MaxedOutMama
Sunday, August 22, 2010
Three Recessions Graph August Update
Let me just note with some bitterness that a week which incorporates my brother's family's loss of the twins, acute bursitis and the latest claims data is one hell of a character test.
In any case, here's the main graph:
As always, left click to get a larger version or right click to open the larger version in a new window or tab.
This smarts. A very, very bad trajectory.
If we were in a recovery summer, it would look more like the bottom line (1982) on this graph:
It's not so much that claims remain elevated, but that claims are following the wrong trajectory. This represents a consistently low trend for the generation of new jobs.
For what it's worth, I think that initial claims will move back down after the middle of September, because I am sure that this three week rise in claims has to do with claims relating to education, and they all should be in the pipeline already by the middle of September.
But I was already sure that the retail orders had overshot somewhat. So far we are continuing the industrial growth pattern, and that is infusing some underlying strength. But excess industrial capacity is still a big problem, so it's not going to overcome new sources of weakness.
Congress screwed up badly by not extending both the original tiers of unemployment and extending the eligibility date for them. As of the April 1st initial claims report, there were 5.9 million people on EUC, and another 5.1 million on standard unemployment. As of the July 29th initial claims report, there were 3.2 million people on EUC, and 4.6 on standard unemployment. Congress did pass (late) an extension of the ability to transition from tiers until November 27th, 2010. However quite a few people have run out their unemployment benefits and can't find jobs. There is no help for them. (More facts about EUC here in pdf form.)
So if you look at the August 19th report, you see that the number of people receiving EUC has risen again to 4.75 million. But the group of unemployed who are not getting any benefits other than perhaps welfare and/or food stamps keeps rising.
Now the economy had generated some jobs in the private sector over the April-July period, but if you look at the household survey of the employment report, the total number of employed people had dropped by over 500K during that period (far beyond the statistical validity point). A lot of that was Census jobs dropping out but there also seems to have been additional losses of other government jobs, and I am guessing we will see that trend continue in the August and September employment reports.
So we haven't moved most people net from unemployment to employment. We have moved some who qualified for Social Security to retirement, but we aren't even adding enough jobs to maintain the number employed.
This means that income flows to the population are impaired.
Now add to this the fact that under current law, a huge tax increase is set to go into effect next January. This is a recipe for a great deal of economic uncertainty. In particular, it is probably preventing some business investment due to uncertainty about the ability to pay for it (you pay investment loans with after-tax dollars). The Bush tax cuts and the Obama stimulus tax cuts ($400 credit) are supposed to expire next year, and I have to believe that in one way or another many families will be paying more tax.
If you take the administration seriously, the intention is to keep the lower tax rates for many individuals, although it seems that Congress intends to raise taxes on far more individuals than Obama's campaign rhetoric would indicate.. However the administration's expressed intention is to raise taxes on many corporations, to raise capital gains taxes hugely, etc. None of that is likely to produce more jobs.
As far as I can see, we are on track for at least a few months of NOMINAL GDP CONTRACTION this year. That's much more serious than real contraction. Technically this would suggest that NBER's criteria for the end of recession (return to previous peak) will not be reached in 2010.
The uncertainty about taxes makes it very difficult to project into 2011. Assuming that plans to raise taxes are substantially scaled back, we would most probably see a skimming contraction with GDP oscillating between quarters of mild growth and quarters of mild contraction. Assuming that taxes are substantially raised, we should subside into a milder (than 2008/09) but sustained contraction by the second quarter of 2011.
There are already substantial future tax-and-cost increases built into Obamacare. Additionally, the wild cards involved in state and local tax increases are still being thrown on the table with some consistency. (See the Tax Policy Blog of the Tax Foundation.) Therefore we cannot plausibly assume that the net tax burden will fall in 2011 - it appears that it is doomed to rise under any scenario.
Finally, including the cost of medical insurance/care deductions reduces private incomes further in both 2011 and 2012. Therefore it appears that we are going to have a hard time getting private wages back to their level of 2008 over these two years.
The incentive to deleverage consumer debt ex RE among higher income earners is massive. I cannot look at all of this and be precise, but I would say that we are facing a very deflationary two years. I expect real private median incomes to shrink rather than increase. I also expect those with excess income to pay down debt first and to build savings more rapidly.
In any case, here's the main graph:
As always, left click to get a larger version or right click to open the larger version in a new window or tab.
This smarts. A very, very bad trajectory.
If we were in a recovery summer, it would look more like the bottom line (1982) on this graph:
It's not so much that claims remain elevated, but that claims are following the wrong trajectory. This represents a consistently low trend for the generation of new jobs.
For what it's worth, I think that initial claims will move back down after the middle of September, because I am sure that this three week rise in claims has to do with claims relating to education, and they all should be in the pipeline already by the middle of September.
But I was already sure that the retail orders had overshot somewhat. So far we are continuing the industrial growth pattern, and that is infusing some underlying strength. But excess industrial capacity is still a big problem, so it's not going to overcome new sources of weakness.
Congress screwed up badly by not extending both the original tiers of unemployment and extending the eligibility date for them. As of the April 1st initial claims report, there were 5.9 million people on EUC, and another 5.1 million on standard unemployment. As of the July 29th initial claims report, there were 3.2 million people on EUC, and 4.6 on standard unemployment. Congress did pass (late) an extension of the ability to transition from tiers until November 27th, 2010. However quite a few people have run out their unemployment benefits and can't find jobs. There is no help for them. (More facts about EUC here in pdf form.)
So if you look at the August 19th report, you see that the number of people receiving EUC has risen again to 4.75 million. But the group of unemployed who are not getting any benefits other than perhaps welfare and/or food stamps keeps rising.
Now the economy had generated some jobs in the private sector over the April-July period, but if you look at the household survey of the employment report, the total number of employed people had dropped by over 500K during that period (far beyond the statistical validity point). A lot of that was Census jobs dropping out but there also seems to have been additional losses of other government jobs, and I am guessing we will see that trend continue in the August and September employment reports.
So we haven't moved most people net from unemployment to employment. We have moved some who qualified for Social Security to retirement, but we aren't even adding enough jobs to maintain the number employed.
This means that income flows to the population are impaired.
Now add to this the fact that under current law, a huge tax increase is set to go into effect next January. This is a recipe for a great deal of economic uncertainty. In particular, it is probably preventing some business investment due to uncertainty about the ability to pay for it (you pay investment loans with after-tax dollars). The Bush tax cuts and the Obama stimulus tax cuts ($400 credit) are supposed to expire next year, and I have to believe that in one way or another many families will be paying more tax.
If you take the administration seriously, the intention is to keep the lower tax rates for many individuals, although it seems that Congress intends to raise taxes on far more individuals than Obama's campaign rhetoric would indicate.. However the administration's expressed intention is to raise taxes on many corporations, to raise capital gains taxes hugely, etc. None of that is likely to produce more jobs.
As far as I can see, we are on track for at least a few months of NOMINAL GDP CONTRACTION this year. That's much more serious than real contraction. Technically this would suggest that NBER's criteria for the end of recession (return to previous peak) will not be reached in 2010.
The uncertainty about taxes makes it very difficult to project into 2011. Assuming that plans to raise taxes are substantially scaled back, we would most probably see a skimming contraction with GDP oscillating between quarters of mild growth and quarters of mild contraction. Assuming that taxes are substantially raised, we should subside into a milder (than 2008/09) but sustained contraction by the second quarter of 2011.
There are already substantial future tax-and-cost increases built into Obamacare. Additionally, the wild cards involved in state and local tax increases are still being thrown on the table with some consistency. (See the Tax Policy Blog of the Tax Foundation.) Therefore we cannot plausibly assume that the net tax burden will fall in 2011 - it appears that it is doomed to rise under any scenario.
Finally, including the cost of medical insurance/care deductions reduces private incomes further in both 2011 and 2012. Therefore it appears that we are going to have a hard time getting private wages back to their level of 2008 over these two years.
The incentive to deleverage consumer debt ex RE among higher income earners is massive. I cannot look at all of this and be precise, but I would say that we are facing a very deflationary two years. I expect real private median incomes to shrink rather than increase. I also expect those with excess income to pay down debt first and to build savings more rapidly.
Comments:
<< Home
MOM,
I am so sorry for the loss your family suffered. I missed the updates you provided. I think deep down, I was actually afraid to look.
I've been losing a lot of sleep lately. My girlfriend is having a really hard time right now. For a variety of reasons she's way past due on the shots that relieve her chronic pain. The clock is also ticking on her COBRA.
I think there's a good chance we'll look back and see this "recovery" as nothing more than the eye of the storm. I was hoping I'd be wrong about that. The hope fades a bit with each passing month.
I was trying to explain to someone recently that the only thing propping up the stock market is our unsustainable trillion dollar deficit. I got back a "decoupling" theory.
Government workers eat at our restaurants and shop at our malls too though. They'll leave quite a deflationary void if we just fire them all.
I'm tempted to say that we should teach economics more in school. Who would be the teachers though? So few economists saw any of this coming. Some can barely see it now. They are too caught up doing economic archeology research on 200 year old stock market data. Sigh.
I am so sorry for the loss your family suffered. I missed the updates you provided. I think deep down, I was actually afraid to look.
I've been losing a lot of sleep lately. My girlfriend is having a really hard time right now. For a variety of reasons she's way past due on the shots that relieve her chronic pain. The clock is also ticking on her COBRA.
I think there's a good chance we'll look back and see this "recovery" as nothing more than the eye of the storm. I was hoping I'd be wrong about that. The hope fades a bit with each passing month.
I was trying to explain to someone recently that the only thing propping up the stock market is our unsustainable trillion dollar deficit. I got back a "decoupling" theory.
Government workers eat at our restaurants and shop at our malls too though. They'll leave quite a deflationary void if we just fire them all.
I'm tempted to say that we should teach economics more in school. Who would be the teachers though? So few economists saw any of this coming. Some can barely see it now. They are too caught up doing economic archeology research on 200 year old stock market data. Sigh.
Mark - I was debating about posting this earlier in response to your comment about her still being out of work.
Honestly, she really needs to go on disability.
I understand how deeply she wants to avoid it, but it is the only realistic option, and in the long term, it is the best chance she has of getting back into the workforce.
None of this is her fault. She has done all she can do.
If she goes on disability she can pursue retraining, she'll get medical benefits, and she can even work part time to augment her income. And eventually, given the medical benefits and the ability to work part time or as a volunteer, she'll be able to leverage herself back. She has the determination to do it, she just doesn't have the resources.
No one not coping with this type of an illness can understand how difficult and crushing a decision this is for her, but it is the only real decision that offers hope for her.
The shots are a necessity for her, because lack of sleep is only going to make her condition worse.
You know, this is what disability is for, and for every person who wants to get out on disability, there are three or four that are deathly afraid of it. The reforms to disability made way back in the Reagan era were designed to help workers get back into the workforce, and they can help her too. But once she doesn't have the medical benefits, she's through. She'll slowly get sicker and sicker. She'll likely end up to impaired to have a chance of getting back in.
This page has information about SS Disability Work transition programs.
Please, read up on it and talk to her. Her doctor has already told her she should do it, and if she doesn't do it her chances of getting back into the workforce are slim to none.
I wouldn't ask any human being to write him- or herself off, but these days disability is actually a second chance at continuing to work, if you have the desire. And that she has.
Honestly, she really needs to go on disability.
I understand how deeply she wants to avoid it, but it is the only realistic option, and in the long term, it is the best chance she has of getting back into the workforce.
None of this is her fault. She has done all she can do.
If she goes on disability she can pursue retraining, she'll get medical benefits, and she can even work part time to augment her income. And eventually, given the medical benefits and the ability to work part time or as a volunteer, she'll be able to leverage herself back. She has the determination to do it, she just doesn't have the resources.
No one not coping with this type of an illness can understand how difficult and crushing a decision this is for her, but it is the only real decision that offers hope for her.
The shots are a necessity for her, because lack of sleep is only going to make her condition worse.
You know, this is what disability is for, and for every person who wants to get out on disability, there are three or four that are deathly afraid of it. The reforms to disability made way back in the Reagan era were designed to help workers get back into the workforce, and they can help her too. But once she doesn't have the medical benefits, she's through. She'll slowly get sicker and sicker. She'll likely end up to impaired to have a chance of getting back in.
This page has information about SS Disability Work transition programs.
Please, read up on it and talk to her. Her doctor has already told her she should do it, and if she doesn't do it her chances of getting back into the workforce are slim to none.
I wouldn't ask any human being to write him- or herself off, but these days disability is actually a second chance at continuing to work, if you have the desire. And that she has.
MOM,
Thanks for the info.
You'll be happy to know that I convinced/nagged her to apply quite some time ago. It is going to take time though. She's in the apply, deny, and appeal loop. We're told that it is pretty much standard operating procedure. I'm not sure where she is in the process now. It takes a LONG time.
Ditto for her unemployment checks. Since she's in school as part of a worker retraining, there was a hangup with her unemployment. She's not alone. She's fairly sure she'll be getting it, but no check since November.
She normally isn't this bad, but she flew across the country for her sister's baby delivery. Her return flight stranded her in Chicago for a day due to weather. Her shots were scheduled for the next day. Oops! They got rescheduled one week later but a migraine kicked in. That pushed them back another two weeks.
As for sleep, I am the basket case, lol. She's on Ambien.
She's optimistic that she'll get her phlebotomy training by the end of the year, that she will enjoy it, that there will be a job waiting for her, and that she will be able to do the work. It is sitting at a desk all day that is most difficult.
And lastly, she is training to be a radiation therapist. So far, so good. She was told that she was the first to ever get a perfect score on the aptitude test. It will be three more years though. She's starting over. The English Literature degree in this economy wasn't cutting it.
Thanks for the info.
You'll be happy to know that I convinced/nagged her to apply quite some time ago. It is going to take time though. She's in the apply, deny, and appeal loop. We're told that it is pretty much standard operating procedure. I'm not sure where she is in the process now. It takes a LONG time.
Ditto for her unemployment checks. Since she's in school as part of a worker retraining, there was a hangup with her unemployment. She's not alone. She's fairly sure she'll be getting it, but no check since November.
She normally isn't this bad, but she flew across the country for her sister's baby delivery. Her return flight stranded her in Chicago for a day due to weather. Her shots were scheduled for the next day. Oops! They got rescheduled one week later but a migraine kicked in. That pushed them back another two weeks.
As for sleep, I am the basket case, lol. She's on Ambien.
She's optimistic that she'll get her phlebotomy training by the end of the year, that she will enjoy it, that there will be a job waiting for her, and that she will be able to do the work. It is sitting at a desk all day that is most difficult.
And lastly, she is training to be a radiation therapist. So far, so good. She was told that she was the first to ever get a perfect score on the aptitude test. It will be three more years though. She's starting over. The English Literature degree in this economy wasn't cutting it.
As a side topic, I am still coughing up green. It is getting a bit clearer though and I'm coughing less each month. The doctor said doing nothing was a reasonable choice as long as there was improvement.
I had pulminary function testing, blood work, and chest x-rays. All came back normal.
The breathing test was fascinating. There's nothing quite like being told to keep exhaling long past the point you think there's anything left to exhale. There's a "keep spending" economy analogy here I think.
The breathing tests were done in the ER. As an uninsured person, it was very much worth it to ask for a discount. They knocked 35% off. Never hurts to ask!
I had pulminary function testing, blood work, and chest x-rays. All came back normal.
The breathing test was fascinating. There's nothing quite like being told to keep exhaling long past the point you think there's anything left to exhale. There's a "keep spending" economy analogy here I think.
The breathing tests were done in the ER. As an uninsured person, it was very much worth it to ask for a discount. They knocked 35% off. Never hurts to ask!
I second the advice about disability. I didn't have my husband put in for it, because I was making good money at the time. Later on, we really could have used both the benefits and the insurance. It had been too long by then since he'd been out of the work force to qualify.
I talk to a lot of folks that are ditching their cable/dish tv for netflix. I think it's significant in that most folks won't consider giving up cable/dish until desperate. (I also talk to a few folks giving up netflix because they are losing their home/job. You hear a lot when you take over a hundred calls a day.)
The folks that lost jobs in this recession will likely never again have jobs that pay as well. It's already happened to a lot of us. I think they can pretty well forget about all that money they expect folks to amass for retirement. It's not gonna happen.
I talk to a lot of folks that are ditching their cable/dish tv for netflix. I think it's significant in that most folks won't consider giving up cable/dish until desperate. (I also talk to a few folks giving up netflix because they are losing their home/job. You hear a lot when you take over a hundred calls a day.)
The folks that lost jobs in this recession will likely never again have jobs that pay as well. It's already happened to a lot of us. I think they can pretty well forget about all that money they expect folks to amass for retirement. It's not gonna happen.
Teri,
The netflix discussion comes up here every now and then. I'm mainly just planting the seeds though. I'm not about to wait for the desperation level to kick in. I don't want to look back in my 60s as I'm digging ditches and think, "Was HBO really worth this?"
We spend more on Comcast (internet, phone, and cable) than we individually spend on food. That just seems a bit wrong to me.
The netflix discussion comes up here every now and then. I'm mainly just planting the seeds though. I'm not about to wait for the desperation level to kick in. I don't want to look back in my 60s as I'm digging ditches and think, "Was HBO really worth this?"
We spend more on Comcast (internet, phone, and cable) than we individually spend on food. That just seems a bit wrong to me.
Mark,
Comcast gets a ridiculous amount of our fixed expenses, too. The cost/value equation is even worse when you're only getting internet/phone! What's worse is that the only reason we keep it is for 911 service. Otherwise, there would be cheaper options for the internet.
Best wishes to both you and M_O_M in coping with your respective situations. Fortunately, for both of you the gradient seems to be positive, even if the vector isn't so good at the moment.
Comcast gets a ridiculous amount of our fixed expenses, too. The cost/value equation is even worse when you're only getting internet/phone! What's worse is that the only reason we keep it is for 911 service. Otherwise, there would be cheaper options for the internet.
Best wishes to both you and M_O_M in coping with your respective situations. Fortunately, for both of you the gradient seems to be positive, even if the vector isn't so good at the moment.
M_O_M,
I cannot look at all of this and be precise, but I would say that we are facing a very deflationary two years.
That's a key date, I think. The question is how people behave once they've paid down their debt and saved a few bucks. At that point, you'd think the Fed will have to sell bonds to soak up the monetary expansion they've been shoving into the system as the demand destruction slows (in the sense that dollars are destroyed when we pay back debt). I'm not sure anybody really knows what happens then.
I cannot look at all of this and be precise, but I would say that we are facing a very deflationary two years.
That's a key date, I think. The question is how people behave once they've paid down their debt and saved a few bucks. At that point, you'd think the Fed will have to sell bonds to soak up the monetary expansion they've been shoving into the system as the demand destruction slows (in the sense that dollars are destroyed when we pay back debt). I'm not sure anybody really knows what happens then.
Neil,
The worst part about having Comcast phone service is that it is often down when the other services are out. And it is Comcast we're talking about! ;)
The worst part about having Comcast phone service is that it is often down when the other services are out. And it is Comcast we're talking about! ;)
2 years may be the key in a lot of ways. Maybe the Mayans were right.
China Swallows Obama Stimulus Meant for U.S. Economy: Andy Xie
In 2012, the Fed will run out of excuses not to raise interest rates. As the excess liquidity in the global economy will be gigantic by then, the tightening will probably trigger a global crisis as asset bubbles burst.
What really ails the West is declining competitiveness. Globalization is pitting the Wangs in China or Gandhis in India against the Smiths in the U.S. or Gonzalezes in Spain.
I am very symptathetic to Xie's reasoning and he does have an excellent track record. I remain deflationary through Christmas but I'm still not willing to sell my inflation protected treasuries.
China Swallows Obama Stimulus Meant for U.S. Economy: Andy Xie
In 2012, the Fed will run out of excuses not to raise interest rates. As the excess liquidity in the global economy will be gigantic by then, the tightening will probably trigger a global crisis as asset bubbles burst.
What really ails the West is declining competitiveness. Globalization is pitting the Wangs in China or Gandhis in India against the Smiths in the U.S. or Gonzalezes in Spain.
I am very symptathetic to Xie's reasoning and he does have an excellent track record. I remain deflationary through Christmas but I'm still not willing to sell my inflation protected treasuries.
Mark, I'll note that Andy Xie's remarks suggest that trickle-up doesn't work either: if you give a poor person more money, they use it to consume cheap Chinese goods, which is then plowed into real estate malinvestment in China.
Perhaps we need to quit trickling. At a certain point, gimmicks no longer work and you have to fix the problems.
Unfortunately, it might not happen until after a sovereign default or three. Act II has barely begun.
Perhaps we need to quit trickling. At a certain point, gimmicks no longer work and you have to fix the problems.
Unfortunately, it might not happen until after a sovereign default or three. Act II has barely begun.
Who Struck John,
I'll note that Andy Xie's remarks suggest that trickle-up doesn't work either: if you give a poor person more money, they use it to consume cheap Chinese goods, which is then plowed into real estate malinvestment in China.
Yeah, I was pretty much stuck on the fairness part of the debate and not so much on the should we do it at all part of the debate.
The "cash for appliances" program was trickle up and all it did was make me even more bearish long-term.
That said, a trickle down approach might have increased production of appliances at a time when demand was so weak anyway. Perhaps Chinese investors would have hoarded them on our behalf? They'd probably want something to go in all those empty housing units.
At least with trickle down our consumers actually "won" the appliances. That's something I guess. Woohoo.
I'll note that Andy Xie's remarks suggest that trickle-up doesn't work either: if you give a poor person more money, they use it to consume cheap Chinese goods, which is then plowed into real estate malinvestment in China.
Yeah, I was pretty much stuck on the fairness part of the debate and not so much on the should we do it at all part of the debate.
The "cash for appliances" program was trickle up and all it did was make me even more bearish long-term.
That said, a trickle down approach might have increased production of appliances at a time when demand was so weak anyway. Perhaps Chinese investors would have hoarded them on our behalf? They'd probably want something to go in all those empty housing units.
At least with trickle down our consumers actually "won" the appliances. That's something I guess. Woohoo.
Oops. I meant to say...
At least with trickle UP our consumers actually "won" the appliances. That's something I guess. Woohoo.
(And to be clear the "won" is meant to be sarcastic, as is the WooHoo.)
At least with trickle UP our consumers actually "won" the appliances. That's something I guess. Woohoo.
(And to be clear the "won" is meant to be sarcastic, as is the WooHoo.)
Well, as you've just pointed out, "trickle up" doesn't do the job in a situation like this, at least not by itself. You get a pop from the spending and then it's gone. That might solve the problem if we were in a temporary downturn, but we're not. We've got structural problems that can only be met satisfactorily by increasing domestic fixed investment. I don't think you disagree with me on this.
What I'm not understanding is why the idea that cap-gains taxes might help the middle class as much or more than the wealthy seems to aggravate you so much (once people adjust their behavior to take advantage of it). To me, this is a wonderful thought! I understand that you think I'm wrong, but you're not just trying to punch holes in my hypothesis--you were calling me names right out of the box. (I'm not complaining about that, I'm used to it.) I don't like to step on people's toes unknowingly, so I'd like to know: Why does this bother you so much?
I'm genuinely puzzled.
What I'm not understanding is why the idea that cap-gains taxes might help the middle class as much or more than the wealthy seems to aggravate you so much (once people adjust their behavior to take advantage of it). To me, this is a wonderful thought! I understand that you think I'm wrong, but you're not just trying to punch holes in my hypothesis--you were calling me names right out of the box. (I'm not complaining about that, I'm used to it.) I don't like to step on people's toes unknowingly, so I'd like to know: Why does this bother you so much?
I'm genuinely puzzled.
Neil,
"I understand that you think I'm wrong, but you're not just trying to punch holes in my hypothesis--you were calling me names right out of the box."
I don't believe that I resorted to name calling in any of this. If I did, I apologize. I will say that you said this to me right out of the box though.
"[snark] As surprising as this may be, it's not all about you. [/snark] ;)
OK, got that out of my system."
In hindsight, I probably should have done us both a favor and backed out of the discussion.
"What I'm not understanding is why the idea that cap-gains taxes might help the middle class as much or more than the wealthy seems to aggravate you so much (once people adjust their behavior to take advantage of it)."
I do NOT believe that it will help the middle class. My parents were typical middle class. To the best of my knowledge, they NEVER paid any capital gains tax during their entire lives.
You assume that the tax cuts will provide increased spending on fixed investments and it will simply trickle down to the middle class. It could just as easily flow into fully automated factories and/or other productivity miracles designed to eliminate middle class jobs.
Consider 47,000 meter readers and Itron.
http://illusionofprosperity.blogspot.com/2009/10/capitalistsocialist-utopia.html
Once again, if you want to claim that we need to create fully automated factories to be more competitive globally, I'd probably have to agree. Surely there must be an alternative to simply handing the wealthiest among us tax breaks though.
I'll let you have the last word on this. I'm done on this topic.
"I understand that you think I'm wrong, but you're not just trying to punch holes in my hypothesis--you were calling me names right out of the box."
I don't believe that I resorted to name calling in any of this. If I did, I apologize. I will say that you said this to me right out of the box though.
"[snark] As surprising as this may be, it's not all about you. [/snark] ;)
OK, got that out of my system."
In hindsight, I probably should have done us both a favor and backed out of the discussion.
"What I'm not understanding is why the idea that cap-gains taxes might help the middle class as much or more than the wealthy seems to aggravate you so much (once people adjust their behavior to take advantage of it)."
I do NOT believe that it will help the middle class. My parents were typical middle class. To the best of my knowledge, they NEVER paid any capital gains tax during their entire lives.
You assume that the tax cuts will provide increased spending on fixed investments and it will simply trickle down to the middle class. It could just as easily flow into fully automated factories and/or other productivity miracles designed to eliminate middle class jobs.
Consider 47,000 meter readers and Itron.
http://illusionofprosperity.blogspot.com/2009/10/capitalistsocialist-utopia.html
Once again, if you want to claim that we need to create fully automated factories to be more competitive globally, I'd probably have to agree. Surely there must be an alternative to simply handing the wealthiest among us tax breaks though.
I'll let you have the last word on this. I'm done on this topic.
MoM,I am grieved to hear about the twins and worried about the Bursitis. Take care of youraelf.the parents will need emotional support for some time,losing children is no small thing,those emotional scars are deep and lifelong. Af dar as our government ("Our" government?) doing anything to cure the structural problems...The local PD picked up a drunk driver the other day,his second DUI in 2 days and 10th overall. He is as likely to get sober as DC is to respond to this crisis effectively,perhaps more so.
# posted by 
: 6:57 AM
: 6:57 AM
John Hussman has some persuasive thoughts on what current Fed policies will do to the dollar. Any reactions?
I'm sorry for your family's loss, MOM. Good luck to you and them.
I keep thinking of that donut graph you created a while back. We were in the middle of the center red zone then, and you had three possible trajectories. I guess we're in the one that slid through a bit of green, and then curved into an orbiting zone of red. There's not enough velocity to get us out of that zone anytime soon.
I keep thinking of that donut graph you created a while back. We were in the middle of the center red zone then, and you had three possible trajectories. I guess we're in the one that slid through a bit of green, and then curved into an orbiting zone of red. There's not enough velocity to get us out of that zone anytime soon.
The part of me that believes in conspiracies has often thought that this is planned. You move the majority of American workers into lower paying jobs. That makes us more competitive in the global workplace. Of course, it pushes down our standard of living too, but that seems to be acceptable, as long as the politicians, academics and other elites don't have their standard of living touched. It's the same part of me that thinks that the housing bubble was caused to get more property in the hands of the banks. I do try and keep that side of me under check, but some days it's hard.
David, I agree with Hussman pretty solidly.
You are already seeing the lower growth combined with lower interest impact foreign buying of some obligations.
Mark, in order to be competitive manufacturers for many items, we will need to extensively automate factories.
But automating factories doesn't mean that no jobs are created. Many jobs will be created. And without strong incentives to invest all of the capital, those factories won't be created.
In order to lift the standard of living of the average American, the absolute essential is to redress the trade balance. Otherwise the standard of living of the average American will continue to erode as the trade balance is redressed by cutting consumption.
So while I agree we should raise taxes to a certain extent, and while I am wholeheartedly against regressive measures such as sales taxes (which seems a lot like beating a car accident victim to try and make him get up and walk), any taxation plan which makes major capital investment unlikely to return a profit will overall cut living standards for the low and moderate income individuals among us.
You are already seeing the lower growth combined with lower interest impact foreign buying of some obligations.
Mark, in order to be competitive manufacturers for many items, we will need to extensively automate factories.
But automating factories doesn't mean that no jobs are created. Many jobs will be created. And without strong incentives to invest all of the capital, those factories won't be created.
In order to lift the standard of living of the average American, the absolute essential is to redress the trade balance. Otherwise the standard of living of the average American will continue to erode as the trade balance is redressed by cutting consumption.
So while I agree we should raise taxes to a certain extent, and while I am wholeheartedly against regressive measures such as sales taxes (which seems a lot like beating a car accident victim to try and make him get up and walk), any taxation plan which makes major capital investment unlikely to return a profit will overall cut living standards for the low and moderate income individuals among us.
Gordon - uh-huh. The doughnut just looked at current imbalances and possible choices, plus figuring out the effects of the possible choices.
I really don't have information to produce another one like that, because all things basically wait on the US Congress, and I am guessing they are going to do nothing until after the election.
One thing currently in effect that wasn't in the doughnut graph is Obamacare, but I really wouldn't know how to incorporate it, because it's impossible. It's really another version of "oil will cost $200 a barrel". Nope.
Another thing that wasn't in there was the financial reform bill. There are some extremely problematic aspects to that. I am working on that.
Since we haven't actually made any policy choices directed at redressing our trade imbalance, paying for retirements, etc, for the rest, the calculations in that graph are pretty good.
I really don't have information to produce another one like that, because all things basically wait on the US Congress, and I am guessing they are going to do nothing until after the election.
One thing currently in effect that wasn't in the doughnut graph is Obamacare, but I really wouldn't know how to incorporate it, because it's impossible. It's really another version of "oil will cost $200 a barrel". Nope.
Another thing that wasn't in there was the financial reform bill. There are some extremely problematic aspects to that. I am working on that.
Since we haven't actually made any policy choices directed at redressing our trade imbalance, paying for retirements, etc, for the rest, the calculations in that graph are pretty good.
Teri - Believe me, banks don't want the property. You can have no conception of just how passionately the banks don't want it.
And in all honesty, importing low-cost labor and keeping it low-cost by a modern sort of serfdom is just catering to some of the worst corporate impulses of this century. Both Democrats and Republicans fell for that one. They'll believe just about anything if you drag a few dollars through the Congressional cloakroom.
On the other hand, at least they aren't highly qualified Fed economists writing papers claiming that home prices have nothing to do with income, so when you stack the two groups up against each other, it does generate a little more compassion for the Congress Critters.
And in all honesty, importing low-cost labor and keeping it low-cost by a modern sort of serfdom is just catering to some of the worst corporate impulses of this century. Both Democrats and Republicans fell for that one. They'll believe just about anything if you drag a few dollars through the Congressional cloakroom.
On the other hand, at least they aren't highly qualified Fed economists writing papers claiming that home prices have nothing to do with income, so when you stack the two groups up against each other, it does generate a little more compassion for the Congress Critters.
Mark,
I'm sorry my snark offended you. I probably didn't achieve the bantering tone I intended.
The name-calling didn't offend me at all, it was all economic in nature; "supply-sider", "trickle down", claiming that my intent is inequality. No biggie, it just seemed out of character for you. Which is why I pried, even though I shouldn't have.
'Nuff said.
I'm sorry my snark offended you. I probably didn't achieve the bantering tone I intended.
The name-calling didn't offend me at all, it was all economic in nature; "supply-sider", "trickle down", claiming that my intent is inequality. No biggie, it just seemed out of character for you. Which is why I pried, even though I shouldn't have.
'Nuff said.
Ugh, "I'm sorry my snark offended you" should have been "I'm sorry I started off with a snark". I didn't mean to use the non-apologetic apology locution.
MOM-
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of foolish national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the ruling party . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover. Once burned, a person is mighty cautious around a stove; the rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of foolish national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the ruling party . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover. Once burned, a person is mighty cautious around a stove; the rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
# posted by : 2:54 PM
: 2:54 PM
MOM-
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of foolish national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the ruling party . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover. Once burned, a person is mighty cautious around a stove; the rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of foolish national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the ruling party . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover. Once burned, a person is mighty cautious around a stove; the rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
# posted by : 2:55 PM
: 2:55 PM
MOM-
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of poor national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the government . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover: Once burned, a person is mighty cautious around a stove. The rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
Deepest condolences for your family's loss. I pray for you and your family in this terribly difficult time.
Thanks for keeping up the remarkable economic analysis despite your trials.
After many year's observation of the economy vs. theory, I am of the opionion that the ONLY two things economics can tell us is 1.) the hard facts about the basics, and 2.) that we can not steer around those hard facts in either the short or the long run, or avoid the consequences of poor national policy.
Our wellbeing as a nation is exactly determined by the amount of things we produce, and the value per unit of those things. Our wellbeing as individuals does, too. Nothing can be done to change these basic facts.
We are seeing rational expectations - nearly $2 trillion in cash on corporate balance sheets - played out before our eyes. Unless and until Federal receipts perfectly match outlays ( $ 0 deficit ,) and grow at the same pace as outlays, the rational investor will expect that the Federal deficit will be financed by expropriation of corporate profit per the tax and healthcare plans laid out by the government . We will not see higher investment, followed by lower unemployment, unless and until the Fed deficit is 0. Until then, stagflation ala the '70's in Britain is OUR future.
Unfortunately, $0 Fed deficit will not be sufficient. The healthcare bill, if you look at it closely, represents yet another UNLIMITED claim on corporate income. The government appointed administrators can set liabilities at ANY LEVEL, without oversight, without Congressional approval. How should we expect that will work out, in practice? If I am a firm, or a private individual, should I invest in the US, with a $1.4 trillion Federal deficit, and corporate healthcare liabilities large enough to swallow 100% of US corporate profits, or should I invest in Canada ( Fed budget deficit, 0 healthcare liabilities for corporations.?) The competitiveness of US can only deteriorate from its present sorry state if these twin threats remain out in the real economy. Any investor would be a fool to ignore them. Taxes follow deficits.
When the US eliminates the deficit, repeals the healthcare bill, and stops force feeding other poison to the golden geese ( such as unpredictable, costly regulation, including wildly expensive and unpredictable environmental and other regulation, we can expect investment in the US/ employment to SLOWLY recover: Once burned, a person is mighty cautious around a stove. The rhetoric AND action these last 20+ years at the national political level has all been completely anti-investment.
Investment depends on expectation of profit.
# posted by : 3:00 PM
: 3:00 PM
No hard feelings, no worry. And I should say that I think we have no choice but to lower cap-gains taxes given our situation whether or not they lead to income inequality. But I also think it's probable that they won't increase inequality.
I accept the facts as listed in the table you linked (except for the $2000 median--that's for everybody in the U.S. under 70, half of whom haven't had much time to save yet), but really they demonstrate my point!
Those tables show that it is very difficult to save or make money in financial instruments. It is much easier to create wealth in non-financial assets. Look at the difference in value between the median financial assets and the median non-financial assets! Now, I realize that most of those non-financial assets are homes, but that is because they are not subject to cap-gains tax. Imagine if small businesses were also not subject to the cap-gains tax. Would we have had a housing bubble? Or would we have had a lot of productive real investment?
Unfortunately, paper financial instruments are the way to go if cap-gains are taxed, because they are fungible and can be sold off piecemeal to spread tax over time. So that's what everybody did, and we got bubbles in growth stocks and housing.
The cap-gains tax benefits people who are already cash-rich, and can manage their wealth to minimize the tax. It penalizes people who might become somewhat wealthy from the one or two big investments they have built up over their lives. It means you're better off working for a big corporation and socking cash away in a 401k than you would be creating your own wealth. Except for a house, because it's also tax-advantaged, which is why so many people do fixer-uppers to get the sweat equity. Think about all the enthusiasm and work people have put into houses and equities the last 15 years. Wouldn't they do the same in other ventures if there were no tax disadvantages? Wouldn't people have a better chance of success if they weren't all piling into the same few tax-advantaged markets?
My point is that the cap-gains tax has institutionalized behaviors in the middle class that reduce our total earnings. At the same time, it has lowered the productivity (and therefore employment and wages) of everyone who is employed. It does not seem obvious to me that changing this will increase inequality.
I accept the facts as listed in the table you linked (except for the $2000 median--that's for everybody in the U.S. under 70, half of whom haven't had much time to save yet), but really they demonstrate my point!
Those tables show that it is very difficult to save or make money in financial instruments. It is much easier to create wealth in non-financial assets. Look at the difference in value between the median financial assets and the median non-financial assets! Now, I realize that most of those non-financial assets are homes, but that is because they are not subject to cap-gains tax. Imagine if small businesses were also not subject to the cap-gains tax. Would we have had a housing bubble? Or would we have had a lot of productive real investment?
Unfortunately, paper financial instruments are the way to go if cap-gains are taxed, because they are fungible and can be sold off piecemeal to spread tax over time. So that's what everybody did, and we got bubbles in growth stocks and housing.
The cap-gains tax benefits people who are already cash-rich, and can manage their wealth to minimize the tax. It penalizes people who might become somewhat wealthy from the one or two big investments they have built up over their lives. It means you're better off working for a big corporation and socking cash away in a 401k than you would be creating your own wealth. Except for a house, because it's also tax-advantaged, which is why so many people do fixer-uppers to get the sweat equity. Think about all the enthusiasm and work people have put into houses and equities the last 15 years. Wouldn't they do the same in other ventures if there were no tax disadvantages? Wouldn't people have a better chance of success if they weren't all piling into the same few tax-advantaged markets?
My point is that the cap-gains tax has institutionalized behaviors in the middle class that reduce our total earnings. At the same time, it has lowered the productivity (and therefore employment and wages) of everyone who is employed. It does not seem obvious to me that changing this will increase inequality.
Neil,
"I accept the facts as listed in the table you linked (except for the $2000 median--that's for everybody in the U.S. under 70, half of whom haven't had much time to save yet), but really they demonstrate my point!"
It is not everybody under 70. It is every "head of household" under 70. The midpoint between 18 and 70 is 44. I would argue that 44 is a very typical age for the very typical middle class American.
Once again, my very typical middle class parents never did accumulate savings, other than the value of their home.
"Now, I realize that most of those non-financial assets are homes, but that is because they are not subject to cap-gains tax."
Like other typical middle class Americans, my parents a wanted a place to live and raise a family. That's why they bought a home.
If lowering capital gains taxation elsewhere will change that behavior as you suggest, then heaven help our already weakened housing market and the bulk of the nonfinancial "savings" of the middle class.
Just opinions of course.
I'm glad you were able to read my comments. They vanished as I posted them and I still can' see them. I do see 3 copies of a comment from David, so I just assumed something broke.
"I accept the facts as listed in the table you linked (except for the $2000 median--that's for everybody in the U.S. under 70, half of whom haven't had much time to save yet), but really they demonstrate my point!"
It is not everybody under 70. It is every "head of household" under 70. The midpoint between 18 and 70 is 44. I would argue that 44 is a very typical age for the very typical middle class American.
Once again, my very typical middle class parents never did accumulate savings, other than the value of their home.
"Now, I realize that most of those non-financial assets are homes, but that is because they are not subject to cap-gains tax."
Like other typical middle class Americans, my parents a wanted a place to live and raise a family. That's why they bought a home.
If lowering capital gains taxation elsewhere will change that behavior as you suggest, then heaven help our already weakened housing market and the bulk of the nonfinancial "savings" of the middle class.
Just opinions of course.
I'm glad you were able to read my comments. They vanished as I posted them and I still can' see them. I do see 3 copies of a comment from David, so I just assumed something broke.
Mark,
I did notice some weirdness with the comments.
Anyway, I think we've about beat this to death.
If I understand the table correctly (which I might not), $2000 is the median financial assets of every head-of-household under the age of 70. The fact is, what with kids, cars, and housing, most people don't have much cash until after they are 40 or so, at which point they begin socking it away, so I don't think that one proves much because of the step change in behavior near the median age.
What this comes down to is this: I think that if we change the tax laws, people will change their behavior to benefit from it. You think that behavior is more sticky. For example, you think your parents are a relevant example and I just don't see the point.
Ditto the effect of capital investment (such as automation) on employment. You see machines doing things that people used to do, and figure most of the people will never have as good a job as the one the machine made redundant. I see the same thing, and figure (given the greater resources now available) the people will get higher-value jobs fixing machines, making more complicated things, or installing the things the machines built.
Hopefully I've stated your beliefs correctly.
I don't think we're going to get any farther than that, although I would be fascinated to hear sometime the life experiences that lead you to these conclusions, which are so opposite from mine.
Post a Comment
I did notice some weirdness with the comments.
Anyway, I think we've about beat this to death.
If I understand the table correctly (which I might not), $2000 is the median financial assets of every head-of-household under the age of 70. The fact is, what with kids, cars, and housing, most people don't have much cash until after they are 40 or so, at which point they begin socking it away, so I don't think that one proves much because of the step change in behavior near the median age.
What this comes down to is this: I think that if we change the tax laws, people will change their behavior to benefit from it. You think that behavior is more sticky. For example, you think your parents are a relevant example and I just don't see the point.
Ditto the effect of capital investment (such as automation) on employment. You see machines doing things that people used to do, and figure most of the people will never have as good a job as the one the machine made redundant. I see the same thing, and figure (given the greater resources now available) the people will get higher-value jobs fixing machines, making more complicated things, or installing the things the machines built.
Hopefully I've stated your beliefs correctly.
I don't think we're going to get any farther than that, although I would be fascinated to hear sometime the life experiences that lead you to these conclusions, which are so opposite from mine.
<< Home
