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Reasons for slow economic growth

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  • Liberal Democrat
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    Colorado Springs, CO
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    Vox, August 1, 2016: The big puzzle in economics today: why is the economy growing so slowly?

    Timothy Lee of Vox notes that the "US economy grew at an inflation-adjusted rate of 1 percent in the first half of 2016. That’s the slowest six-month growth rate since 2012, and it continues the slow growth that has characterized the recovery since 2009...Since 2009, inflation-adjusted output has barely grown at 2 percent per year. Business investment has been weak, wages have been stagnant, and worker productivity has improved at its slowest pace since World War II."

    Lee lists eight popular reasons often cited by economists-- running out of innovations, too little spending, high debt, too much regulation, aging population, and a few more. I would focus on two: too little spending and an aging population. With respect to spending, I would emphasize the lack of government spending on big projects like infrastructure. This is a direct result of the Republican controlled Congress sabotaging President Obama's efforts to stimulate growth and employment. It is appears to be entirely political...the Party of No puts party ahead of country. However, some Republican brains are also hard wired into austerity economic theories.

    On the aging population, there is truth to this idea that as the population demographics gets older, we tend to be less entrepreneurial and innovative...less risk taking. We need an influx of young energetic people including immigrants to take their ideas to the market place. This may be a longer term problem as us baby boomers are now retiring in huge numbers, but are not being replaced one for one by young energetic innovative workers. Many of the young people who might have the desire are burdened by college debt. Immigration of people with ideas is stymied by Republican fear mongering.

    Other thoughts? Take a look at the list of eight.

  • Independent
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    Wolfgang streeck posits that there hasn't been real growth in the u.s. for decades. financialization as a result of neoliberalism and loose money policies has resulted in what he calls pseudo-growth with bubbles every decade since the election of reagan. the state has, in his view, reached a point where it cannot intervene and create real growth any more. and growth that is created will not be the old "rising tide lifts all boats" of jfk's rhetoric.
  • Independent
    Ft.myers, FL
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    As I said a million times this country refuses to grow up; like Schmidt says the infrastructure needs an total revamp. Right now Delta's computers conked out; no planes are flying; it sure would be nice to be able to step on our non existing high speed rail to get to your destination. But yeah for politicians we rather spent it on our fantastic wars and war equipment as well wasted projects. Let's have some more bankrupted cities and slums; just kick out the hard working Mexicans etc. then I guess nothing gets built here anymore; the Trump "whities" are too lazy to do anything anyway. Just lets fill up our jails that will help, and help people to kill themselves via "overdoses", as well sell some more guns that will help reducing the population. When is this country coming to their senses?

    This election shows clearly what I have said since I started on this site that we are running backwards; certainly "brain" wise. Buy yeah, like Jared says the Constitution will save our ass; I agree, if it still was 1790.

    With Hillary and the Jesuit guy may be we can hang on the gallows a bit longer, but with Trump we will fall immediately into the ravine. I don't believe in any "god" , but I am ready to say: The "god" thing may be the only thing which can save us. However all the "praying" here does not help much either. The "walls" have no ears. Amen

  • Independent
    Ft.myers, FL
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    Would it not be nice to have all the trillions we did spent on our never ending wars? Wow the infrastructure would be fantastic, plus everybody would have work instead of coffins or artificial limbs.

    I saw another idiotic thing here; Rubio said: Pregnant women who contracted Zyka should not be allowed to have an abortion. What a piece of filth is this guy; thus the woman and her screwed up baby have to suffer an lifetime, because of such an religious bastard. He is running for election in FL again; the whole of the GOP should be banned from this country and deported to the South Pole.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    CFMA and derivatives are the reason for no growth. There is new money and old money that instead of being invested in businesses that hire people and proved products and services that money is used to secure contracts that plain and simple bet on the outcomes of businesses and products. Simple economics and accounting is money is not being spent on business, it is used to support gambling and transactions. There are over 2 billion trades a day. With that much activity where is there not an increase in GDP ???

  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Schmidt Wrote:

    Vox, August 1, 2016: The big puzzle in economics today: why is the economy growing so slowly?

    Timothy Lee of Vox notes that the "US economy grew at an inflation-adjusted rate of 1 percent in the first half of 2016. That’s the slowest six-month growth rate since 2012, and it continues the slow growth that has characterized the recovery since 2009...Since 2009, inflation-adjusted output has barely grown at 2 percent per year. Business investment has been weak, wages have been stagnant, and worker productivity has improved at its slowest pace since World War II."

    Lee lists eight popular reasons often cited by economists-- running out of innovations, too little spending, high debt, too much regulation, aging population, and a few more. I would focus on two: too little spending and an aging population. With respect to spending, I would emphasize the lack of government spending on big projects like infrastructure. This is a direct result of the Republican controlled Congress sabotaging President Obama's efforts to stimulate growth and employment. It is appears to be entirely political...the Party of No puts party ahead of country. However, some Republican brains are also hard wired into austerity economic theories.

    On the aging population, there is truth to this idea that as the population demographics gets older, we tend to be less entrepreneurial and innovative...less risk taking. We need an influx of young energetic people including immigrants to take their ideas to the market place. This may be a longer term problem as us baby boomers are now retiring in huge numbers, but are not being replaced one for one by young energetic innovative workers. Many of the young people who might have the desire are burdened by college debt. Immigration of people with ideas is stymied by Republican fear mongering.

    Other thoughts? Take a look at the list of eight.

    This is a simple unspent income or demand leakage story.

    Human beings have understood the paradox of thrift for hundreds of years.

    At the highest levels of policy making in our country, it's been understood for at least 70 years, since at least the time of Marriner Eccles as FDR's Fed Chairman, and whose name is on the building of where the Board of Governors meet and work today.

    We've had environments with way higher taxes and regulation, with way less people, with less knowledge and technology, and with labor even more subdued and subservient to capital, and had far higher economic growth and employment.

    What's different is we've never had this large a foreign sector, nor have we had this level of income inequality in the domestic sector.

    Furthermore, there's a hell of a lot that's wrong with our healthcare and education funding systems that screw up the economy.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Carlitos, You list classical and historical facts of the economy. It is obvious that growth and affluence are possible. What kills economies is lack of spending. Why do you propose deficits when the obvious reason for the poor economy is the enormous amount of money removed from investing and used to create the futures market?
  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    Carlitos Wrote:
    Schmidt Wrote:

    Vox, August 1, 2016: The big puzzle in economics today: why is the economy growing so slowly?

    Timothy Lee of Vox notes that the "US economy grew at an inflation-adjusted rate of 1 percent in the first half of 2016. That’s the slowest six-month growth rate since 2012, and it continues the slow growth that has characterized the recovery since 2009...Since 2009, inflation-adjusted output has barely grown at 2 percent per year. Business investment has been weak, wages have been stagnant, and worker productivity has improved at its slowest pace since World War II."

    Lee lists eight popular reasons often cited by economists-- running out of innovations, too little spending, high debt, too much regulation, aging population, and a few more. I would focus on two: too little spending and an aging population. With respect to spending, I would emphasize the lack of government spending on big projects like infrastructure. This is a direct result of the Republican controlled Congress sabotaging President Obama's efforts to stimulate growth and employment. It is appears to be entirely political...the Party of No puts party ahead of country. However, some Republican brains are also hard wired into austerity economic theories.

    On the aging population, there is truth to this idea that as the population demographics gets older, we tend to be less entrepreneurial and innovative...less risk taking. We need an influx of young energetic people including immigrants to take their ideas to the market place. This may be a longer term problem as us baby boomers are now retiring in huge numbers, but are not being replaced one for one by young energetic innovative workers. Many of the young people who might have the desire are burdened by college debt. Immigration of people with ideas is stymied by Republican fear mongering.

    Other thoughts? Take a look at the list of eight.

    This is a simple unspent income or demand leakage story.

    Human beings have understood the paradox of thrift for hundreds of years.

    At the highest levels of policy making in our country, it's been understood for at least 70 years, since at least the time of Marriner Eccles as FDR's Fed Chairman, and whose name is on the building of where the Board of Governors meet and work today.

    We've had environments with way higher taxes and regulation, with way less people, with less knowledge and technology, and with labor even more subdued and subservient to capital, and had far higher economic growth and employment.

    What's different is we've never had this large a foreign sector, nor have we had this level of income inequality in the domestic sector.

    Furthermore, there's a hell of a lot that's wrong with our healthcare and education funding systems that screw up the economy.

    The biggest problem is that any economist that identifies the problem will become the instant enemy of all past, present and future Harvard MBA's. I don't see any changes in the foreseeable future.
  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    "The big puzzle in economics today: why is the economy growing so slowly?"

    What a crock!!!! All the things that caused the big bust are still there. Nobody wants to come out and say that making a profit without people is wrong. After a big bust they expect a big boom ? 20 years of perpetual right wing propaganda telling people they control their own destiny and the only people they have to care about is themselves has gotten people to believe it. Every major tax cut has been followed by a recession. Yet the right wing has taught people that big government is wrong and that is the cause of all problems. Hillary has been talking lately like a working people's candidate. Maybe Trump will scare enough people to build a Democratic Congress. ????

  • Libertarian
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    Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.
  • Independent
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    MMTJohn Wrote: Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.

    the concept of tax less is neoclassical economic theology. the end result of less taxation under the money as debt regime is a revenue starved government. even a tax cut to the largest number people meaning the lower 98% or so will not result in the increase in spending required to significantly boost the economy. large scale demand on large scale monetary projects most certainly helps and infrastructure is an example of this. tax cuts do nothing more than reduce long term revenue. i am not saying they shouldn't happen but it will be necessary under the debt-money regime to raise them again in the future.

    better that the government act as employer of last resort.

  • Strongly Liberal Democrat
    Democrat
    Pensacola, FL
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    MMTJohn Wrote: Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.

    MMT John, I am for spending in any way possible. I think saving in banks ((which is just letting somebody else spend your hard earned money) is a waste of the use of money. I propose a zero sum tax program for derivatives and futures created or altered after 2001. I would heavily penalize CFMA created trades and reward jobs producing investments that provide jobs and services. I would start income taxes above $75,000* and make it accelerated progressively. So I would eliminate income taxes altogether on incomes less than $75k. The tax program** directed at CFMA would force multi billions of dollars to look for a job and go to work. Coupled with new laws*** the economy would boom and the USA would start making the products that people with good incomes would buy. With all the new money investing in what the stock market claims it does there would soon be a shortage of labor. Unions would thrive and wages would go up . Workers would get the retirement packages they deserve and then they could spend the money they make instead of giving it back through banks and retirement accounts. This extra money would create more jobs and cooperation instead of winning would result. The only roadblock is the people making a living from the speculative gambling in the stock market. They would create lies beyond belief.

    *Subject to review.

    .** Heavily tax non interested trades. Heavily reward jobs and service, brick and mortar investments.

    *** National and international trades would be influenced to comply with anti non interested trading modification and elimination.

  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    lonely bird Wrote:
    MMTJohn Wrote: Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.

    the concept of tax less is neoclassical economic theology. the end result of less taxation under the money as debt regime is a revenue starved government. even a tax cut to the largest number people meaning the lower 98% or so will not result in the increase in spending required to significantly boost the economy. large scale demand on large scale monetary projects most certainly helps and infrastructure is an example of this. tax cuts do nothing more than reduce long term revenue. i am not saying they shouldn't happen but it will be necessary under the debt-money regime to raise them again in the future.

    better that the government act as employer of last resort.

    Taxes are about regulating inflation, not about the government getting revenue to spend.

    Cutting taxes on people with high propensities to spend will most certainly add to total spending in the economy. It's like giving them a raise.

  • Independent
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    Carlitos Wrote:
    lonely bird Wrote:
    MMTJohn Wrote: Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.

    the concept of tax less is neoclassical economic theology. the end result of less taxation under the money as debt regime is a revenue starved government. even a tax cut to the largest number people meaning the lower 98% or so will not result in the increase in spending required to significantly boost the economy. large scale demand on large scale monetary projects most certainly helps and infrastructure is an example of this. tax cuts do nothing more than reduce long term revenue. i am not saying they shouldn't happen but it will be necessary under the debt-money regime to raise them again in the future.

    better that the government act as employer of last resort.

    Taxes are about regulating inflation, not about the government getting revenue to spend.

    Cutting taxes on people with high propensities to spend will most certainly add to total spending in the economy. It's like giving them a raise.

    Really doesn't matter what you or I think. The reality is that under the idiocy of neoclassical economics federal governments are being held hostage by the financial system and that means forcing or attempting to force federal governments into austerity. The amount of money given to a worker making $50,000 a year in a tax break is not going to result in anywhere near enough stimulus no matter the total numbers involved. The government itself must inject money directly as well as act as employer of last resort. The injection cannot take the form of quantitative easing which is simply the financial system digging its claws in deeper via debt.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    lonely bird Wrote:
    Carlitos Wrote:
    lonely bird Wrote:
    MMTJohn Wrote: Chet, if you know that lack of spending kills economies - which is what Carlitos said, it's a demand leakage problem - then how can you be against more spending to fix it? If the government either spent more itself, or taxed less so as to let the people spend more, the economy would start to recover.

    the concept of tax less is neoclassical economic theology. the end result of less taxation under the money as debt regime is a revenue starved government. even a tax cut to the largest number people meaning the lower 98% or so will not result in the increase in spending required to significantly boost the economy. large scale demand on large scale monetary projects most certainly helps and infrastructure is an example of this. tax cuts do nothing more than reduce long term revenue. i am not saying they shouldn't happen but it will be necessary under the debt-money regime to raise them again in the future.

    better that the government act as employer of last resort.

    Taxes are about regulating inflation, not about the government getting revenue to spend.

    Cutting taxes on people with high propensities to spend will most certainly add to total spending in the economy. It's like giving them a raise.

    Really doesn't matter what you or I think. The reality is that under the idiocy of neoclassical economics federal governments are being held hostage by the financial system and that means forcing or attempting to force federal governments into austerity. The amount of money given to a worker making $50,000 a year in a tax break is not going to result in anywhere near enough stimulus no matter the total numbers involved. The government itself must inject money directly as well as act as employer of last resort. The injection cannot take the form of quantitative easing which is simply the financial system digging its claws in deeper via debt.

    QE is a tax. It removes interest income from the economy.

    Payroll tax cut would equal a $500 billion raise for workers and a $500 billion tax cut for employers for employing people.

    It raises incomes and lowers costs of production. So it promotes real output. People have more incomes to purchase things that cost less to produce.

    We're talking about real money. If half of the payroll tax cut is saved and not spent, the economy still grows near 3%.

    Yes, a JG is needed. I've advocated for an ELR or JG for over 4 years on this website.

    I'm also an advocate for keeping the JG pool of workers small. And the trick is to keep taxes low per "size" of government.

    The payroll tax is an aggressively regressive, punishing tax on labor. It should be adamantly opposed by progressives.