Economists

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Re: Economists

Post by pErvinalia » Fri Aug 28, 2020 6:59 am

A rising tide lifts all boats:
The phrase is commonly attributed to John F Kennedy,[1] who used it in a 1963 speech to combat criticisms that a dam project he was inaugurating was a pork barrel project.[2][3] However, in his memoir Counselor: A Life At The Edge Of History, Kennedy's speechwriter Ted Sorensen revealed that the phrase was not one of his or the then President's own fashioning. It was in Sorensen's first year working for him, during Kennedy's tenure in the Senate, when Sorensen was trying to tackle economic problems in New England, that he happened upon the phrase. He wrote that he noticed that "the regional chamber of commerce, the New England Council, had a thoughtful slogan: 'A rising tide lifts all the boats.'" From then on, Kennedy would borrow the slogan often. Sorensen highlighted this as an example of quotes mistakenly attributed to President Kennedy.[4]

In subsequent decades, the phrase has been used to defend tax cuts and other policies where the initial beneficiaries are high-income earners.[5]

Meaning
The expression also applies to free-market policies, in that comparative-advantage production and subsequent trade would theoretically increase incomes for all participating entities. It is said to be a favorite proverb of former U.S. Treasury Secretary Robert Rubin.[6]

However, the term has also been used in recent years to highlight economic inequality. Gene Sperling, Bill Clinton's former economic advisor, has opined that, in the absence of appropriate policies, "the rising tide will lift some boats, but others will run aground."[3][7] British Labour MP Ed Miliband said at a party conference that “they used to say a rising tide lifted all boats. Now the rising tide just seems to lift the yachts.”[8][9] New Zealand Labour MP David Parker has stated that "We believe that a rising tide of economic growth should lift all boats, not just the super yachts."[10]
Last edited by pErvinalia on Fri Aug 28, 2020 7:06 am, edited 1 time in total.
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Re: Economists

Post by pErvinalia » Fri Aug 28, 2020 7:03 am

Sean Hayden wrote:
Fri Aug 28, 2020 4:47 am
The idea that government's can't become hard up is definitely new to me.
It's based around the idea that governments can create as much of their own currency as they want (well, the "independent" reserve banks can). Traditionally mass money printing would be considered likely to lead to mass inflation. However, we are living in a time of very low inflation, thanks primarily due to "technological deflation"*. Hence money printing isn't likely to lead to out of control inflation, and indeed is likely propping up our economies from suffering from debilitating deflation.

* Products get cheaper over time due to technological advancements.
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Re: Economists

Post by Svartalf » Fri Aug 28, 2020 7:30 am

after all, Gorby had to break up the soviet union because the arms race relaunch by reagan and their basic economic inefficiency just broke their back.
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Re: Economists

Post by Brian Peacock » Fri Aug 28, 2020 2:21 pm

Sean Hayden wrote:
Fri Aug 28, 2020 4:47 am
In this regard, stories about how the government are hard up or can go broke are misinformed, or just a politically convenient fiction.
:shock:

Bankrupting others was a staple of the British Empire, wasn't it? --nvm-- We became the global player we are in large part because Europe became hard up and had to rely on us. The idea that government's can't become hard up is definitely new to me.

edit: Worse, unless I'm misremembering, it was by following the advice of British economists that some found themselves suddenly beholden to the empire... :hehe:
It was a different, simpler time. A nation's currency was backed by assets -- traditionally land and then gold -- and from the mid-1800 Europe became rather 'hard up' because it had to pay for the resources to prosecute a series of wars and rearmaments - in this regard the US was a very good friend to all of Europe, and received a large amount of gold for its assistance. Thus, after WWII the US had become the largest holder of gold by quite a substantial margin, and with gold being a safe bet at the time, countries began tying their currencies to the security of the US dollar. A country became broke if it had no assets to draw on. Eventually the gold standard was abandoned an new mechanisms were found to denote and create value, but even today the US dollar accounts for c.60% of the World's banking reserves and c.40% of global debt and is effectively the reserve currency of the Earth.

Nowadays money is not created as a function of the value of assets but as a function of debt. And in this regard the US Fed is the Earth's lender of last resort. But central banks like the Fed don't 'lend' something they already have (as in, "Can you lend me a pencil?"), they licence institutions and corporations to create and issue debt which ultimately gets repaid to the central bank plus a little bit of interest.

Anyway, that's a slightly different point to the one I was making, which was that government spending precedes economic activity, which precede tax revenue, rather than the other way around. We can see this in an acknowledgement of how the post 2007/8 austerity, 'The Austerity', depressed the Western economy - which had a knock-on effect on the global economy. Austerity was a very bad idea economically but it appealed to people's (public and politicians) intuitions about the national balance sheet being basically the same as a household or business budget, just on a larger scale.

As Joe pointed out I'm dropping hints about Keynesianism here and locating Keynesian ideas in the context of modern monetary theory (MMT). MMT is a description of the operation of the World's financial system in terms of the structural and regulatory mechanisms at play - it explains the plumbing of the financial system, or the hardware the system runs on if you like. It explains how value is created out of thin air (debt) and how that value is passed around in the real economy by people and businesses buying and selling stuff, and also how some of that value is withdrawn from the system by taxation and also sliced out of the system and stored (or hoarded) in special kinds of financial assets that are not backed by something in the material world like currencies used to be backed by gold.

Crypto aside, all money in the system is basically public money created by governments through the central banking system. Governments put value into the system through spending and by allowing institutions to create and issue debt. This created value gets passed into, around and multiplied by real economic activity before government finally withdraws some of it out of the system in the form of taxation. As Stephanie Kelton puts it, one can think of the IRS as the graveyard for used dollars and in this regard taxation is not a mechanism to generate revenues for spending but one for balancing inflationary forces associated with spending against those of monetary supply and demand.

A little light reading anyone? :D

Austerity: The History Of A Dangerous Idea, Mark Blyth
The 99 Percent Economy: How Democratic Socialism Can Overcome the Crises of Capitalism, Paul Adler
Stolen: How to Save the World from Financialisation, Grace Blakeley
The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy, Stephanie Kelton
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Re: Economists

Post by L'Emmerdeur » Fri Aug 28, 2020 5:07 pm

Svartalf wrote:
Fri Aug 28, 2020 7:30 am
after all, Gorby had to break up the soviet union because the arms race relaunch by reagan and their basic economic inefficiency just broke their back.
That's a convenient narrative that's promoted by some, but it's almost entirely empty hype.

'Let's stop revising history: Reagan didn't win the Cold War'
With access to thousands of pages of Soviet records, oral histories and memoirs, we now know that the confrontational approach that defined Reagan’s first few years in office had very little, if any, impact on Soviet strategic decisionmaking. In fact, the antagonism of Reagan’s early presidency likely prolonged the Cold War by elevating hardline, anti-American voices over those of moderate reformers like Gorbachev.

Reagan’s true Cold War legacy is rooted in his deeply personal diplomatic engagement with Gorbachev. Reagan’s embrace of Gorbachev and praise for his reforms gave the Soviet leader the latitude to enact the political and social changes – perestroika, glasnost, demokratizatsiya – that ultimately caused the collapse of the Soviet Union.

...

Another common refrain among conservatives is that Reagan simply “outspent” the Soviets. But Soviet defense spending remained flat throughout the 1980s. More significantly, Gorbachev was unalterably opposed to increasing military spending; he fought a relentless campaign by the Soviet military-industrial complex to spend exorbitant sums in response to Reagan’s buildup.

In particular, revisionist historians point to Reagan’s enormous investments in the Strategic Defense Initiative (derisively known as “Star Wars”) as playing a significant role in the Soviet collapse. But Russian (and American) scientists knew early on that SDI, which sought to shoot down incoming ballistic missiles with lasers, was a pipe dream. Far more consequentially, the Soviets knew that they could easily defeat Reagan’s “Star Wars” fantasy by launching hundreds of decoys and saturating the skies with more nuclear warheads than the system could handle.

Despite costing taxpayers billions of dollars, SDI had no significant effect on Soviet strategic decisionmaking. Gorbachev rejected every single proposal to build a Soviet response to Reagan’s “Star Wars” program.

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Re: Economists

Post by Svartalf » Fri Aug 28, 2020 5:53 pm

Interesting, thanks
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Re: Economists

Post by Joe » Fri Aug 28, 2020 7:51 pm

Brian Peacock wrote:
Fri Aug 28, 2020 2:21 pm
Sean Hayden wrote:
Fri Aug 28, 2020 4:47 am
In this regard, stories about how the government are hard up or can go broke are misinformed, or just a politically convenient fiction.
:shock:

Bankrupting others was a staple of the British Empire, wasn't it? --nvm-- We became the global player we are in large part because Europe became hard up and had to rely on us. The idea that government's can't become hard up is definitely new to me.

edit: Worse, unless I'm misremembering, it was by following the advice of British economists that some found themselves suddenly beholden to the empire... :hehe:
It was a different, simpler time. A nation's currency was backed by assets -- traditionally land and then gold -- and from the mid-1800 Europe became rather 'hard up' because it had to pay for the resources to prosecute a series of wars and rearmaments - in this regard the US was a very good friend to all of Europe, and received a large amount of gold for its assistance. Thus, after WWII the US had become the largest holder of gold by quite a substantial margin, and with gold being a safe bet at the time, countries began tying their currencies to the security of the US dollar. A country became broke if it had no assets to draw on. Eventually the gold standard was abandoned an new mechanisms were found to denote and create value, but even today the US dollar accounts for c.60% of the World's banking reserves and c.40% of global debt and is effectively the reserve currency of the Earth.

Nowadays money is not created as a function of the value of assets but as a function of debt. And in this regard the US Fed is the Earth's lender of last resort. But central banks like the Fed don't 'lend' something they already have (as in, "Can you lend me a pencil?"), they licence institutions and corporations to create and issue debt which ultimately gets repaid to the central bank plus a little bit of interest.

Anyway, that's a slightly different point to the one I was making, which was that government spending precedes economic activity, which precede tax revenue, rather than the other way around. We can see this in an acknowledgement of how the post 2007/8 austerity, 'The Austerity', depressed the Western economy - which had a knock-on effect on the global economy. Austerity was a very bad idea economically but it appealed to people's (public and politicians) intuitions about the national balance sheet being basically the same as a household or business budget, just on a larger scale.

As Joe pointed out I'm dropping hints about Keynesianism here and locating Keynesian ideas in the context of modern monetary theory (MMT). MMT is a description of the operation of the World's financial system in terms of the structural and regulatory mechanisms at play - it explains the plumbing of the financial system, or the hardware the system runs on if you like. It explains how value is created out of thin air (debt) and how that value is passed around in the real economy by people and businesses buying and selling stuff, and also how some of that value is withdrawn from the system by taxation and also sliced out of the system and stored (or hoarded) in special kinds of financial assets that are not backed by something in the material world like currencies used to be backed by gold.

Crypto aside, all money in the system is basically public money created by governments through the central banking system. Governments put value into the system through spending and by allowing institutions to create and issue debt. This created value gets passed into, around and multiplied by real economic activity before government finally withdraws some of it out of the system in the form of taxation. As Stephanie Kelton puts it, one can think of the IRS as the graveyard for used dollars and in this regard taxation is not a mechanism to generate revenues for spending but one for balancing inflationary forces associated with spending against those of monetary supply and demand.

A little light reading anyone? :D

Austerity: The History Of A Dangerous Idea, Mark Blyth
The 99 Percent Economy: How Democratic Socialism Can Overcome the Crises of Capitalism, Paul Adler
Stolen: How to Save the World from Financialisation, Grace Blakeley
The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy, Stephanie Kelton
My library had Austerity, so I downloaded it, but here are some "CliffsNotes" for those whose reading time is limited. :{D




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Re: Economists

Post by Seabass » Fri Aug 28, 2020 8:09 pm

Speaking of light reading, I'm currently on this one:

https://en.wikipedia.org/wiki/Capital_and_Ideology

Consider this: during the New Deal era, the US had the highest minimum wage in the world, the highest progressive tax rates in the world, and the highest proportion of children attending secondary school in the world. This was back when we had a burgeoning middle class in which single income households could afford a house with a white picket fence and nice automobile. But now, after decades of supply side economics, decades of red baiting, decades of conservatives using race as a wedge issue, decades of sliding further and further right, we've returned to conditions similar to those that preceded the Great Depression.
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Re: Economists

Post by Joe » Fri Aug 28, 2020 9:18 pm

Ah, you're ahead of me then. I still haven't cracked the first one.
"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe." - Albert Einstein
"as far as strong, i am hard as a rock and tough as a nail. no one will bring me down. no one. i am the debonator. the tnt. and jesus has my back door pal!" - D. C. Bockemehl
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Re: Economists

Post by Sean Hayden » Sat Aug 29, 2020 12:31 am

Brian Peacock wrote:
Fri Aug 28, 2020 2:21 pm
Sean Hayden wrote:
Fri Aug 28, 2020 4:47 am
In this regard, stories about how the government are hard up or can go broke are misinformed, or just a politically convenient fiction.
:shock:

Bankrupting others was a staple of the British Empire, wasn't it? --nvm-- We became the global player we are in large part because Europe became hard up and had to rely on us. The idea that government's can't become hard up is definitely new to me.

edit: Worse, unless I'm misremembering, it was by following the advice of British economists that some found themselves suddenly beholden to the empire... :hehe:
It was a different, simpler time. A nation's currency was backed by assets -- traditionally land and then gold -- and from the mid-1800 Europe became rather 'hard up' because it had to pay for the resources to prosecute a series of wars and rearmaments - in this regard the US was a very good friend to all of Europe, and received a large amount of gold for its assistance. Thus, after WWII the US had become the largest holder of gold by quite a substantial margin, and with gold being a safe bet at the time, countries began tying their currencies to the security of the US dollar. A country became broke if it had no assets to draw on. Eventually the gold standard was abandoned an new mechanisms were found to denote and create value, but even today the US dollar accounts for c.60% of the World's banking reserves and c.40% of global debt and is effectively the reserve currency of the Earth.

Nowadays money is not created as a function of the value of assets but as a function of debt. And in this regard the US Fed is the Earth's lender of last resort. But central banks like the Fed don't 'lend' something they already have (as in, "Can you lend me a pencil?"), they licence institutions and corporations to create and issue debt which ultimately gets repaid to the central bank plus a little bit of interest.

Anyway, that's a slightly different point to the one I was making, which was that government spending precedes economic activity, which precede tax revenue, rather than the other way around. We can see this in an acknowledgement of how the post 2007/8 austerity, 'The Austerity', depressed the Western economy - which had a knock-on effect on the global economy. Austerity was a very bad idea economically but it appealed to people's (public and politicians) intuitions about the national balance sheet being basically the same as a household or business budget, just on a larger scale.

As Joe pointed out I'm dropping hints about Keynesianism here and locating Keynesian ideas in the context of modern monetary theory (MMT). MMT is a description of the operation of the World's financial system in terms of the structural and regulatory mechanisms at play - it explains the plumbing of the financial system, or the hardware the system runs on if you like. It explains how value is created out of thin air (debt) and how that value is passed around in the real economy by people and businesses buying and selling stuff, and also how some of that value is withdrawn from the system by taxation and also sliced out of the system and stored (or hoarded) in special kinds of financial assets that are not backed by something in the material world like currencies used to be backed by gold.

Crypto aside, all money in the system is basically public money created by governments through the central banking system. Governments put value into the system through spending and by allowing institutions to create and issue debt. This created value gets passed into, around and multiplied by real economic activity before government finally withdraws some of it out of the system in the form of taxation. As Stephanie Kelton puts it, one can think of the IRS as the graveyard for used dollars and in this regard taxation is not a mechanism to generate revenues for spending but one for balancing inflationary forces associated with spending against those of monetary supply and demand.

A little light reading anyone? :D

Austerity: The History Of A Dangerous Idea, Mark Blyth
The 99 Percent Economy: How Democratic Socialism Can Overcome the Crises of Capitalism, Paul Adler
Stolen: How to Save the World from Financialisation, Grace Blakeley
The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy, Stephanie Kelton
I'm not seeing a justification for the claim that worrying about a government being hard up, or going broke, is a convenient political fiction. Weren't the austerity measures a response to a hard up, threatening to go broke, government? How would this hard up, broke government have spent its way out of trouble? Obviously, they were given another loan to see their way out. But, at first glance at least, it hardly seems prudent to rely on such things.
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Re: Economists

Post by laklak » Sat Aug 29, 2020 1:58 am

When all else fails, start a war. Good for business, gets the flags waving and shuts the protesters up. Oorah! Murika!
Yeah well that's just, like, your opinion, man.

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Re: Economists

Post by Sean Hayden » Sat Aug 29, 2020 2:03 am

Was it war that expanded the middle class, or FDR's taxing of the little guy? :hehe:
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Re: Economists

Post by Seabass » Sat Aug 29, 2020 2:53 am

FDR didn't tax the little guy. A progressive tax taxes the wealthy at higher rates.

https://en.wikipedia.org/wiki/Progressive_tax

Wars aren't good for the economy. That's a myth. Consider all the wars we've been in and how they've affected the economy. Iraq, Afghanistan, Vietnam, Korea, etc...
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Re: Economists

Post by Sean Hayden » Sat Aug 29, 2020 3:01 am

He did tax the little guy.

Post WW2 saw us expand into the power we are today, largely owing to a beneficial relationship with a devastated Europe.
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Re: Economists

Post by laklak » Sat Aug 29, 2020 3:06 am

'Nam and Iraq and all that - those were border skirmishes. Never got the GDP really involved in them. The only thing getting us out of this shit is WW III. I'm guessing us and Europe against Vlad and the Chinese. Or maybe us and Vlad against the rest. Anyway, it's got to be a big one, with tinfoil drives and meat rationing and ersatz. You gotta get the Proles involved in it, they need to have skin in the game. Orwellian perpetual warfare. The USA is at war with SinoRussia. The USA has always been at war with SinoRussia. What rough Crumple, it's time come at last....
Yeah well that's just, like, your opinion, man.

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