US economy doing great, on account of everybody else being kind of fucked
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Hiring slowdown? Brexit scare? U.S. economy ploughs ahead
The Federal Reserve was so worried about the U.S. economy just a month ago that it put off a long-anticipated increase in interest rates to see how things...
Especially good news for me to hear, right after reading an article about how hard it is to even buy food in Venezuela.
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Yeah, the world economy is kind of screwed up right now. Lots of credit contractions are happening simultaneously.
The US has a big opportunity to actually improve its productive capacity and welfare, but it has to capitalize on its strengths on the global market.
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@Captain Now is clearly the time to elect a xenophobic jingoist government!
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@Weng Yeah, we'll screw it up somehow. With a $15 minimum wage, probably. Or T.Rump.
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Pick your lie.
Xenophobic liberal that says he is conservative.
Racist liberal that says she can manage classified information.
(oh, and good catch on the subtle difference between xenophobia and racism)
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@Weng said in US economy doing great, on account of everybody else being kind of fucked:
@Captain Now is clearly the time to elect a xenophobic jingoist government!
Kick 'em when they're down! I like the cut of your jib.
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For the head of Syria is Damascus, and the head of Damascus is Rezin.
-- Isaiah 7:8Nearly 3,000 years ago, the Hebrew prophet Isaiah pointed out that, in many cases, you can understand the behavior of a large and complex system by understanding its most significant sub-component. This is an important point to keep in mind when talking about modern economics, for the head of the economy is consumer spending, and the head of consumer spending is the largest demographic group: the Baby Boom generation.
This is true more or less uniformly throughout the world, at least among the nations that participated in World War II, on account of the Baby Boom being a direct result of World War II. The story of the American economy, and the economies of all developed nations, since the 1950s has been the story of the life of the Boomers. As Randall Munroe pointed out, "Every year, American culture embarks on a massive project to carefully recreate the Christmases of Baby Boomers' childhoods." Why? Because they're the ones with all the money to spend at Christmastime!
Problem is, that's been changing recently. You've probably heard about it. Can you fill in the blanks: "the Baby Boomer _________ Crisis"?
I'm talking about retirement, of course.
When one person retires, that's not such a big deal. It can be kind of pleasant, really. They get to relax and rest from their labors, to enjoy the life they've spent their productive years building up, and have fun spoiling the grandkids. With recent advances in medical science, today's retirees have it better than ever.
The problem, though, comes when the people who have for all intents and purposes been synonymous with the world economy begin to shift en masse from driving it to dragging it down, because when people retire, they spend less. When people prepare to retire, they spend less, cutting back on buying things they don't need, paying down debts and saving up for when their income gets sharply curtailed.
Why is this important? Because the simplest basically-accurate heuristic to determine the size and health of the economy is
money supply * money velocity, where "money supply* is the amount of total money in the system, and money velocity is how quickly it's changing hands. (If I receive $100 from my employer, and then I go and buy $100 worth of groceries and household goods, this contributes $200 of productivity to the economy. The stores then take my money and use it to pay their employees and their suppliers, and it continues moving around, continually doing more with the same amount of money.)When the Boomers cut back on their spending, this brings the money velocity down, with noticeable diminishing effects on the overall economy. When the economy slows down like that, we call it a recession, or sometimes a depression, depending on [insert econo-technobabble here] reasons.
Compounding the problem further, the Boomers have done an abysmal job of preparing for retirement, and are busy scrambling to catch up now. (Remember the 80s and "conspicuous consumption"? Yeah, that was them.) So money velocity is plummeting as the biggest spenders all try to spend less and less, pay down debts, and downshift to more manageable lifestyles all at once.
Remember the economy equation?
money supply * money velocity? This implies that if the one decreases, you can prop up the total by increasing the other side. And sure enough, central banks around the world have been busy for years trying to combat falling money velocity with increased money supply. (You may have heard of it referred to as "money printing." The technical details are far more complicated than that, but the basic imagery is accurate enough.) However, as anyone with a basic understanding of middle school-level arithmetic can understand, as you decrease one side of a multiplication equation like this, the amount you need to increase the other side by to balance it out grows disproportionately. This is disturbing for two reasons.First, the Boomer retirement wave has just gotten started, and already central banks have had to "print" enormous amounts of money just to break even, to the point where many economists believe they're essentially running out of political capital to keep doing this, but the underlying problem's not going away anytime soon, and in fact it's accelerating!
Second, what they did with their printed money was mostly worthless: propping up banks and financial markets to keep them secure, in the hopes that they would start making more loans and get money flowing around the economy again. Problem is, the underlying reason for the economic slowdown is people not wanting to spend, and particularly not wanting to go into debt to do so because they're currently trying to pay down their debts. In essence, the vast majority of the monetary stimulus of the post-2008 days has been wasted "pushing on a rope" and wondering why it wouldn't move!
The problems continue to compound in unexpected ways. For example, depressing interest rates, which is designed to make borrowing and spending more attractive, has the knock-on effect of making it much harder to safely grow investments. (Such as... retirement accounts!) This means that people we expect to be retiring are staying in the workforce longer, trying to hold onto their income long enough to pay down their debts and save up, which means that they're not leaving the workforce and "making room for" up-and-coming Millennials right at the time period when they should be establishing themselves.
This is not the first time that that particular problem has come up in the USA. We saw it in the 1930s, and President Roosevelt came up with a brilliant(-ish) solution: bribe them to retire and get out of the way with a pension fund drawn from the earnings of the rising generation who they'd be getting out of the way of. They can't really do that again, though, because that program is still around, and it's not enough. It's expected to run out of money before the bulk of the Baby Boom generation runs out of life.
There have been several propositions to remedy this particular problem. Some people on the conservative side of the spectrum like to point out that when Social Security was first established, the retirement age for the program was actually a few years higher than the average American life expectancy, but the latter has gone way up in the last 80 years and the former... not so much. Raising the retirement age would certainly help with Social Security solvency, but it would just make the problem of people not retiring and making way for the rising generation that much worse!
On the other side of the aisle, liberals staunchly oppose any cuts in retirement benefits or payout schedules, preferring to point out that the taxes that support the system fall disproportionately on the backs of the working class: if your income is below $118K/yr, as is true for essentially all of the "99%", you pay FICA on your entire income. If you're above that line, though, you only pay on the first $118K. Since many of the people who are above that line are significantly above that line, the narrative goes, simply removing the cutoff point would bring in a lot more money. (How true this is, of course, is unclear, since there are high incomes involved here, but comparatively few of them. That's the downside to targeting a group that your own rhetoric calls "the 1%": there's only 1% of them!)
Just to make things worse, of course, the reason that Social Security has worked as well as it has so far is because there were a lot of people paying to support a comparatively low number of retirees, because they'd had lots of kids to support them--the classic "retirement plan" since the dawn of time. But there, too, we have a big problem. Remember the 70s and "zero population growth"? Guess who...
So the situation as it exists today is a large demographic that's (collectively, even if individual counterexamples exist) spent its entire life not saving up or planning for the future, and now that the future's arrived, they're shifting the burden of caring for them squarely onto the shoulders of a comparatively small replacement population that's already struggling to make ends meet for themselves, let alone anyone else!
The US economy is really hurting, but for a variety of reasons it's hurting a lot less than anyone else; we're essentially "the best house in a bad neighborhood" right now. And that makes us look like we're "doing great", because we are by comparison, if not by any objective standard.
Just remember, this is just getting started. Batten down the hatches. No matter who gets elected; the next 4 years are going to be a really rough period!
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@masonwheeler I didn't read a word of that.
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@blakeyrat said in US economy doing great, on account of everybody else being kind of fucked:
I didn't read a word of that.
What else is new?
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@blakeyrat said in US economy doing great, on account of everybody else being kind of fucked:
@masonwheeler
I didn't read a word of that.another masonwheeler sighting!
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@masonwheeler said in US economy doing great, on account of everybody else being kind of fucked:
Raising the retirement age would certainly help with Social Security solvency, but it would just make the problem of people not retiring and making way for the rising generation that much worse!
That depends on how much you raise it by. Also, it's a brave politician indeed that votes to make people work for longer in the near future. Changing it for people further out is politically easier, though there's a problem there that there is more likely to be political tinkering the other way instead as a way to attract more votes from older people. The mix of politics and finance makes this all rather nasty, and the US doesn't have that big a problem as they can still grow the working age population relatively easily via immigration.
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@dkf When a politician promises not to do it to get elected, then does it anyway, it's no longer brave, it's suicidal.
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@Khudzlin said in US economy doing great, on account of everybody else being kind of fucked:
@dkf When a politician promises not to do it to get elected, then does it anyway, it's
no longer brave, it's suicidalbusiness as usual.FTFY
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@masonwheeler It's business as usual for politicians to renege on their campaign promises. But to do so to when they would come under fire even if they had made no promise is a great way to not be reelected.
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@dkf said in US economy doing great, on account of everybody else being kind of fucked:
the US doesn't have that big a problem as they can still grow the working age population relatively easily via immigration.
But the immigrants, they steal all our jobzzz!!!!!!!!!!!!111!1!
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@HardwareGeek said in US economy doing great, on account of everybody else being kind of fucked:
But the immigrants, they
steal all our jobzzzpay all our taxezzzzz!!Â!!Â!!Â!!Â!!Â!!Â11Â1!Â1!FTFY
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@dkf You'll never get a job in President Trump's government with an attitude like that.
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@HardwareGeek said in US economy doing great, on account of everybody else being kind of fucked:
You'll never get a job in President Trump's government
That's true anyway.
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@HardwareGeek said in US economy doing great, on account of everybody else being kind of fucked:
@dkf You'll never get a job in President Trump's government with an attitude like that.
Yeah, sensible true things are not welcome in politics
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@Jaloopa said in US economy doing great, on account of everybody else being kind of fucked:
Yeah, sensible true things are not welcome in politics
I don't think most immigrants are paying much in the way of taxes. Certainly not the illegal Mexicans and Central Americans who come here and end up working odd jobs or mowing lawns. Your H1B types and other well educated and motivated immigrants, perhaps.
It depends on which day it is whether Trump wants more or fewer of the latter sorts of immigrants, but the guys coming in (and staying) at the bottom of the economy are almost certainly a net loss with respect to public treasuries.
That's probably different than most of Europe where you rely much more heavily on regressive consumption taxes.
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@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
regressive consumption taxes
I thought you'd have preferred those to progressive taxes…
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@dkf said in US economy doing great, on account of everybody else being kind of fucked:
I thought you'd have preferred those to progressive taxes…
At least in this case the term actually makes sense. But
aside, you're right, I'd prefer a less progressive tax code. The regressiveness of consumption tax makes me leery of those, however.
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@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
At least in this case the term actually makes sense. But
aside, you're right, I'd prefer a less progressive tax code. The regressiveness of consumption tax makes me leery of those, however.Hmm...
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
What dirty Commie wrote that?
Oh, wait... it was Adam Smith, the guy who literally wrote the book on capitalism. This quotation, in fact, comes from said book, The Wealth of Nations.
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@boomzilla That would depend not only on what they pay as taxes (I'm guessing they don't pay income tax because they do odd jobs, but they would still pay sales tax, it's harder to avoid), but also on what they receive in benefits, and I've seen it written many times that, contrary to popular belief and anti-immigration rhetoric, poor immigrants receive fewer benefits than the system says they're entitled to (partly because they don't know what they can ask for).
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@Khudzlin also, illegal immigrants aren't eligible for benefits since they're not on the system
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@Jaloopa That too (and they still pay sales tax). But since @boomzilla didn't specify "illegal" when saying immigrants were a net loss for treasuries, I assumed he was talking about the legal ones.
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@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
Certainly not the illegal Mexicans and Central Americans who come here and end up working odd jobs or mowing lawns
There are also other low wage immigrants, of course
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@dkf said in US economy doing great, on account of everybody else being kind of fucked:
@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
regressive consumption taxes
I thought you'd have preferred those to progressive taxes…
I like how we had insurgency in the past here because 20% taxes were too high, and today we swallow 70% of taxes quietly.
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@otter said in US economy doing great, on account of everybody else being kind of fucked:
I like how we had insurgency in the past here because 20% taxes were too high, and today we swallow 70% of taxes quietly.
How much free income did people have then once they'd paid their taxes and acquired critical necessities like enough food to not starve? And nowadays by comparison? Those figures matter a lot.
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@masonwheeler said in US economy doing great, on account of everybody else being kind of fucked:
@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
At least in this case the term actually makes sense. But
aside, you're right, I'd prefer a less progressive tax code. The regressiveness of consumption tax makes me leery of those, however.Hmm...
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
What dirty Commie wrote that?
Oh, wait... it was Adam Smith, the guy who literally wrote the book on capitalism. This quotation, in fact, comes from said book, The Wealth of Nations.
Yes, exactly. I see you've taken up the @Fox habit of confirming people's points while claiming to refute them.
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@Khudzlin said in US economy doing great, on account of everybody else being kind of fucked:
@boomzilla That would depend not only on what they pay as taxes (I'm guessing they don't pay income tax because they do odd jobs, but they would still pay sales tax, it's harder to avoid), but also on what they receive in benefits, and I've seen it written many times that, contrary to popular belief and anti-immigration rhetoric, poor immigrants receive fewer benefits than the system says they're entitled to (partly because they don't know what they can ask for).
No doubt that's true for some. Analyses I've seen have come up with negative numbers for their net effect of taxes paid vs benefits received.
@Jaloopa said in US economy doing great, on account of everybody else being kind of fucked:
also, illegal immigrants aren't eligible for benefits since they're not on the system
Haha! You're such a racist!
Welfare Use by Legal and Illegal Immigrant Households | @CIS_org
This report separates legal and illegal immigrant households and estimates welfare use using Census Bureau data.
This analysis shows that legal immigrant households make extensive use of most welfare programs, while illegal immigrant households primarily benefit from food programs and Medicaid through their U.S.-born children.
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@boomzilla One may surely quibble with their model, but:
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Two things to not on the immigrant issue:
First off, the estimated total number of illegal immigrants has hovered around 11 million for twenty years, and actually dropped in the past five despite a huge crisis regarding underaged refugees from Guatemala, Honduras and El Salvador. While that's a large number, it amounts to less than 4% of the US population.
EDIT: 4% not 2%, my mistake.
Second, about a half of all immigrants are transitory ones, coming to the US temporarily in order to make money to take back home. This jumps to 2/3rds when discussing illegal immigrants, most of whom are traveling back and forth annually for harvest periods. Most of them come in legally when they are able to, and only cross the border illegally because the demand for labor is higher than the legal quotas, driving up the pay scale and making it profitable for the employers to hire coyotes for this purpose in order to drive it back down. In other words, most of the illegal immigration occurs because of the restrictions.
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@ScholRLEA said in US economy doing great, on account of everybody else being kind of fucked:
First off, the estimated total number of illegal immigrants has hovered around 11 million for twenty years, and actually dropped in the past five despite a huge crisis regarding underaged refugees from Guatemala, Honduras and El Salvador. While that's a large number, it amounts to less than 2% of the US population.
BTW keep that number in mind the next time a Euroweenie complains the US doesn't take enough refugees from Syria. We already have more "refugees" than all of Western Europe and have for decades.
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Just noticed I gave the wrong number for the % of the population. I've corrected it now.
Also, the total number of immigrants is around 35 million, or 11% of the population. Sounds like a lot, right? Except that this is the lowest figure in US history. At its peak, immigration accounted for 60% (if memory serves) of the US population. Now, admittedly, that was at a time (1880 to 1900) when the country was filling in large empty spaces, had a booming economy, and had a much younger population overall, among other things, but considering the incredible overcrowding in the major cities and attitudes towards African-Americans, the poor, and the foreign-born that make David Duke look like Bernie Sanders, what we're dealing with now is not much of a much.
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@ScholRLEA said in US economy doing great, on account of everybody else being kind of fucked:
In other words, most of the illegal immigration occurs because of the restrictions.
A tautology if I've ever seen one.
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@Greybeard "quotas" would be a better word. It's easy to envision a scenario where we keep out terrorists and criminals but allow as many legal immigrants as want to come over and meet the requirements we lay out.
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@Yamikuronue So a low quota for terrorists and criminals?
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@Greybeard Zero. Nobody wants terrorists, and you've already got a sufficient supply of criminals in Congress.
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And someone immigrating without permission is breaking the law. I think there's a word for that kind of person, something starting with a "c".
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@Greybeard Civil disobedience?
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You know, most criminals are such because we've made things be crimes.
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@Greybeard We don't base a large chunk of the economy in several states on shoplifting or murder, either. If we did we'd probably decriminalize them. But we steadfastly refuse to raise the caps when clearly there's enough demand to handle the influx. Which seems stupid in my book.
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@boomzilla I'm not sure what point you are referring to, since he quite clearly demonstrated that even an ardent champion of capitalism is in favor of progressive taxes, which hardly proves your point that progressive taxes should be avoided.
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@Fox It sounds like you didn't read my previous post, where expressed a similar sentiment (in less detail) about regressive taxes, so par for the course, eh?
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@Yamikuronue said in US economy doing great, on account of everybody else being kind of fucked:
We don't base a large chunk of the economy in several states on shoplifting or murder, either.
What does that have to do with anything I've said? I have neither defended nor attacked the merits of the current immigration restrictions. I am mocking @ScholRLEA for making a tautological argument.
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And rightly so. It was a fairly foolish statement on my part, and I'm actually glad you pointed out that particular brainfart.
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@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
where expressed a similar sentiment (in less detail) about regressive taxes, so par for the course, eh?
How previous? Or similar to what? Because I didn't see anything about you saying capitalists like regressive taxes, and I can't imagine why you would think that saying regressive taxes are kind of bad would do anything to negate your assertion that progressive taxes are always bad.
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@Fox said in US economy doing great, on account of everybody else being kind of fucked:
Because I didn't see anything about you saying capitalists like regressive taxes
Yes, exactly. I said that I didn't like consumption taxes due to them being regressive.
@Fox said in US economy doing great, on account of everybody else being kind of fucked:
and I can't imagine why you would think that saying regressive taxes are kind of bad would do anything to negate your assertion that progressive taxes are always bad.
OTOH, I can imagine why you'd post a strawman like this.
Good lord, man, go back and read what I said. If you still think your post makes sense in light of it, please quote my post so we can identify your reading comprehension and / or logic failures.
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@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
OTOH, I can imagine why you'd post a strawman like this.
Good lord, man, go back and read what I said. If you still think your post makes sense in light of it, please quote my post so we can identify your reading comprehension and / or logic failures.@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
I'd prefer a less progressive tax code.
Is a much more negative comment than
@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
The regressiveness of consumption tax makes me leery of those
You said you don't like progressive taxes. You said you're merely uncertain of of regressive ones.
Ergo you dislike all progressive taxes, but you think regressive taxes are kind of okay, or possibly okay.
@boomzilla said in US economy doing great, on account of everybody else being kind of fucked:
Yes, exactly. I said that I didn't like consumption taxes due to them being regressive.
Meanwhile you said you dislike progressive taxes more, which is the point that @masonwheeler was disproving. Progressive taxes are better. Even capitalists say so.
