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A healthy economy - macro view. - 12/1/2011 7:36:17 PM

DarkSteven

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One thing that's been bugging me a lot lately - how do we ensure a healthy economy? There's a lot of dogma running around, from protectionistic tariffs to Laffer curve stuff, that doesn't work.I'm trying to think of what does work, and then how to get it.

1. The middle class. A healthy middle class is key because they drive purchasing. There aren't enough wealthy people to spend, and the poor don't have much money. Note that this middle class does not have to live in America - exports are a great way to boost the national economy, because it essentially represents money magically appearing in the US economy.

2. Velocity of money. If $100 is spent once per year, it's one sixth as effective as if it's spent six times per year. Unfortunately, that also means that saving is counterproductive to economic strength.

3. New products/services. If I open up a restaurant in a city that already has restaurants, I will do nothing more than cannibalize their revenues. If I make $300K from my restaurant and employ eight people from it, presumably my competitors will earn $300K less and will let eight people go. As long as new business is in competition with existing business, it will not grow the economic pie larger as much as simply redistribute the same size pie.

If I create a new product or service, then the money I earn will be new. People may do some shifting around of discretionary income, but if my new product is sufficiently compelling, people will save less to buy.

Please chime in with your thoughts, and my apologies that my presentation is disorganized.

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RE: A healthy economy - macro view. - 12/1/2011 7:42:31 PM

BanthaSamantha

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Conquest is an excellent way to boost the national economy. Right now, we have one of the most advanced militaries that the world has ever seen, yet it isn't doing a whole lot to contribute to the economy. If we leveraged it to take resource rich portions of Mexico and Canada, we could boost the economy by both increased production as well as increased natural resources.

(in reply to DarkSteven)

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RE: A healthy economy - macro view. - 12/1/2011 7:42:45 PM

willbeurdaddy

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It is impossible to "ensure a healthy economy". Any attempt to do so through government intervention is destined to ensure that it is less healthy. The business cycle is as inevitable to economies as gravity. Attempts to avoid peaks and valleys ensure that the peaks will be lower and valleys will last longer.

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RE: A healthy economy - macro view. - 12/1/2011 8:08:03 PM

DarkSteven

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quote:

ORIGINAL: willbeurdaddy

It is impossible to "ensure a healthy economy". Any attempt to do so through government intervention is destined to ensure that it is less healthy. The business cycle is as inevitable to economies as gravity. Attempts to avoid peaks and valleys ensure that the peaks will be lower and valleys will last longer.

You're ahead of me. I'm still trying to figure out what the parameters of a healthy economy are, and you're already advocating means. After determining what end results are desired, THEN the question arises of how to get there. Government policy will be involved, even if it's to reduce government intervention.

Oh, another way to ensure a healthy economy (or more accurately, to prevent an economy from NOT being healthy) is to maintain good infrastructure. That means good roads and transportation, good utilities including Internet, and political stability.

_____________________________

"You women....

The small-breasted ones want larger breasts. The large-breasted ones want smaller ones. The straight-haired ones curl their hair, and the curly-haired ones straighten theirs...

Quit fretting. We men love you."

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RE: A healthy economy - macro view. - 12/1/2011 8:09:24 PM

MrRodgers

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quote:

ORIGINAL: willbeurdaddy

It is impossible to "ensure a healthy economy". Any attempt to do so through government intervention is destined to ensure that it is less healthy. The business cycle is as inevitable to economies as gravity. Attempts to avoid peaks and valleys ensure that the peaks will be lower and valleys will last longer.

This is an absolutely incorrect reading of economic history and the effects of govt. First The Smoot-Hawley (protective tariffs) bill rather than hurting the economy as the capitalist propaganda has fairly successfully convinced those that don't like to think for themselves, or can't, that it hurt jobs and GDP. In fact was followed by 6 of the next 8 yrs, with a trade surplus, one break even and the other 1 deficit. That helped save many millions of manufacturing jobs.

If it wasn't for $50 trillion in private debt, the fact that we have exported the vast majority of our manufacturing would have led to a permanent depression and hasn't because we borrowed.

The business cycle is another Orwellian term designed to have you think there is nothing one can do about it but yet govt. tries and almost always in the interest of business. That may be but it does not exist. Businesses go in human cycles...building too much in the face of demand and to little when demand falls.

You see the right wing capitalist propagandists tells you its fine for govt. to help out business and still part of the 'free market. ' [sic]
But for govt. to help people, oh its socialist or communist.

When govt. employs more people in the US than manufacturing, kinkroids...govt. does in fact create demand and does and can create jobs.

Germany may be the best example since WWII but they built a production/manufacturing economy of expert enhanced value but then Germany of today has statesmen not a extra-constitutional minority of right wing fascists worshiping money and power.

(in reply to willbeurdaddy)

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RE: A healthy economy - macro view. - 12/1/2011 8:11:08 PM

Termyn8or

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"Note that this middle class does not have to live in America - exports are a great way to boost the national economy, because it essentially represents money magically appearing in the US economy. "

Not magically. That's how the real world is, we need NEW money. Alot of people don't get it.

"Velocity of money. If $100 is spent once per year, it's one sixth as effective as if it's spent six times per year. Unfortunately, that also means that saving is counterproductive to economic strength. "

And this is undoubtedly what spawned the throwaway society. The problem is that we are moving too fast, but we must because if we don't we will be passed. If people were more realistic, and didn't need to reinvent the universe for every CES we would be better off. Products would have a longer life cycle. Planned obsolescence wouild not be the rule. What (most of) you see as progress is actually not. It's profit driven.

But now we are stuck in it so the only real solution is the breakdown of the system. I say structure the breakdown to minimalise the loss, but people say that's defeatist. They haven't crunched the numbers.

"3. New products/services. If I open up a restaurant in a city that already has restaurants, I will do nothing more than cannibalize their revenues. If I make $300K from my restaurant and employ eight people from it, presumably my competitors will earn $300K less and will let eight people go. As long as new business is in competition with existing business, it will not grow the economic pie larger as much as simply redistribute the same size pie."

Agreed, but I phrased it as "pushing around the same pile of money".

"If I create a new product or service, then the money I earn will be new. "

I think that depends on the source, but in a more abstract sense I have to agree. If you invent a new frazenstazit and people have to have them and it costs local restaurants that discretionary spending, I mean what are you supposed to do ?

I guess you just have to please the stockholders.

T^T

< Message edited by Termyn8or -- 12/1/2011 8:15:04 PM >

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Post #: 6

RE: A healthy economy - macro view. - 12/1/2011 8:16:09 PM

OrionTheWolf

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Well one thing based upon what you have written, is we need to stop money from leaving the country, or have it create a return back to the country if it does.

1) What does the US have to offer to gain money to come back into the country?

2) What industries can be increased to seize some of the markets overseas?

3) In a global economy, the mega corps really do not care where they make their money, how do we make them care?

4) The power elite are driven by money for their war chests to get re-elected, how do we remove that link so that politicians will focus on the problems in the middle?

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RE: A healthy economy - macro view. - 12/1/2011 8:31:06 PM

MrRodgers

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quote:

ORIGINAL: OrionTheWolf

Well one thing based upon what you have written, is we need to stop money from leaving the country, or have it create a return back to the country if it does.

1) What does the US have to offer to gain money to come back into the country?

2) What industries can be increased to seize some of the markets overseas?

3) In a global economy, the mega corps really do not care where they make their money, how do we make them care?

4) The power elite are driven by money for their war chests to get re-elected, how do we remove that link so that politicians will focus on the problems in the middle?

Good ideas and questions...all. None of those however will ever happen. It certainly doesn't matter what the 'people' think. We've already ceded the solar panel and conversion market among other technology markets to the Chinese gulag...so ? The future of America is impoverishment...simple as that.

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RE: A healthy economy - macro view. - 12/1/2011 8:36:54 PM

MasterSlaveLA

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quote:

ORIGINAL: DarkSteven

One thing that's been bugging me a lot lately - how do we ensure a healthy economy?

Promote a business-friendly environment (i.e., non-burdensome regulations, taxes, etc.), which will increase employment, and cash flow for purchasing goods (for both businesses and consumers) -- as well as supply cash flow for savings and/or investment.

Do this, and the cash flow within the economy will increase (thus, your new "restaurant" is now competing for NEW money, as cash flow/availability is not finite), and all will prosper. Do the opposite... increase burdensome regulations, increase taxes, and so forth, and both business/people will spend NOTHING... invest in NOTHING... start NO new businesses... will LAYOFF people (to preserve existing cash flow)... and NOBODY will prosper.

Summary: Allow everyone to keep MORE of their money and they'll spend/invest it -- and everybody wins.

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RE: A healthy economy - macro view. - 12/1/2011 8:41:35 PM

BanthaSamantha

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In all fairness, the US has one of the world's greatest economic juggernauts ever since the 40's, and has remained so until this day. I figure that whatever we've been doing for those 70 years or so has been good for America.

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Post #: 10

RE: A healthy economy - macro view. - 12/1/2011 8:44:23 PM

tj444

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Hmmm,.. I hope this hasnt been keeping you up at night..

How about another baby boom?

I dont think there is a way to ensure it and imo govt intervention only makes the cycles worse.. they have been trying for decades now and look at the latest friggin mess the govt(s) have made of the world...

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RE: A healthy economy - macro view. - 12/1/2011 8:52:53 PM

MasterSlaveLA

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quote:

ORIGINAL: BanthaSamantha

In all fairness, the US has one of the world's greatest economic juggernauts ever since the 40's, and has remained so until this day.

I'd disagree ---> http://www.usdebtclock.org/

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RE: A healthy economy - macro view. - 12/1/2011 8:55:58 PM

tj444

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quote:

ORIGINAL: MrRodgers
We've already ceded the solar panel and conversion market among other technology markets to the Chinese gulag...so ?

well,.. that might just be lost to the Saudis now...

Canadian researcher pioneers paint-on solar cell
Sargent, a Canada Research Chair in nanotechnology, has been working on, and talking up, paint-on solar cells for years.
And he has parlayed his ingenuity into a $10-million deal with the Saudi Arabians, who are looking to alternatives to help keep the energy wealth flowing.
Sargent's solar technology is still in the early stages but his Saudi backers, who recently announced a deal to licence his technology, describe it as a ``potential game changer.''

http://www.canada.com/technology/Canadian+researcher+pioneers+paint+solar+cells/5774518/story.html#ixzz1eyqmwGy7

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RE: A healthy economy - macro view. - 12/1/2011 8:56:32 PM

BanthaSamantha

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You're welcome to pull out of the American stock market and go invest in Europe or Asia, but I'm keeping my investments right here.

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Post #: 14

RE: A healthy economy - macro view. - 12/1/2011 8:58:52 PM

MasterSlaveLA

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You're confusing a safer (not safe) investment with a "great" economy. Two different things.

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RE: A healthy economy - macro view. - 12/1/2011 8:59:59 PM

BanthaSamantha

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I take great to mean great relative to the rest of the world's economies.

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RE: A healthy economy - macro view. - 12/1/2011 9:15:49 PM

DarkSteven

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quote:

ORIGINAL: MasterSlaveLA

quote:

ORIGINAL: DarkSteven

One thing that's been bugging me a lot lately - how do we ensure a healthy economy?

Promote a business-friendly environment (i.e., non-burdensome regulations, taxes, etc.), which will increase employment, and cash flow for purchasing goods (for both businesses and consumers) -- as well as supply cash flow for savings and/or investment.

Do this, and the cash flow within the economy will increase (thus, your new "restaurant" is now competing for NEW money, as cash flow/availability is not finite), and all will prosper. Do the opposite... increase burdensome regulations, increase taxes, and so forth, and both business/people will spend NOTHING... invest in NOTHING... start NO new businesses... will LAYOFF people (to preserve existing cash flow)... and NOBODY will prosper.

Summary: Allow everyone to keep MORE of their money and they'll spend/invest it -- and everybody wins.

I'm not following. If a business-friendly climate is established, what does that do? Is the assumption that businesses will be based in the US that otherwise would be based overseas? Or is it that without a business-friendly environment, businesses will not be started that have the markets to support them?

My basic assumption here is that if a market exists, a business will rise up to meet its needs. Your assumption seems to be that the existence of that business is not a given.

Employment will not be increased by a business-friendly environment, not directly. In my model, the only way employment will increase is if businesses have more revenue, allowing them the resources to hire.

I also don't follow your assertion that cash flow will increase. If that's due to reduced taxes, then that makes no sense to me - taxes redistribute money from the private sector to the public one. If the public sector then turned around and bought $1 million of goods and services, how is that different than the private sector retaining the money and spending the $1 million themselves?

I'm not saying that your ideas don't have merit, but I don't see them helping the economy.

_____________________________

"You women....

The small-breasted ones want larger breasts. The large-breasted ones want smaller ones. The straight-haired ones curl their hair, and the curly-haired ones straighten theirs...

Quit fretting. We men love you."

(in reply to MasterSlaveLA)

Post #: 17

RE: A healthy economy - macro view. - 12/1/2011 9:46:40 PM

MasterSlaveLA

Posts: 3991
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quote:

ORIGINAL: DarkSteven

quote:

ORIGINAL: MasterSlaveLA

quote:

ORIGINAL: DarkSteven

One thing that's been bugging me a lot lately - how do we ensure a healthy economy?

Promote a business-friendly environment (i.e., non-burdensome regulations, taxes, etc.), which will increase employment, and cash flow for purchasing goods (for both businesses and consumers) -- as well as supply cash flow for savings and/or investment.

Do this, and the cash flow within the economy will increase (thus, your new "restaurant" is now competing for NEW money, as cash flow/availability is not finite), and all will prosper. Do the opposite... increase burdensome regulations, increase taxes, and so forth, and both business/people will spend NOTHING... invest in NOTHING... start NO new businesses... will LAYOFF people (to preserve existing cash flow)... and NOBODY will prosper.

Summary: Allow everyone to keep MORE of their money and they'll spend/invest it -- and everybody wins.

I'm not following. If a business-friendly climate is established, what does that do?

As stated above, "...will increase employment, and cash flow for purchasing goods (for both businesses and consumers) -- as well as supply cash flow for savings and/or investment."

quote:

Is the assumption that businesses will be based in the US that otherwise would be based overseas?

That's certainly one possibility... if you create a climate where it's cost-effective to manufacture (for example) in the U.S. vs. overseas (China, for example), then those businesses would benefit by being based in the U.S. -- that is, assuming the bulk of their shipments are within the U.S.

quote:

Or is it that without a business-friendly environment, businesses will not be started that have the markets to support them?

This too... but keep in mind, the only reason an otherwise viable market could not support a local business, is because consumers lack the "cash flow" (discretionary/disposable income) to buy goods/services they would otherwise wish to buy.

quote:

My basic assumption here is that if a market exists, a business will rise up to meet its needs. Your assumption seems to be that the existence of that business is not a given.

There may be a "market", but in a bad economy, the business will not be sustained -- as consumers stop/slow spending out of fear.

quote:

Employment will not be increased by a business-friendly environment, not directly.

Of course it will... business-friendly environment = more NEW bussinesses = more jobs.

quote:

In my model, the only way employment will increase is if businesses have more revenue, allowing them the resources to hire.

Which goes to what I stated by eliminating "burdensome regulations, taxes, etc.". Doing so results in "more revenue".

quote:

I also don't follow your assertion that cash flow will increase. If that's due to reduced taxes, then that makes no sense to me - taxes redistribute money from the private sector to the public one.

Less Regulations/Taxes = Business Has More Revenues = They Hire People = Both have more revenue -- and with more people working, the Gov. collects more taxes, as more people to tax = more revenue.

quote:

If the public sector then turned around and bought $1 million of goods and services, how is that different than the private sector retaining the money and spending the $1 million themselves?

The "public sector" does't "bring in" any revenues from "goods and services" -- the "public sector" TAXES (confiscates) monies from the "private sector" who has sold its "goods and services". The public sector CREATES NOTHING -- just an environment that either encourages or discourages private sector growth/revenues.

quote:

I'm not saying that your ideas don't have merit, but I don't see them helping the economy.

My "ideas" are Business 101. More money for business and consumers = a healthy economy. Less money = shit economy.

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Post #: 18

RE: A healthy economy - macro view. - 12/1/2011 10:23:06 PM

NeedToUseYou

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The only thing that "raises" all boats, is "new" products that allow you to either do something more efficiently than before, or something "useful" that you weren't able to do before. Restaurants are old "tech" if you want to call it that, and unless they do something innovative, I would not consider another Mcdonalds as "real" economic growth. Same thing for another Wal-Mart, K-mart etc..., as all those businesses are chasing those dollars that already were going to be spent.

So,even an improved more efficient can opener, would have a small "real" positive effect on the economy, as people will spend money to save time, and that sometimes is money they wouldn't have spent at all if it had not been created, as people and businesses value time. However, created another trash novelty product has no "real" effect.

That's it. Right now, IMO, the only single thing that will save the US economy in a real sense, is a new "product" that will allow us to be more "efficient" in our creation of energy. IF you look at the numbers, the largest portion of our deficit is caused by oil importation. Many business aren't feasible at current energy costs. We export thousands of jobs for oil, we pollute the land and air, only to incur costs in the future to simply return the those to a near original state.

I think computers as a growth driver will be tapped out shortly (driver of growth, as opposed to simply matching growth of the overall economy), the internet probably has another decade at best before it starts to stagnate and become "old" tech, that won't drive growth much anymore. So, we are definitely due a new driver for the economy. And really I think it will be energy production storage, as it seems to be the case that even the "greedy" capitalists are starting torealize the basic fact that growth requires more cheap energy if they wish to exploit the half of the world population that consumes almost nothing.

It's all energy, efficiency, time.

That's why if there was one thing I could actually not feel disgusted about the government funding, it would be a "SERIOUS" trillion dollar effort to produce a new or improved method of commercial energy production (Energy dependence is far more of a threat than any thing else) with the patents put into the public domain, whether that be solar, wind, what the hell ever, it's our only hope, IMO.

And really if you look at it from a global perspective, cheaper energy is what is required if we ever want Africa, large parts of Asia, and even people in our own country to all be able to live at least minimally humane existences.

But we aren't we spend the money, energy and intellect blowing up shit, and building more dumb ass missiles.

So, I do not understand it, Capitalists should be dumping money in new energy research, hippy tree huggers should be, those that advocate for the poor in this country and around the world should be, hell the only people that have any incentive not to is the most narrow minded oil company and even some of them are investing some amount.

I'm tired, so probably spelling errors etc.... don't taze me, bro.

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Post #: 19

RE: A healthy economy - macro view. - 12/1/2011 10:31:58 PM

MasterSlaveLA

Posts: 3991
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quote:

ORIGINAL: NeedToUseYou

The only thing that "raises" all boats, is "new" products that allow you to either do something more efficiently than before, or something "useful" that you weren't able to do before.

I'd disagree. One could creat the greatest product in the world, but if people don't have the money to buy it... then it's doomed to fail. Still a great product, just no buyers. That's what happens in a shitty economy... everyone (business and consumers) STOP SPENDING out fear, among other things.

Example: Tons of WONDERFUL homes out there, yet people aren't buying -- hell, even if they can afford it. FEAR!!!

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