Brad DeLong's Semi-Daily Journal (2004)

those communists at the Financial Times are really something, aren't they?

Read:
Professor Paul Krugman
"Whither America?"
London School Of Econonics
Wednesday 26 May 2004

My sis belongs to a Detroit Chamber of Commerce women's league, and has admitted to me her group promises a most unusual and satisfying 9/11 to the men of their choice, as a way to counter the hijacking of the 9/11 WTC tragedy by Bushites.

"Guaranteed to keep the TV turned off", she said.

This RNC NYC might be a good thing for us guys, if sis's idea catches on around the country! Gonna have to dig out my Marvin & Barry tapes.
Whoo-hoo, imagine the baby boom in June 2005!

Would one of your sis's CoC friends *please*
make sure Donny Rumsfeld gets laid on 9/11!!
Wow, what if the DAR ladies try to outdo 'em!
Smiling Republican National Conventioneers,
and all those hookers on Broadway out of work.

Would one of your sis's CoC friends *please*
make sure Donny Rumsfeld gets laid on 9/11!!
Wow, what if the DAR ladies try to outdo 'em!
Smiling Republican National Conventioneers,
and all those hookers on Broadway out of work.

I guess Mr Hindery does not consider the unprecedented increase in value of peoples homes the past 5 years as benfiting the general population or the economy as whole.

Brad,
Does it seem to you that the Bush tax cuts were ever actually aimed at stimulating the domestic economy of the US? To me, that doesn't seem like their intention. Rather, it seems the Bush tax cut program was intended to (and thus designed to) increase the profitability of removing capital from corporations and returning it to the stockholders, concentrating the wealth produced by the economy rather than increasing economic activity per se, along the lines of the "capital formation/trickle down" ideas of the Reagan era.

To claim that dividend tax cuts, inheritance tax cuts, and individual income tax cuts slanted towards those with very high incomes are intended to stimulate business activity ignores the fact that each of these tax cuts increase the benefits of extracting capital from businesses and giving it to individuals, resulting in pressure to turn retained earnings to stockholders rather than to invest retained earnings in plant, equipment, training, product development, etc.

Given the design of the Bush tax cut program, why is it that economists are not publicly challenging not just the effectiveness of Bush's economic program, but Bush's intentions for the economy as revealed by the design of his economics? To me it seems like one of the major problems that the American economy has is not that the Bush tax cuts aren't working to stimulate the economy enough, but that they are in fact working just as they were designed.

Extractive, concentration of wealth plans do not stimulate economic activity but instead do just the opposite, except in those unusual cases where investment capital is in short supply because massive amounts of capital are frozen in obsolete business structures and need strong incentives to be returned to the market. Reducing the economic incentive for managements to invest in increasing business activity and increasing the incentives to extract retained earnings in ways which send the rewards to those who are already the best compensated is not primarily a pro growth policy. The incentive becomes to remove capital from the national investment pool and place it in countries whose policies favor increasing business investment, not only because the domestic economy must carry an extra burden of the resulting budget deficits, but the reduced incentives for economic growth make capital expansion far less certain, as the markets have reflected during the Bush years.

The intention behind this design and its consequences for the economy seem to me to be key political issues, in that the previous (Clinton) administration not only pursued opposite policies, but that the policies of the previous administration resulted in a far superior macroeconomic performance because they were, unlike the current administration's policies, intended to do just that.

Bush is right, we don't need boom-or-bust type growth. Much better to have just the bust kind!

Larry writes: "I guess Mr Hindery does not consider the unprecedented increase in value of peoples homes the past 5 years as benfiting the general population or the economy as whole."

And this results in increasing home valuations, which can lead to higher property taxes. Values, and taxes, have been rising so fast in Illinois that the state passed a law capping tax increases at 7%.

Unfortunately, peoples' incomes aren't necessarily rising fast enough to keep pace with property tax increases and other costs that are rising rapidly.

If your income isn't rising, but your taxes and expenses are rising, you're not going to feel any better off. Unless you're wealthy enough that you're numb to such problems. (ie, Bush's base).

Good point BC.

You can add to the policies favoring extraction of money from business by wealthy individuals the policy of favoring extraction of money from government by wealthy individuals. The national debt now stands at over $7.3 trillion, up from the under $5.7 trillion owed when Bush took office. Junior will run up more debt than his father did, a new four year record.

Instead of collecting $1.6 trillion in taxes, we are now paying interest on bonds sold to finance the additional $1.6 trillion in government borrowning. This is not a stimulus. It is a giant transfer of wealth from the government to the very wealthy.

The FT article nicely summarizes why I have been disenchanted by Bush policy from the very beginning.

Larry wrote: "I guess Mr Hindery does not consider the unprecedented increase in value of peoples homes the past 5 years as benfiting the general population or the economy as whole."

Living in DC, one of those housing bubble markets, we have definitely seen an increase in our property taxes as property values have increased. One of the things Larry doesn't actually get about this type of bubble market is this. If the value of your home has increased by 35% or even 50%, you never actually reap the increase in value unless you sell your property. If you sell, but plan to remain in the area, you end up rolling over your entire profit into another property in the same town(gotta live somewhere) where the value of the new property is ASLO inflated by 35-50%. The only way I could capitalize on my increased property value would be for me to move out of DC to a cheaper part of the country.

locus is almost completely correct (which is why I have a hard time buying the idea that a 'wealth effect' arising from housing leads to increased consumption).

There is an exception to her point, however; people nearing retirement in places like DC do get a benefit, because they can either downsize their housing or move to a relatively cheap place such as Florida and Arizona and live off their capital gains.

Yes, Richard. However, this benefits those who bought more than a few years ago, *and* sell soon.

JOHN KERRY WOULD BE A DISASTER AS PRESIDENT BECAUSE…

He has no record or, more importantly, no advisors with a record of successfully conducting foreign policy because they are afraid of war and against war as an instrument of foreign policy.

The first question I will answer is;

IS WAR A LEGITIMATE ANSWER TO PROBLEMS BOTH FOREIGN AND DOMESTIC?

My answer is yes and I cite:

1 – The first great democracy, Athens, was a military state that gained prominence through military conquest and used the spoils to promote the greatest culture of its time.

2 – Aristotle’s most illustrious student, Alexander, spread Hellenistic Civilization throughout the known world enrichening the lands he conquered.

3 – The Romans, most notably under Julius Caesar, further spread their Greek derived civilization, by military conquest, to the Western lands not reached by Alexander civilizing the barbarians of Britain, France, Germany, Spain and Portugal.

4 – The Prophet Mohamed spread his civilizing religion militarily.

5 – Charles Martel, at the battle of Tours, stopped the Muslim invasion that would have turned Western Europe into an Islamic Caliphate and destroyed Western Civilization forever.

6 – William Duke of Normandy conquered Anglo Saxon England enrichening the language and culture of those little islands to the point that English became both the language and wellspring of the democratic capitalism that has done the best job of all competing political systems of alleviating the miseries of the great masses of humanity while greatly enrichening them.

7 – The Medieval Wars of Religion reformed Christianity and removed the deadening heel of the Papacy from the neck of Christian Europe.

8 - It was the American Colonists military prowess that allowed them to break free of the British Monarchy and create the greatest Democracy ever.

9 – The Civil War eliminated the “original sin” of slavery.

10 – World War I stopped the first German drive to enslave all Europe.

11 – World War II stopped the second drive of Germany to enslave Europe and the drive of Imperial Japan to enslave all Asia.

12 – The Korean War stopped the advance of Communism in that peninsula.

13 – The Vietnam War stopped the advance of Communism in Southeast Asia.

14 – The gulf War liberated the Kuwaitis and removed a threat to the petroleum lifeline of Civilization.

15 – The Afghanistan War liberated her people from their Taliban and al Qaeda oppressors making America safer.

16 – The Iraq War liberated her people from a murdering despot, removed an al Qaeda ally and source of WMDs from power making America safer.

Therefore it should be clear...

http://pep.typepad.com/public_enquiry_project/2004/08/john_kerry_woul_1.html

Wow, that Spidle guy is really taken with himself.

Richard - Florida and Az are no longer as cheap as they were, because all those people who bought with their capital gains drove up housing prices there, too. The bigger question is, with wages failing to keep pace with inflation (and further behind the cost of housing), how does a family buy their first house anymore? Anything in my area under $150,000 is a teardown. Even with an FHA zero-down at 4.25% VAR, with taxes and insurance, you're looking at a $900/month payment. If housing should be no more than 30% of your gross income, that's $36,000 a year, or $17.31/hr. Most jobs in our area pay around $15.

Wow, that Spidle guy is really taken with himself.

Richard - Florida and Az are no longer as cheap as they were, because all those people who bought with their capital gains drove up housing prices there, too. The bigger question is, with wages failing to keep pace with inflation (and further behind the cost of housing), how does a family buy their first house anymore? Anything in my area under $150,000 is a teardown. Even with an FHA zero-down at 4.25% VAR, with taxes and insurance, you're looking at a $900/month payment. If housing should be no more than 30% of your gross income, that's $36,000 a year, or $17.31/hr. Most jobs in our area pay around $15.

So to afford something liveable, you need around $20/hr. It's just not happening here.

The Republicans are the agents of the Banana Republicing of America. First you lose your freedoms, then you lose your wealth.

If you want to live like a Republican, go get yourself born into a well-off Republican family and continue to vote to protect your privilege and to keep others from acquiring it.

It's not the only way, but it's probably the safest bet.

Then again, who wants to live like a Republican? Sure, I want to be rich, but I can do without the golf games and prayer breakfasts.

Could someone please ask the IRS to look into cancelling the AmCham's non-profit status since they have decided to abandon their neutrality and become a partisan campaign organization? Thanks!

Could someone please ask the IRS to look into cancelling the AmCham's non-profit status since they have decided to abandon their neutrality and become a partisan campaign organization? Thanks!

1 – "The first great democracy, Athens, was a military state that gained prominence through military conquest and used the spoils to promote the greatest culture of its time." It then overreached itself militarily (read Thucydides) and was marginalized within a generation.

2 – "Aristotle’s most illustrious student, Alexander, spread Hellenistic Civilization throughout the known world enrichening the lands he conquered." He too overreached and died prematurely, whereupon his empire promptly disintegrated.

3 – "The Romans, most notably under Julius Caesar, further spread their Greek derived civilization, by military conquest, to the Western lands not reached by Alexander civilizing the barbarians of Britain, France, Germany, Spain and Portugal." Within a century of Caesar's death (killed by those who feared his autocratic tendencies), Rome was a decadent, exploitative, empire that was already beginning to show signs of decay.

4 – "The Prophet Mohamed spread his civilizing religion militarily." Until Islam overreached, see below, and has been in decline ever since

5 – "Charles Martel, at the battle of Tours, stopped the Muslim invasion that would have turned Western Europe into an Islamic Caliphate and destroyed Western Civilization forever." Given the admiration expressed in 4 above, is this a good thing?

6 – "William Duke of Normandy conquered Anglo Saxon England enrichening the language and culture of those little islands to the point that English became both the language and wellspring of the democratic capitalism that has done the best job of all competing political systems of alleviating the miseries of the great masses of humanity while greatly enrichening them." William the Conqueror destroyed the "English-speaking culture" of the time, and introduced French culture and customs. It was only centuries later that the benefits Spidle refers to occurred.

7 – "The Medieval Wars of Religion reformed Christianity and removed the deadening heel of the Papacy from the neck of Christian Europe." They also devastated Central Europe and France, setting back economic and political development by at least a century.

8 - "It was the American Colonists military prowess that allowed them to break free of the British Monarchy and create the greatest Democracy ever." The colonists' victory had much more to do with British forces being overextended by other wars and conquests than with their military prowess.

9 – "The Civil War eliminated the “original sin” of slavery." Although some still seem to think the wrong side won.

10 – "World War I stopped the first German drive to enslave all Europe." And created conditions for the rise of Communism, Fascism, and Nazism. See 11 below.

11 – "World War II stopped the second drive of Germany to enslave Europe and the drive of Imperial Japan to enslave all Asia." The Axis powers initiated the war so that they could acheive their objectives militarily. Didn't seem to work terribly well for them.

12 – "The Korean War stopped the advance of Communism in that peninsula." That war is not over yet.

13 – "The Vietnam War stopped the advance of Communism in Southeast Asia." I think the Cambodians and Laotians might disagree.

14 – "The gulf War liberated the Kuwaitis and removed a threat to the petroleum lifeline of Civilization." It also created or exacerbated the conditions that led to 15 and 16 below.

15 – "The Afghanistan War liberated her people from their Taliban and al Qaeda oppressors making America safer." Way too early to make any of these claims.

16 – "The Iraq War liberated her people from a murdering despot, removed an al Qaeda ally and source of WMDs from power making America safer." Iraq was not an Al Qaeda ally, nor--apparently--was it a source of WMD after 1991.

The pattern here is one of empires overextending themselves and disintegrating when they can no longer sustain their dominance. I hope that the United States isn't next. Spidle also ignores the unintended consequences of war in his "analysis."

Meanwhile we have one country that already has WMDs (North Korea, from the "successful" Korean War), and another that is actively seeking to obtain them (Iran, which--unlike Iraq--has also been a long-standing actual threat to the United States). I don't notice the United States gearing up to attack either of these actual threats.

>I guess Mr Hindery does not consider the unprecedented increase in value of peoples homes the past 5 years as benfiting the general population or the economy as whole.

Monetizing debt is not an increase in value.

Ratese of economic growth under the last ten presidents:

JFK - 5.49%
LBJ - 5.12%
Clinton - 3.57%
Carter - 3.42%
Reagan - 3.37%
Ford - 3.03%
Bush II - 2.73%
Nixon - 2.54%
Ike - 2.27%
Bush I - 1.90%

So apparently, for the CoC, distributional issues trump the size of the pie!

Somehow, the figures for Ike do not seem correct. The Fifties had less economic growth than the Seventies? Doesn't seem true. Also, the rates for Carter seem awfully high.