Reaganomics

[flintlock]

Re: Reaganomics

Alan Greenspan was not appointed until June 1987, about 19 months before the end of President Reagan's Presidency and almost 2.5 years into his second term.

Just to keep the record clear of course!

[flintlock]

Re: Reaganomics

The interesting thing about Stalin is that he would ask a question like this: People are starving and unemployed and prices for land and rent and bread and electricity are too high; therefore, why would you oppose building a hydro-electric dam? Why would you oppose wheat growing in the arctic? Why would you oppose dredging a canal? Why would bird-habitat preservation be your energy plan? Why would salmon-habitat preservation be your water plan? Why would you be storing water in a rain-forest? Why would you be telling people that something can not be done? Why would you be telling people that there is a water-shortage in a rain-forest? .... etc.

We will dig-out of this mess.

""Boy the way Glen Miller played, songs that made the hit parade, guys like us we had it made, those were the days, and you know where you were then, girls were girls and men were men, mister we could use a man like STALIN again, didn't need no welfare states everybody pulled his weight, gee our old Lasalle ran great, those were the days!"

[thriftyandboringinohio]

Re: Reaganomics

have you read The Fourth Turning? I hate to be fatalistic but if there's any credence to it then we're in far deeper poop than even we think.

I did read The Fourth Turning. Though I wouldn't be as harsh as c1ue, I have to agree with his assessment. The authors put all people into one of 4 clearly defined generations that repeat in a predictable way. People are born every day, not in lumpy cohorts. The book proposes a sort of Kondratieff Cycle or Elloitt Wave theory for human beings and their group pyschology. I don't embrace those theories for investing either.

The book really resonates with a natural-born doomer like me, because it concludes that a castostrophy is nigh, and how can a doomer not like that?
I found it very entertaining.

[Starving Steve]

Re: Reaganomics

""Boy the way Glen Miller played, songs that made the hit parade, guys like us we had it made, those were the days, and you know where you were then, girls were girls and men were men, mister we could use a man like STALIN again, didn't need no welfare states everybody pulled his weight, gee our old Lasalle ran great, those were the days!"

To substitute more politically-correct names of heros here, maybe: Gen. Douglas MacArthur, Gen. Dwight David Eisenhower, Gen. Harris ("Bomber Harris"), Gen. Patton, or a bit less "PC" name, Chairman Mao.

[Prazak]

Re: Reaganomics

gee our old Lasalle ran great,

All these years I've been wondering what were the words in that bit of the song. My mind is finally at peace. :-)

[charliebrown]

Re: Reaganomics

I have read the book and find it very interesting. I am a doomer by nature also. Starving Steve is saying we can work our way out of this, and maybe he is right if we start. No-one is starting. small plans from small, cowardly minds.
Only a true crisis will shake things up for real change. I hope the crisis is purely financial and not starvation or war. The book is not joroscopes or numerology etc. It is backed up by history. Maybe this time is different, but it certainly looks like we are headed the way the book forecasts.

I'm sure you're aware of this but for others saying Reagan is the answer, look at the debt graph of the united states.
Takes a hockey stick like shape in the early-mid 80's. It was prosperity through borrowing.

[flow5]

Re: Reaganomics

I was a commodity broker then & remember it better:
The basic idea of supply side economics is to create an economic milieu that will foster increased production of higher quality goods and services which can be marketed at competitive prices. To achieve these objectives we need to reduce monopolistic elements in the price structure (monopolistic prices of goods or services tends to increase prices and restrict output); increase labor productivity; reduce unit labor costs; reduce transfer payments to the non-productive sectors; eliminate excess regulatory burdens, excessive rates of taxation on producers and savers, etc.
The caveat is that supply side economics requires structural and attitudinal changes which will be zealously resisted by powerful special interest groups. Even more intractable are constraints imposed by resource and technological factors. Gains will be limited and a long time in coming even with our best efforts. Up until now we have ameliorated these unnecessary self-imposed economic hardships largely through massive transfer payments to non-productive recipients. Deficit financing by the Federal Government provided the principal source of funds. Al we all should know, there is a finite limit to this "remedy".
Supply-side economics, as applied to the deficit, assumes that if enough tangible financial encouragement is given to the business community and investors, then plant expansion, production, employment and taxable incomes will increase sufficiently to enable the economy to "grow out of the deficit". All of this, the supply-siders contend, it possible without burdening ourselves with higher taxes or endangering our national security through “real” reductions in the federal budget.
Methods already adopted to achieve these supply-side objectives include: 1) sharply lower corporate income taxes; 2) more generous treatment of capital gains; 3) tax credits for capital outlays; 4) tax deductions for certain types of investments: 5) accelerated depreciation on plant and equipment and rental housing; 6) removal of costly (and presumably unnecessary) government regulations, etc.
However, further tax incentives, especially to corporations, are likely to be counterproductive. That is, the adverse effects on the deficit and interest rates will more than offset the simulative effects on the economy. Many corporations, including some of the largest, pay little or no income taxes. A past survey of 250 of the Fortune 500 found these 250 paying net corporate income taxes at an average annual rate under 15 percent. Very few were paying anything close to the 46 percent maximum rate.
There is one all-important ingredient that the supply-siders ignore; namely that the demand for capital goods is a derived demand, derived from primary consumer demands. That even in a capitalistic system the end and objective of all production is human consumption. The demand for inventory or plant and equipment, however far removed from the ultimate consumer, is derived from final consumer outlays in the marketplace.
Demand is always paramount in successful business planning and commitment decisions. If sufficient demand is not expected to exist, it matters not what the expected costs will be. "Sufficient" demand, of course, covers all costs plus and expected after tax profit margin.
Supply-siders approach the demand side of the equation on a "trickle down" basis; build the plants and produce the goods, and demand will take care of itself. Supply creates its own demand.
Unfortunately, we do not live in that kind of world. The proposition is simple. An economy such as ours which is geared to mass production requires concomitant mass consumption. Payrolls must be sufficient to buy the goods and services produced - at the asked prices.
Only in the frictionless world created by the mathematical model builders are the asked prices in equilibrium with consumer spendable income. In the real world, there is always a purchasing power deficiency gap of varying proportions. This is just another way of saying that to have high levels of production and employment, we need not only a vastly more competitive price structure, we also need a steady but slightly inflationary monetary policy (prices increase c. 2-3 percent annually), and a tax policy that contains some elements of compulsory income redistribution - downward.

[dcarrigg]

Re: Reaganomics

""Boy the way Glen Miller played, songs that made the hit parade, guys like us we had it made, those were the days, and you know where you were then, girls were girls and men were men, mister we could use a man like STALIN again, didn't need no welfare states everybody pulled his weight, gee our old Lasalle ran great, those were the days!"

Archie and Edith - meet Boris and Natasha.

[oddlots]

Re: Reaganomics

Wow. Thanks "supply side" finally makes some sense.

[Serge_Tomiko]

Re: Reaganomics

I have read the book and find it very interesting. I am a doomer by nature also. Starving Steve is saying we can work our way out of this, and maybe he is right if we start. No-one is starting. small plans from small, cowardly minds.
Only a true crisis will shake things up for real change. I hope the crisis is purely financial and not starvation or war. The book is not joroscopes or numerology etc. It is backed up by history. Maybe this time is different, but it certainly looks like we are headed the way the book forecasts.

I'm sure you're aware of this but for others saying Reagan is the answer, look at the debt graph of the united states.
Takes a hockey stick like shape in the early-mid 80's. It was prosperity through borrowing.

There are organizations working on a new social structure, but I don't think you recognize the difficulty of preparing for the myriad demographic, cultural, economic, and resource scarcity problems that face us. You combine this with a hostile government, depraved leadership, highly centralized economic power, and an apathetic populace and it can seem insurmountable. A non-democratic continuity government has to be established that does not lend itself to excessive dictatorial power. Treasonous and evil members of the elite must be segregated from society. This has to be done quickly such that the power vacuum can be filled prior to a total breakdown. The vast bureaucratic systems - both public and private - that will cease functioning can only be replaced with a healthy culture, and that is the biggest challenge of all. The huge underclass will likely riot, while educating what remains of the middle class on how society worked before said bureaucracies will require much time and effort on the part of many.

The best we can hope for today is to establish an competitive authority that can provide a reasonable alternative when the present government and their associated cartels fail to maintain order. Revolution is out of the question - there are public papers out there that detail in no uncertain terms all forms of military actions are on the table to prevent secession or any more drastic attacks on government authority. This includes nuclear weapons. There are divisions in the military sympathetic to our cause, but not enough have yet been located to ensure a significant break in the chain of command.

All that said, the Fourth Turning is an interesting book but it is still based fundamentally on flawed liberal assumptions of human nature that are simply wrong. The cycles are fundamentally oriented towards *progress*, which a casual tour of America should make clear to any sane man is illusory. The authors also do not understand how the advanced liberal state has robbed the majority of the people of the skills necessary to function as independent entities. Millions will likely die or go insane when they cannot cope with the coming future.

[ThePythonicCow]

Re: Reaganomics

All these years I've been wondering what were the words in that bit of the song. My mind is finally at peace. :-)

Except of course that the real song spoke of Herbert Hoover, not Stalin.

[flintlock]

Re: Reaganomics

Its amazing how desperately people want a hero to worship, regardless of the facts. Yeah sure, it's all just a misunderstanding. He was a sweet guy.

[dcarrigg]

Re: Reaganomics

Its amazing how desperately people want a hero to worship, regardless of the facts. Yeah sure, it's all just a misunderstanding. He was a sweet guy.

I think it was F. Scott Fitzgerald that penned:
"Show me a hero and I'll write you a tragedy."

[metalman]

Re: Reaganomics

thank you, thank you for this informative post... but... why can't the gross incomes of the low end be raised vs lowering the after-tax incomes of the high end?