Open thread Oct. 31. 2014 Dan Crawford | October 31, 2014 7:06 am Tags: open thread Comments (3) | Digg Facebook Twitter |
OBAMA ENDS “INEQUALITY” AS AN ISSUE AFTER PRIVATE POLLING:
“Democratic Sen. Charles Schumer (D-NY) candidly admits that internal polling data proves the class warfare and soak the rich rhetoric is an election loser.
” ‘There are some who believe it’s better to talk about the negative parts of wealth that people have accumulated, but our polling data show people care less about that and more about how we’re going to help them,’ said Schumer.”
Cut to CENRALIZED BARGAINING:
Denmark has no minimum-wage law. But Mr. Elofsson’s $20 an hour is the lowest the fast-food industry can pay under an agreement between Denmark’s 3F union, the nation’s largest, and the Danish employers group Horesta, which includes Burger King, McDonald’s, Starbucks and other restaurant and hotel companies.
It would help if Obama and aids were not helpless to know what actually might reverse so called “inequality” (I prefer “Great Wage Depression) — and reinstate the average American’s political clout at the same time: re-unionization in the only for that defeats the race-to-the-bottom.
It would help if progressives of any ilk would pick up on the only labor system that guarantees a just and bountiful society anywhere in the world. How come we have Marxists but we don’t have centralized bargaining oriented trade unionists? ???
(all emphasis mine)
Paul Krugman reminds us that American economists were scathing in their criticisms of Japan’s handling of their economic problems back in the 1990s. And he suggests that apologies might be in order.
After WWII, economists came to believe that the correct monetary and fiscal policies would end any depression. So if the US central banker (the Fed) and the US federal government had the will to pour money into the economy, we would have recovered. And that would also be true of Japan and Europe. Paul Krugman undoubtedly still believes that to be true.
I believe that they learned exactly the wrong lessons from the Great Depression. Hint, when you are pouring huge amounts of government borrowed money into your economy, your GDP will go up, but when you quit pouring government money into your economy then your GDP will go down. That is the lesson of 1937.
We are now in the process of proving that monetary and fiscal policies can not end depressions. We should be dealing with our fundamental problems but mainstream economists will not recommend that until they have tried everything else.
Japan has a simple fundamental problem. They have an export based economy, they depend on exporting finished products to pay for imported raw material and to fund their domestic economy. But after about 1990 they had to compete with the rest of southeast Asia for the US and European import markets. That problem can not be solved by monetary or fiscal policies and no Japanese economist is going to suggest lowering Japan’s standard of living. What else is there?
Europe’s fundamental problem is that the EU has economically healthy countries and economically poor countries, and those healthy economies depend on at least some exporting to their poorer EU neighbors and to the US. The poorer EU countries ran up huge debts and then their demand for goods fell. When US consumer demand fell, the EU was in deep trouble. That problem can not be solved by monetary or fiscal policies. Any solution to the EU’s problem is going to be painful too.
The fundamental problem in the US is that Global Free Trade policies allowed US companies to move production overseas. This left American workers with less and less power to negotiate higher wages. As wages stagnated over the last 25 or 30 years, consumers began to borrow more and more money. Eventually, in the aggregate, they had borrowed as much as they could borrow. Then in 2008, simple truths took over. Consumers can not spend what they do not have, and producers will not produce what they can not sell. That problem can not be solved by monetary or fiscal policies.
WE NEED TO IMPROVE THE ECONOMIC HEALTH OF AMERICAN CONSUMERS, LESS DEBT AND HIGHER INCOMES. AND NOT JUST SOME TEMPORARY BANDAID SOLUTION. We are the world’s net importer, so unlike the Japanese and the Europeans, we could improve our lot by raising tariffs and forcing production back into this country. But practically the only thing that American economists agree on, is that Global Free Trade must continue.
So here we are, debating which kettle is blacker and waiting for a miracle.
A couple weeks ago Edward Lambert claimed to be a great seer of why the stock market was tanking:
“Dow Jones stock index continues downward. Why? The future will be disappointing. So these future disappointments are already being priced in. Why wait for the bad data? We know its coming…
If an economist does not know when the business cycle will end, they will make serious errors in judgement. My advantage over the great economists of our time is that I found a theory of effective demand that determines the end of the business cycle. I could see things that they could not…
The stock markets are aware that the business cycle has ended. The Fed and prominent economists are simply behind the curve in understanding that.”
Since then, the Dow has somehow miraculously recovered and just hit an all-time high. Will we now hear from Mr. Lambert about how his brilliant “discovery” of the effective demand equation explains that?