Political Roundtable Quasar of Mayhem part III

[nate33]

This chart pretty much says it all:

[popper]

The conclusion I draw from the great posts here is that we need to go back to a protectionist, high tariff based economy. The obvious downside is to our strong export base - this would be somewhat mitigated by competing countries having to make do with inferior aircraft, computers, etc.

Domestic consumers would pay more for everything but that too would be mitigated because jobs would be plentiful.

America first.

[Zonkerbl]

Wow. Just wow.

So the solution to our problems is to create a distortion in our economy that will divert our labor and capital to less productive resources?

Brilliant!

[popper]

Wow. Just wow.

So the solution to our problems is to create a distortion in our economy that will divert our labor and capital to less productive resources?

Brilliant!

Depends on how you define "productive resources." I would agree with your principle, in a perfect world. But isn't it better to have our least educated employed in some capacity rather than financing the Chinese defense establishment and paying our own citizens unemployment and food stamp compensation? Our free trade philosophy has allowed China and Russia to wreak havoc by way of nuclear proliferation, currency manipulation, leverage over Europe, etc.

Also, I was amused by your "brilliant" comment at the end of your post. As a result, I'm sure we will all now attach extra importance to your superior opinions. Perhaps you should reveal who on the board is brilliant (I'm sure you of course) and who is not. Am I the only only who is not brilliant? Are there others? If so, who? Please, you should consider the hubris in your style of communication.

[barelyawake]

Unfortunately, I'm in Canada for work. So, I can't write back and forth responses with long diatribes.

Allow me to ask a few rhetorical questions, and I believe you will get my point. So, wages have remained the same for decades.

What is the percentage increase in hours worked?
What is the percentage decrease in paid leave?
What is the percentage increase of unpaid commute time?
What is the percentage increase in child care needed to be paid for because of those?
What is the percentage increase in child care?
What is the percentage decrease of jobs that provide health care?
What is the percentage decrease of procedures covered by insurance?
What is the percentage increase of expenditures on items necessary to be employed (computers, cell phones, spyware, etc etc)?
What is the percentage decrease of time before said items need to be replaced?

This could go on for pages and pages.

[hands11]

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

That article explains the problem with our economy -- wealth disparity. If that isn't fixed, there will be no recovery and the middle class will vanish. Period. As I said many times, it's a demand problem. It's a customer problem. If you don't allow the middle class spendable income (by paying them 1970s wages and raising prices on everything else), then you have no customers. You can't play poker when one side holds all the chips -- especially when they refuse to even pay the blinds. In short, the wealth needs to be redistributed or this whole circus is going over a cliff.

I'm been trying to point that ouy for 50 pages ala the game of Monopoly, etc


Nate,

I have just been catching up on these new posts.

How can you not see the dow dropping has something to do with this last deal The rating agengy report even came right out and said it. Not only did these last agreement not set the table for any investment, the house exposed it hand for what they would do moving forward and how they will act.

You highlight no cuts. Maybe that is true today but the table is set, the tone is set. The super congress will do their thing. The TP and R will threaten to shut down the gov at ever turn. The econ is weak. N

ow the voices are getting louder for.. we need to not only not cut right now...we need investment to build demand. Hell, even Cramer was on saying how Government spending fuels small businesses. I know that is true with my company. If it wasn't for Fed funding state and local government with JAG grants, etc, we would have never developed the technology we did. And our stuff saves them money and helps put the right bad guys away.

That is what I have been saying and Wall Street seems to be seeing the same. Add the EU, and what is to like for them.

We will see how this all works out in time politically. My personal take, I thing the TP and R did themselves no real favor in this last deal. And Boner saying he got 98% of what he wasn't was amateur. He will regret saying that.

[hands11]

Pine, Zonker,

Just reading those posts got me angry. I can't figure out why you guys won't join me in my hatred of big government. Clearly, any system that is that dysfunctional is a ginormous waste of taxpayer dollars and an inexcusable drain on our economy. Government should be able to do things they do with half the manpower if it could just be run efficiently.

In my idealized world, I would apply the following principles:

1. If it could be done in the private sector, do it privately. That would include regulation of many products. Use the Underwriters Laboratory model: have two or three independent laboratories test and vouch for the effectiveness of a consumer good, a food product or a drug. There is no need for an FDA, or the mess of agencies involved in verifying the safety of automobiles. Likewise, most education could be handled privately. There might need to be a backstop of public schools to handle deprived regions and the mentally handicapped, but 75% of kids in America should be privately educated with voucher and or tax/credit assistance.

2. If it must be handled by government, handle it locally or at the state level. This is basically what the Constitution says. This would include all roads and bridges, all entitlements and programs for the poor, and most regulation for things like workplace safety. Obviously, law enforcement and firefighting would be handled here.

3. If there's no possible way to handle it privately or at the local level, then it is done at the Federal level. This would include national defense, border security, coining money, and interstate regulation for things like environmental pollution and airline travel, etc.

The idea is to first minimize the amount of centralized government we have. Then we can focus on the ways to streamline our government so that they can provide services more efficiently.

I guess I don't join you in the hatred of big government just because of that. The Conservative total hatred of government. I take great personal umbrage whenever there's some Drudge Report talking point about government employees. I'm one. I work my azz off. My colleagues - lateral level managers - work their azzes off. And I'd say that 95% of the folks who have worked for me have been hard-working professionals who only cared about public service. In fact, to reiterate, my biggest problem has been appointees who subsequently burrow and now screw up the entire operation via
their subject-matter ignorance coupled with a blinding, egotistical lack of perspective.

Moreover, I think that it's silly to compare government with business. They're two different functions with two different goals, means, and limitations.

-- There's no profit motive for space exploration. Yet I support it as a taxpayer.

-- There's no profit motive for regulatory activities and no demonstration (in my view) that self-regulation works. Regulation is not meant to create business efficiencies. In fact, they're often (mostly) in conflict.

That's okay. Ease of a business profit isn't my first concern as a look at my life, at what I perceive to be the roles of institutions and businesses. I don't care that corporations don't squeeze out that extra penny per dollar (and I admit, 1% is huge) of revenue for their profit line. Look around, there is no profit squeeze in corporate America. Corporate cash hoarding among the "job creators" is at record highs.

I am old. Like dirt. I remember rivers *CATCHING ON FIRE* for lack of environmental action. LA smog used to be a joke. The lack of effective regulation of Wall Street led to this mess of an economy.

Moreover, and parallel, I do not believe in any philosophy that requires one to *believe* in other individual's motivations. Conservatives cut taxes because the *believe* that it incentivizes businesses to create jobs. But really, businesses are hoarding cash. If you want businesses to hire people, only give out incentives for businesses who have already hired people.

Ditto the trickle down theory. As barely notes, a big issue our society now is wealth disparity. Simply put, the concentration of wealth in too few hands kills our economy, not strengthens it. It's the bicycle theory.

BIKE THEORY: You own a bike shop on two parallel universes. In universe 1, we an imbalanced wealth distribution. It's caused by literally decades of trickle down theory that giving all of the breaks to the uber-rich will mean that they'll be "job creators". No data exists that backs this up, but people still cling to the belief like dogma. The top 400 people have as much wealth as half of our population. Or, expressed in a math formula: 400=150,000,000. How many bike are you gonna sell? 400? In universe 2, wealth isn't concentrated to the wealthiest of us via a nonsensical tax code. There are millions more middle class people. How many bikes are you gonna sell? A lot more? Enough to hire more people for your store (at a better-than-McDonalds wage). The bike factory is gonna hire more assembly workers, buy more steel and rubber, etc.

This is a consumer-based economy and 400 uber-rich individuals can't stimulate the economy as well as 150,000,000 middle class folks.

Anyway, this was too rambling. But there it is. Sorry if it doesn't make too much sense, it's a one-draft, then I got work (off-the-clock, but still doing it, a good-for-nothing-goverment-employee) that'll keep me up past midnight.

Pine

As guess with your old dirt came wisdom. Well written.

True, it is not government jobs to create a "pure" profit market for a business and like you said, profits don't lead directly to more jobs. Sometimes it does. If there is demand they will hire to make more profit. But this market is weak on demand so they are pocketing the profits.

Governments role helps make it so "we" achrome://TooManyTabs/content/redirect.xul?bmId=6367&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Frussell-endorses-gold-manipulation-thesis-2011-04-25re the profitable ones. Example. A chemical business (ie Koch Industries ) make a great profit but they pollute the land and water in doing it. They create a brown field. Or an oil company pollutes the gulf. Who pays to clean it up if you can even do that ?

I remember back when Clinton was in office they had a program to clean up these brown field. It cost a fortune. Those business abandoned those site. They either went out of business or moved. It's hard to get to company to pay up when it is dissolved and the money is already overseas in some hidden bank account.

It is always harder to create then destroy. They keep trying to seed and recover lost rain forest. It is really really hard and mega expense. It is much wiser to preserve and manage resources then to bleed them and then try to clean them up or recreate them.

Reg do hold back business from maximizes their personal profits... sure. But I am totally fine with that because they have a bigger picture in view then business often don't.

I guess if you see the goal of life as a pure profit center where by you max profits quarter to quarter, that is your choice. I think we are playing a bigger game. What that involves a longer term plan and generations. That does not operate at an max profits today model.

[hands11]

Why have Americans been living off of credit?

Paying 2010 prices, to sustain a family, on 1970s wages leads one into debt.

In other words, it's ALL because of wealth disparity.

I would add to that.

It is that .... and greed. Priorities.

A TV marketing world has created a population that thinks they can have it all right now before they can rightful afford it. And they think they need it all to be happy. Big house, two cars, vacations, big screen plasmas when they were still expensive. People want to play the big shots and try to impress with their things.

I say this in part because I took a different path. When it was all cranking, I lived better, but I didnt go hog wild. Hell, I have less material things then a lot of people and I was making bank and I am still doing pretty damn well.

I just took most of it and saved it. I predicted hard times ahead so I stored my nuts. I figured, housing, etc would get cheaper. Better to be the one with cash when other don't so you can buy things for pennies on the dollars compared to what was happening during the gold rush. And I wanted stability. You never know when you might lose your job or maybe you want to start your own business or maybe just take some time off.

You can ride a bubble for a period and do alright, but never totally follow the herd. If it starts looking to good to be true, it probably is. Run the opposite direction form the herd. If most people are doing the same things you are, you are probably wrong. It is at least worth thinking through.

Like with this current market market tank. I'm keeping eye on the buying opprotunity If you did back in 2007/08 you could have made a fortune. You could have almost bought any major stock and doubled you money in a year.

[hands11]

Barelyawake, if you give more power to the unions, it'll only result in more jobs moving overseas. All that would be left are governmentjobs and service jobs that can't be exported. That's a recipe for disaster.

Hasnt that happened anyway and private union are way down.

I think the fix to what you are talking about is for us to change our tax laws on exported jobs and fair trade deals.

And since government jobs are becoming more needed as a means of employment, slashing what is left in teachers, police, etc is not going to help.

Look, nothing is perfect in a snap shot. Unions got blotted along with the bubble. But lets not make out unions to be this evil thing. They need to adapt also. That is what happens when they negotiate. Just like what just happened with the NFL and what is happening with the NBA.

Workers deserve a collective voice.

[hands11]

We've had this argument several times. We are never going to compete with sweat shops (actually in your world of no minimum wage, we would). We are never going to underbid other countries for cheap labor. We both agree that the solution is tariffs on goods shipped back into this country by companies that move overseas. I would also tax companies for overseas employees -- just as we do now for independent contractors. I have told you the market didn't create the middle class -- unions did. And without unions, there is no method for the worker to address wages, health care, etc. -- especially in a global market.

Why is the German economy thriving? A) Strong unions. B) National healthcare. C) Large investments in tech. All of those allow the middle class to thrive. And without a middle class, you have no economy. You have kings and slaves, as we are rapidly reaching.

Actually, I think the government did, then unions formed. But I could be wrong about that.

[hands11]

End of the day, the problem is the US rose to superpower status by being a manufacturer. They abandoned that strategy for cheap goods, office jobs, and reliance on credit lines to artificially improve the standard of living. The mortgage crisis shows how unbelievably spoiled and out of touch the majority of the US population is when it comes to personal finance. The American way is excess, and that excess was borne out of misguided use of credit lines.

To make things worse. The US no longer manufactures.....which would be a saving grace. Vast majority of manufactured goods in the US are Chinese made. As the credit crisis lingers, the US currency will fall hard against the Renminbi, suddenly everything will cost 25% more due to the complete and total reliance on Chinese goods and parts. It's inevitable at this point. No more easy credit, weakened economy, no manufacturing jobs, huge inflation due to our reliance on imported goods. Hope that 500k condo and subsequent foreclosure was worth it America.

Also the reason why Germany's economy is so strong is they still manufacture the vast majority of their goods unlike the US (same with France). Drive through the Dusseldorf area and you'll see a manufacturing society in full swing. Same thing on the outskirts of Paris by CDG airport.

To see the death of a manufacturing society? Drive through Trenton, New Jersey. Trenton was considered the manufacturing capital of America (and for a period, the world) in the mid 1900s. Now it's a ghost city with extreme poverty and Wal Marts.

At least you will see brand new leased cars in the projects......which will inevitably be repossessed. The American way unfortunately.

I remember the stories that started back in the 1980s. Buy a company. Tear is apart. Sell off the pieces after you did a hostile takeover. Sell junk bonds. Get right quick while destroying a town. It was happening all over America.

[hands11]

As barelyawake points out, we are now in competition with China and other "sweatshops". To have strong unions in the face of such competition would require substantial tariffs. I'm not in opposition to selective punative tariffs as a means of addressing China's currency manipulation, but I think the evidence is pretty sound that a blanket policy of high import tariffs is very bad economically over the long term.

As much as you guys pine for the glory days of the 50's and 60's when union membership was strong, that strategy is no longer realistic in today's global economy.

The first thing I would do to address jobs and income disparity (other than import tariffs on China) would be to release the regulative shackles on our energy production. More energy production would decrease unemployment, lower the price of energy, increase tax revenue, and boost demand. For God's sake, why can't we deep water drill in the Gulf yet?

Improved energy production would also permit us to more easily pull out of the Middle East, and it would ease the upcoming turmoil when our dollar collapses and we can no longer afford imported oil.

http://www.huffingtonpost.com/2011/03/1 ... 34945.html

http://community.nasdaq.com/News/2011-0 ... ryid=89171

http://www.msnbc.msn.com/id/42400389/ns ... j5jqoJEMwQ

[Zonkerbl]

Wow. Just wow.

So the solution to our problems is to create a distortion in our economy that will divert our labor and capital to less productive resources?

Brilliant!

Depends on how you define "productive resources." I would agree with your principle, in a perfect world. But isn't it better to have our least educated employed in some capacity rather than financing the Chinese defense establishment and paying our own citizens unemployment and food stamp compensation? Our free trade philosophy has allowed China and Russia to wreak havoc by way of nuclear proliferation, currency manipulation, leverage over Europe, etc.

Also, I was amused by your "brilliant" comment at the end of your post. As a result, I'm sure we will all now attach extra importance to your superior opinions. Perhaps you should reveal who on the board is brilliant (I'm sure you of course) and who is not. Am I the only only who is not brilliant? Are there others? If so, who? Please, you should consider the hubris in your style of communication.

I want to make it absolutely clear that nowhere in this conversation did I advocate for protectionism and I'm frankly insulted that you drew this conclusion "based on the conversation in this thread." Speak for yourself.

[Zonkerbl]

On a completely unrelated topic:

http://www.washingtonpost.com/business/ ... ml?hpid=z1

You reap what you sow.

[Zonkerbl]

Unions in the U.S. are not a political movement, they're an economic bargaining unit that negotiates a split in excess profits between the owners of capital and labor. The excess profits only exist in the absence of competition (monopoly). Unions are weak now because there are fewer profits to split.

I guess if you like unions then you should be pro-protection because that will help create profits for unions to split, at the cost of lower wages and lower returns on investment for everybody else.

[nate33]

Nate,

I have just been catching up on these new posts.

How can you not see the dow dropping has something to do with this last deal The rating agengy report even came right out and said it. Not only did these last agreement not set the table for any investment, the house exposed it hand for what they would do moving forward and how they will act.

You highlight no cuts. Maybe that is true today but the table is set, the tone is set. The super congress will do their thing. The TP and R will threaten to shut down the gov at ever turn. The econ is weak. N

ow the voices are getting louder for.. we need to not only not cut right now...we need investment to build demand. Hell, even Cramer was on saying how Government spending fuels small businesses. I know that is true with my company. If it wasn't for Fed funding state and local government with JAG grants, etc, we would have never developed the technology we did. And our stuff saves them money and helps put the right bad guys away.

That is what I have been saying and Wall Street seems to be seeing the same. Add the EU, and what is to like for them.

We will see how this all works out in time politically. My personal take, I thing the TP and R did themselves no real favor in this last deal. And Boner saying he got 98% of what he wasn't was amateur. He will regret saying that.

Hands, I continue to reject completely the notion that artificially produced government "stimulus" helps the economy. Any government spending beyond the bare minimum to keep the economy flowing (i.e. law enforcement and basic regulation and infrastructure that can't be handled by the free market) is wasted money. Cramer may disagree with me, but he is wrong. These pseudo-Keynesians don't seem to grasp the concept that government first has to borrow money from the free market in order to spend it. Government debt crowds out other debt instruments, making it harder for the private sector to borrow. Keynes himself never even advocated the kind of absurd government spending that guys like Krugman tout. They've bastardized Keynes' economic philosophy to advance their socialist agenda of government command and control.

[nate33]

As barelyawake points out, we are now in competition with China and other "sweatshops". To have strong unions in the face of such competition would require substantial tariffs. I'm not in opposition to selective punative tariffs as a means of addressing China's currency manipulation, but I think the evidence is pretty sound that a blanket policy of high import tariffs is very bad economically over the long term.

As much as you guys pine for the glory days of the 50's and 60's when union membership was strong, that strategy is no longer realistic in today's global economy.

The first thing I would do to address jobs and income disparity (other than import tariffs on China) would be to release the regulative shackles on our energy production. More energy production would decrease unemployment, lower the price of energy, increase tax revenue, and boost demand. For God's sake, why can't we deep water drill in the Gulf yet?

Improved energy production would also permit us to more easily pull out of the Middle East, and it would ease the upcoming turmoil when our dollar collapses and we can no longer afford imported oil.

http://www.huffingtonpost.com/2011/03/1 ... 34945.html

http://community.nasdaq.com/News/2011-0 ... ryid=89171

http://www.msnbc.msn.com/id/42400389/ns ... j5jqoJEMwQ

Thanks for the links. So they've permitted 2 of them to start back up. What about the other 23?

[nate33]

Wow. Just wow.

So the solution to our problems is to create a distortion in our economy that will divert our labor and capital to less productive resources?

Brilliant!

Depends on how you define "productive resources." I would agree with your principle, in a perfect world. But isn't it better to have our least educated employed in some capacity rather than financing the Chinese defense establishment and paying our own citizens unemployment and food stamp compensation? Our free trade philosophy has allowed China and Russia to wreak havoc by way of nuclear proliferation, currency manipulation, leverage over Europe, etc.

Also, I was amused by your "brilliant" comment at the end of your post. As a result, I'm sure we will all now attach extra importance to your superior opinions. Perhaps you should reveal who on the board is brilliant (I'm sure you of course) and who is not. Am I the only only who is not brilliant? Are there others? If so, who? Please, you should consider the hubris in your style of communication.

I want to make it absolutely clear that nowhere in this conversation did I advocate for protectionism and I'm frankly insulted that you drew this conclusion "based on the conversation in this thread." Speak for yourself.

For the record, I don't favor a blanket policy of protectionism either. I only advocate punitive tariffs on China to defend ourselves from their currency manipulation. If they let their currency rise naturally, I'd stop the tariffs.

I agree with Zonker about why unions are currently weak and why they will likely remain weak in an era of globalism.

[pancakes3]

Unions in the U.S. are not a political movement, they're an economic bargaining unit that negotiates a split in excess profits between the owners of capital and labor. The excess profits only exist in the absence of competition (monopoly). Unions are weak now because there are fewer profits to split.

well that certainly is a... pure capitalistic view on things. a marxist interpretation would argue that profit comes from all revenue gained after paying the workers. other interpretations would say that there are no such things as profits because a successful company would take all excess dollars to finance itself to expand in order to gain even more "profits". accountants see profits as a column on their spreadsheet, which they highlight.

i get what you're saying about unions though. unions are weak because the profit margins are getting narrower and narrower, which is an inevitability as the globalization makes the market more "efficient".

i feel an urge to detail the inner workings of comparative advantage and how it relates to our economy but feel like doing so may be insulting or condescending, so... i leave the burden of that enlightening to someone else and/or wikipedia.

i'm glad i got into this thread "early on" even though it's the 3rd incarnation. i've stayed away from the others because it's hard getting on a horse midstream...

and @ nate and hands

keynes did advocate government spending in certain boom/busts because at some point (like in the great depression) normal market forces may not be enough to return things to the original equilibrium and the market may self-correct at a lower equilibrium. now who's to say which boom and which bust would do so? well i think that's where a difference in opinion may arise, but i think the general consensus is that if we let multiple major banks fail as well as a HUGE insurer of these banks then the world would probably self-correct at a lower equilibrium.

i think the real rift happens here. nate doesn't care because that equilibrium is the TRUE equilibrium and where we're meant to be if bankers and traders were honest and didn't overleverage. however hands and some others say "screw the true equilibrium. we're grown accustomed to a certain way of life and we should do our damndest to keep it that way." i'm siding with nate. if our current way of life is unsustainable, we have no business trying to prop it up and keep it afloat. however, that doesn't mean that if we did want to bail out AND have a balanced budget that the opportunity to trim fat should be lost. cut costs, legalize/tax marijuana, etc.

[pancakes3]

oh, edit to add, zonk... imo you were being a bit of a condescending arse in your post at popper. i don't think he ever used your particular views as a cite... just what he gathered from the posts collectively mixed in with his own points of view. if you want to dismantle his theory of protectionism and tell him why he's wrong? valid. to mock? condescending.