up along with the price of everything else.
Obama is taking credit for things he had nothing to do with, he just played a few rounds of golf, and some business leaders made some good decisions in spite of the economy, Apple Computer for one, and Obama had nothing to do with that.
We should have had a much more vigorous recovery by now, and Obama slowed down the economy with threats of increased taxation
Unemployment is still above 8% and rising, I think other presidents could have done better.
After reading the posts from our resident "economists", I decided to stick with the professional economists like Paul Krugman thank you.
(My God, I can't believe that gturner still think that he's an expert on economics)
Paul Krugman is a Democrat first and an economist second, I'd go with Milton Friedman, not Thomas Friedman. Generally speaking an economist that teaches students in school is not a practising economist, his theories only have to make sense on the chalkboard and often don't work in real life.
It only proves that if you want to be a successful Economist, don't go to Harvard! Obama is the most embarrasing student Harvard ever had, I'm not sending my kids there!
Yeah, man, everybody knows Harvard is a terrible school. Totally overrated. I bet if your kids got a free ride to Harvard you'd just throw that shit right in the trash, huh?
Oh, man.
There's a difference between letting one company go bankrupt, take federal bailout money and then have to restructure and start again from square one. We were talking scores of banks and auto companies with their tendrils all over the planet and the very health of the global economy itself. We knew enough about what would have happened that we didn't dare risk letting them fail. The resulting economic meltdown would have had the potential to set off a new, worldwide Great Depression that could have eclipsed the damage caused by the first one eighty years ago.
I sincerely doubt in any way, shape or form that letting all the banks and two of the three big automakers fail and flatline would have been anything positive for our economy or the world's at large. It's hard to say our nation is learning positive, constructive lessons and growing from them with close to 30% unemployment, which is what many economists in 2008 and 2009 were forecasting had no appropriate emergency action been taken.
Yeah, man, everybody knows Harvard is a terrible school. Totally overrated. I bet if your kids got a free ride to Harvard you'd just throw that shit right in the trash, huh?
Oh, man.
If it graduates students that don't learn like Obama, that aside from being a terrible president, didn't know what memorial day was for, or thought that US troops liberated the Auschwitz death camp, which is in Poland, during World war II, then Harvard needs to graduate better students than that.
You ever hear that every so often a forest fire is good for the economy? An economic recession is often like a forest fire, and should be allowed to proceed, and the government should not get in the way of a recovery like it has under Obama. The Great Depression lasted as long as it did because of interventionist government economic policies, too many people following the Keynesian model rather than the classic one of nonintervention.
The unemployment numbers don't tell the story because it's so long-term that people dropped out of the workforce.
http://data.bls.gov/timeseries/LNS11300000/
It dropped from a stable 66% down to 63.5%, so about 7.5 million Americans just gave up, and as of Auguist 2012, it was still dropping.
http://static8.businessinsider.com/...vilian-labor-force-participation-may-2012.jpg
We've already lost all the gains we'd held since the late 1970's.
Yet that number included unemployed people who don't have jobs but are looking for work (they're in the labor force). Drop 8.1% off that and you get the percentage of people who actually have jobs, which is now the lowest since 1948, when soldiers were returning and Rosie the Riveter was going back to being a homemaker.
If this is success, I'd sure hate to see what failure looks like.
http://data.bls.gov/timeseries/LNS11300000/
It dropped from a stable 66% down to 63.5%, so about 7.5 million Americans just gave up, and as of Auguist 2012, it was still dropping.
http://static8.businessinsider.com/...vilian-labor-force-participation-may-2012.jpg
We've already lost all the gains we'd held since the late 1970's.
Yet that number included unemployed people who don't have jobs but are looking for work (they're in the labor force). Drop 8.1% off that and you get the percentage of people who actually have jobs, which is now the lowest since 1948, when soldiers were returning and Rosie the Riveter was going back to being a homemaker.
If this is success, I'd sure hate to see what failure looks like.
It's not success, it's mitigation of tremendous damage--which, by the way, Obama did not cause, but thirty damn years of trickle-down bullshit did.
Small, unimpressive job growth is still preferable to losing pretty close to one million jobs per month. And it's been happening for thirty months in a row without interruption. Unemployment was a little over 10% at one stage. Now it's two points lower.
It might not be the kind of economic improvement you like or want, but it's improvement nonetheless and by most meaningful standards of measurement the United States is an economically healthier nation today than it was the night Barack Obama was elected or the afternoon he was sworn into office. A financial meltdown and crisis this enormous takes a while to dig completely out of, and even now the eurozone across the Atlantic is experiencing colossal problems and is threatened with collapse. The world's going to still be feeling the lingering effects of the 2008-09 crisis for a little while to come, and I sincerely doubt that an administration led by President John McCain would have done any better.
It might not be the kind of economic improvement you like or want, but it's improvement nonetheless and by most meaningful standards of measurement the United States is an economically healthier nation today than it was the night Barack Obama was elected or the afternoon he was sworn into office. A financial meltdown and crisis this enormous takes a while to dig completely out of, and even now the eurozone across the Atlantic is experiencing colossal problems and is threatened with collapse. The world's going to still be feeling the lingering effects of the 2008-09 crisis for a little while to come, and I sincerely doubt that an administration led by President John McCain would have done any better.
After reading the posts from our resident "economists"
(My God, I can't believe that gturner still think that he's an expert on economics
Paul Krugman is a Democrat first and an economist second, I'd go with Milton Friedman, not Thomas Friedman. Generally speaking an economist that teaches students in school is not a practising economist, his theories only have to make sense on the chalkboard and often don't work in real life.
Paul Krugman also criticizies Democratic policies as well. I trust his credentials over yours anytime of the day.
Btw, are you an Economst?
Well, let's be honest here.
The job market is much, much worse off than it was before the crisis. gturner is right that millions have left the workforce. Some retired, others left because they simply could not find work. Workforce participation is at its lowest rate in over 30 years. Millions of jobs have been lost. What jobs have been created are much lower quality by comparison: lower pay, fewer benefits. I'll point out that the same thing happened during Bush's recession, too. Workforce participation peaked around 2000 and has been on a downward trajectory since, with accelerations from the 2001-2002 recession and especially the 2008-2009 recession, which was much worse in magnitude.
These are not issues caused by any one administration or any one Congressional policy. Trickle-down economics, however, have exacerbated the problem by not reinforcing the middle and working classes, and instead permitting ever greater income inequality. Fixing our tax policy is just one of the things we need to do to get back on track--but it is hardly a panacea.
It's not two points lower because those people found jobs, it's two points lower because they gave up. That's what the drop in the workforce participation numbers mean. If you include those, the true unemployment rate is still above 11%.
To keep up with population growth (about 2.8 million a year - 0.899%, pop 311 million as of 2011) and a 66% workforce participation rate, we have to add 1.8 million jobs a year, or 150,000 jobs a month, to stay even. We're down about 18 million jobs from where we'd normally be (66% workforce participation and 5 to 6% frictional unemployment), so we'd have to create 770,000 jobs a month for two straight years to get back to the norm.
We're nowhere near that. We're not even moving noticably in that direction. This is the new normal, and we're running unsustainable deficits to maintain it.
Oh sure it is, but the burden of proof is on you, we don't know how much damage there would have been because we can't test it. I think Obama and his friends are just lowering the bars to make it look like what he's done in the last four years is progress. One might argue instead that government intervention has prolonged the recession because most businesses expect higher government expenditures to lead eventually to higher taxes, which is why we need to get expenditures back down to 2008 levels as soon as possible and end the stimulus spending that has become part of the baseline budget.
The greater point some of us have been trying to make is that TDE/supply side economics isn't going to fix any of the current problems and that President Obama isn't the cause nor blame for them. He inherited the biggest economic mess any chief executive has seen on his first day in the Oval Office since March 4, 1933, and has made a lot of tough and smart choices to get this nation back on some sort of track. They haven't all been grand slam successes, but enough of them have worked to be able to credit the administration with doing the right things at the right time to ameliorate the crisis.
Yes. Some metrics (especially the underemployed and those who have given up on the workforce) are still in dreadful shape and neither I nor anyone else here has said otherwise. That's why I said "most meaningful standards of measurement," not "all." But America in the bigger picture with all factors and circumstances taken into account is in better shape right now than she was when Obama was elected and then inaugurated. To say otherwise is rank dishonesty and partisanship.
Yes. Some metrics (especially the underemployed and those who have given up on the workforce) are still in dreadful shape and neither I nor anyone else here has said otherwise. That's why I said "most meaningful standards of measurement," not "all." But America in the bigger picture with all factors and circumstances taken into account is in better shape right now than she was when Obama was elected and then inaugurated. To say otherwise is rank dishonesty and partisanship.
Trickle-down economics supposes that the top will take care of those beneath them. But this is not the case. Profit is the priority. If companies find that they can leverage the unemployment situation to squeeze out more productivity from existing workers (who won't look elsewhere because they have no time to look), they'll continue doing that instead of hiring more to create a more humane work situation (which is more productive in the long run, actually). It's a vicious circle, though. The more people out of work, the less people there are to buy things. But when you're wealthy, you don't care about that. It's all about what YOU have, not what others do.
Trickle-down works when the economy is healthy, not when it is unhealthy. That's my layman's take on it (I'm no economist).
And I agree with CoolEddie, that the market was hemorrhaging jobs at an alarming rate when Obama took office. It was risky and difficult, but the administration managed to stem the tide. It wasn't an ideal set of policies, but there wasn't enough time to ponder it for long. They had to act fast. And yes, this isn't just George Bush's fault. It's Clinton too. But the weight of blame is far heavier on the last 8 years than what came before it. The Bush Administration put a major dent in our economy by sending us into Iraq. And easing up on all the regulations allowed the mortgage backed securities fiasco to bloom and then implode.
Trickle-down works when the economy is healthy, not when it is unhealthy. That's my layman's take on it (I'm no economist).
And I agree with CoolEddie, that the market was hemorrhaging jobs at an alarming rate when Obama took office. It was risky and difficult, but the administration managed to stem the tide. It wasn't an ideal set of policies, but there wasn't enough time to ponder it for long. They had to act fast. And yes, this isn't just George Bush's fault. It's Clinton too. But the weight of blame is far heavier on the last 8 years than what came before it. The Bush Administration put a major dent in our economy by sending us into Iraq. And easing up on all the regulations allowed the mortgage backed securities fiasco to bloom and then implode.
No. All of that is wrong. Try again.
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