For about 43.2 seconds I thought Trump might cut military spending when he spoke of "keeping us out of stupid wars" and "America First." But then he also stated "Our military is going to be so strong that no one - believe me - I can tell you this - no one will ever consider challenging us!"

America will never cut the military. Did we ever reap the "peace dividend" from the collapse of the Soviet Union? No, current threats are always evolving and new ones pop up every hour, so spending must always increase. If a politician were to somehow cut military spending by $1.00, any subsequent terrorist attack or military loss would be blamed squarely on that person or group. No matter how preposterous the link, a large network of media and pundits would repeat it constantly for decades until the truism "cutting the US military = weakness and death" became cemented into the American psyche. I'm kidding of course, we are already there.

It's my understanding that on a global scale the worlds advanced economies are producing substantial increase's in their debt to GDP ratio. So there is no surprises with the increase during the Obama administration. Considering that during the U.S. recovery cycle of the great recession the previous administration did not institute austerity programs on public or private associations. If we also consider the United Kingdom and the cuts to public programs there and the conflicts that resulted, it is no wonder that a natural offshoot would be Brexit and Trump respectively. U.S. debt has been used by the GOP as a campaign issue although mostly as a tool for fear mongering. The GOP's deficit hawk's have clipped their own wings to help accomplish an easy victory for their party, Tax cuts in reality should be an easy pass. They're struggling image wise and they do fear the potential losses from the coming 2018 midterm elections. It is likely that these tax cuts will increase the U.S GDP in the short term which I think is what the GOP is banking on as a positive to campaign on. It seems that thanks to this tax code change they will have to adjust their rhetoric regarding debt through to the 2020 general election.

Taylor wrote:It's my understanding that on a global scale the worlds advanced economies are producing substantial increase's in their debt to GDP ratio. So there is no surprises with the increase during the Obama administration. Considering that during the U.S. recovery cycle of the great recession the previous administration did not institute austerity programs on public or private associations. If we also consider the United Kingdom and the cuts to public programs there and the conflicts that resulted, it is no wonder that a natural offshoot would be Brexit and Trump respectively. U.S. debt has been used by the GOP as a campaign issue although mostly as a tool for fear mongering. The GOP's deficit hawk's have clipped their own wings to help accomplish an easy victory for their party, Tax cuts in reality should be an easy pass. They're struggling image wise and they do fear the potential losses from the coming 2018 midterm elections. It is likely that these tax cuts will increase the U.S GDP in the short term which I think is what the GOP is banking on as a positive to campaign on. It seems that thanks to this tax code change they will have to adjust their rhetoric regarding debt through to the 2020 general election.

The world is living in a fool's paradise, fuelled by unsustainable debt and fossil fuel emission. Things that can't be sustained stop. Then there will be military dictatorships, since democracy will demand no cuts.

Better to cut now. Small government is good, like having a lean healthy body. Big government is bad, like how obesity causes laziness, cancer, heart disease and lack of discipline.

Change systems now to avoid much worse grief and conflict later.

geo wrote:It seems to me that a tax cut that increases our deficit by more than a trillion dollars is not a tax cut at all, but a burden on future Americans.

One of the ironies of the disappearance of Keynesian insight from public conversation is that this logic does apply now (since the economy is probably about at full employment) but did not apply in the Great Recession when Nobel wannabe and economic dinosaur Robert Barro was claiming that the deficits of the Obama era would mean higher taxes later.

When unemployment is high and unused resources are ample in general, extra spending and borrowing by government will stimulate general economic activity and replace the missing component which is business fixed investment. Gross fixed capital formation in the OECD dropped from 22 percent of GDP in 2008 to 19 percent in 2010-12.
https://en.wikipedia.org/wiki/Gross_fix ... ltEngl.PNG
In the U.S. the drop was even steeper, about an 18 percent drop.
https://data.worldbank.org/indicator/NE ... cations=US
But in times of full employment, borrowing by the government will crowd out investment by raising interest rates unnecessarily. Until interest rates on US debt are back to around 3 percent this is not a serious issue, but by the time the tax bill takes effect they will be.

geo wrote:I heard an economist on NPR say on Friday that this tax legislation is designed to reduce the tax burden of corporations in order to keep America competitive in the global marketplace.

That much is true. Of course no one has shown that US industries are not competitive - they hold their own rather nicely. But lower corporate taxes will make some difference at the margin. The problem is this will matter more to attracting foreign finance (Americans do not save, compared to the rest of the world) and thus driving up the dollar and so the trade deficit, than it will to stimulating investment in the US (corporations are hoarding cash in a way not seen before in US economic history).

geo wrote:All to increase short-term economic growth by a couple of percentage points (and when the economy is already robust).

I doubt that growth will increase at all, but it is starting out pretty good as the recovery gets going.

geo wrote:The fact that Trump has touted this tax reform as a boon to the middle class is simply not supported by the facts.

Well, it is a Trojan Horse for tax cuts for the rich, but it will actually decrease taxes for many, if not most, middle class Americans. Trump has told many whoppers in selling this, but that's not one of them.

Taylor wrote:It's my understanding that on a global scale the worlds advanced economies are producing substantial increase's in their debt to GDP ratio. So there is no surprises with the increase during the Obama administration.

The increase in debt was created mainly by the fall in revenue during a recession. For a serious recession, greater government borrowing is precisely the right medicine. Look at a graph of US debt sometimes and notice what happened in the early 40s. It is not a coincidence that this was the end of the Great Depression - unemployment was still at 15% going into Lend/Lease.

Taylor wrote:U.S. debt has been used by the GOP as a campaign issue although mostly as a tool for fear mongering. The GOP's deficit hawk's have clipped their own wings to help accomplish an easy victory for their party.

The theory seems to be the Grover Norquist "starve the beast" approach. Cut taxes first, then claim there is no money for government programs. They certainly proved that they don't really care about deficits, even though those were their excuse for rejecting additional stimulus when it became clear it was needed.

Robert Tulip wrote:The world is living in a fool's paradise, fuelled by unsustainable debt and fossil fuel emission. Things that can't be sustained stop. Then there will be military dictatorships, since democracy will demand no cuts.

Not really. The debt is much more sustainable than the emissions. The world owes it to itself. Most of the runup is due to demographic changes caused by aging populations. Investment activity has shifted to manufacturing growth in developing countries, especially China, and the income from those investments will pay for retirements in the rich countries.

Robert Tulip wrote:Small government is good, like having a lean healthy body. Big government is bad, like how obesity causes laziness, cancer, heart disease and lack of discipline.

That proposition depends very much on whether the spending is productive. I would argue that all except the earned spending on the elderly and disabled, an insurance plan for all, is clearly productive. The cost benefit numbers support it.

Harry Marks wrote:The theory seems to be the Grover Norquist "starve the beast" approach. Cut taxes first, then claim there is no money for government programs. They certainly proved that they don't really care about deficits, even though those were their excuse for rejecting additional stimulus when it became clear it was needed.

Robert Tulip wrote:The world is living in a fool's paradise, fuelled by unsustainable debt and fossil fuel emission. Things that can't be sustained stop. Then there will be military dictatorships, since democracy will demand no cuts.Better to cut now. Small government is good, like having a lean healthy body. Big government is bad, like how obesity causes laziness, cancer, heart disease and lack of discipline. Change systems now to avoid much worse grief and conflict later.

I used to wonder...How much money does the federal gov't need...Is it 2.5 trillion or 3.5 trillion. How many trillions does the federal gov't need?

What an ignorant question.

If we listen to the conservative end of the political spectrum they will say something like "Small government is good", the question they do not answer however is...what exactly is a small enough gov't. This libertarian view...this anti-federalist view...this far right thinking is an easy cop-out. I am not aware of any historical time frame where this idea of sound money or a pure capitalist economy was ever anything other than a tool for actions like: monopoly building, mineral or transportation manipulation, labor manipulation. just to point out several examples. Capital crushes any entity that is not itself in control of capital (in any form) . For example, during the potato famine, was it a lack of food or a lack of money to purchase food that caused so many to starve?. I do not want to be one sided here, The left end of the spectrum is equally thoughtless. The far left are very much in a socialist camp. History has amply proved the Bolsheviks were wrong about distribution and management. How long would China last without central control of its economy?. It is no wonder that the political extremes in the U.S. court the centrist, it is strength in numbers. The center is not always smart though, so there is easy manipulation. Manipulation towards what?. Power mostly...The power to control money. This battle between the extremes is what really pisses me off, It is where lies are generated. The truly hard work is at the center, it is where the rubber meets the road so to speak. It's in the center where we manage the unanswerable, How much money is needed? Who/what should we as a society be concerned about? what level should that concern be? what are/is the abuses if abuse is happening?. I get that Co2 reduction is a slippery slope, Decarbonization as it is sometimes proposed carries heavy downside implications for the individual much less the global economy. I can see where decarbonization is a dramatic push to the left as it would be gov't regulation that drives it. It would be heavy handed totalitarianism and the conservatives are correct in their push back. I'm thinking here of penalties... we can not penalize people for merely living, for merely being born.

Taylor wrote: Capital crushes any entity that is not itself in control of capital (in any form).

Well, companies and their owners are not reluctant to crush any rival, as well. I used to be confident that we could trust capitalism to act for the general benefit, as the notion of the Invisible Hand tells us, because that is how you get people to pay for products and services. As the benefit from innovation shrinks, and the toll on employment grows, I am beginning to have serious doubts.

Analysis of market failure due to external effects ("side effects" captures the idea) gives a good indication of the way to deal with problems created by capitalists. Usually "cost of production" refers to payment that must be made to bid for resources, that is, to get the resources to work for my firm rather than other firms. Side effects, though, create costs which are not paid for unless government steps in to make it a requirement. So the basic theory of dealing with these externalities is to make producers pay for such costs. Then we get back to a situation in which only the best uses of resources actually get produced.

Effects on demand for labor are harder to sort out. We have never had to treat them as externalities. But the "robot tax" is a serious proposition, because in a society that cares about people (which markets do not), things that contribute to lowering the wage below a living wage are costing the rest of society.

Taylor wrote: How long would China last without central control of its economy?

Mostly the central control is gone. State-owned enterprises are still a larger share of its economy than is typical, but they are a burden on the rest of the economy, not a necessary element to make things run well.

Taylor wrote:Manipulation towards what?. Power mostly...The power to control money.

There is a truly compulsive element to this pursuit of power. Normal people become a kind of monster when they are in the grip of corporatism, like something out of the Milgram experiment.

Taylor wrote:I can see where decarbonization is a dramatic push to the left as it would be gov't regulation that drives it. It would be heavy handed totalitarianism and the conservatives are correct in their push back. I'm thinking here of penalties... we can not penalize people for merely living, for merely being born.

I think you are reading much more into this than you need to. We have used incentive-based approaches to cut down acid rain by 40 to 80 percent, without any need for government control. Regulation of CFC's as propellants and refrigerants has saved the world economy billions with very cost to the lives of citizens. The idea is that if we charge for the side effects ("externalities") just like you charge for damages inflicted by reckless driving, then the economy will voluntarily steer itself toward less harmful methods of getting the goods produced, in order to avoid the charges for the side-effects. This is just responsible production.

Only libertarians who are paranoid about government (or unwilling to consider the matter carefully) reject a reasonable charge for external side-effects.

Taylor wrote: the conservative end of the political spectrum they will say something like "Small government is good", the question they do not answer however is...what exactly is a small enough gov't.

An excellent book on this topic is The Constitution of Liberty by Friedrich Hayek, the Nobel Prize-winning economist who was the main inspiration for British PM Margaret Thatcher (Chicagoist summary of Hayek's book). The conservative libertarian view is that the purpose of the state is to secure rule of law. Everything else is better delivered by the private sector. Now I accept that getting to that ideal is difficult, given pervasive market failure, but it remains a worthy goal, since in principle competitive markets will generate greater wealth than a command economy, including for the poor.

Taylor wrote:This libertarian view...this anti-federalist view...this far right thinking is an easy cop-out.

What do you mean by ‘anti-federalist’? I think it is true that libertarian economics is anti-democratic, just in the sense that most people prefer big government, seen as much in Republican military welfare as in Democrat policies of tax and spend to redistribute wealth. So plans to shrink government to an effective size are not going to win popular elections. I can’t see that as a cop-out, since it presents a moral ideal of self-reliance within a functioning civil society, even if it might take a long time to achieve. Ignoring that goal increases the risk of catastrophic collapse. Having money in the bank is safer than debt.

Taylor wrote: I am not aware of any historical time frame where this idea of sound money or a pure capitalist economy was ever anything other than a tool for actions like: monopoly building, mineral or transportation manipulation, labor manipulation. just to point out several examples.

I raised this topic of sound money in reply to your comment in the thread on impeachment, but happy to also discuss it here, as it is perhaps more relevant to the art of the deal. My relevant post is at post164064.html#p164064 Sound money is definitely relevant to the whole problem of analysing US politics, in this crazy era of quantitative easing, hundred trillion dollar debt levels with no prospect of repayment, and general cultural escape into fantasy.

Here is the article on Sound Money by the great conservative economist Ludwig Mises that I mentioned. What is fascinating here is that Mises presents sound money as a core ethical principle, while advocates of unsound money cynically suggest that balancing budgets and preserving value is just a corrupt stratagem to steal from the poor.

Taylor wrote: It is no wonder that the political extremes in the U.S. court the centrist, it is strength in numbers. The center is not always smart though, so there is easy manipulation.

Political centrists tend not to have strong ideological views and tend to believe in compromise, and include swinging voters with either little interest in politics or ability to be swayed by bribery. The further one goes to the extremes of right and left the stronger becomes the 'take no prisoners' attitude. As I said in the other thread, power results from the base persuading the uncommitted to support them.

Taylor wrote:Manipulation towards what?. Power mostly...The power to control money. This battle between the extremes is what really pisses me off, It is where lies are generated.

Polarisation is politically toxic, destroying respect, dialogue, trust, mutuality, etc. Polarisation is primarily fuelled by corruption, with the perception among the poor and their allies that business has no ethics. That collapse in perceptions of moral legitimacy drove the revolutionary sentiment in Russia and China, seeing politics as class war. From the other side, right wingers think that left wing ethics are corrupt, based on transferring from producers to consumers. Makes me think of Gil Scott Heron B Movie lyrics

Taylor wrote:The truly hard work is at the center, it is where the rubber meets the road so to speak. It's in the center where we manage the unanswerable, How much money is needed? Who/what should we as a society be concerned about? what level should that concern be? what are/is the abuses if abuse is happening?.

No, that analysis is flawed. Centrism is the locus of compromise and the art of the deal, based on what can command majority support rather than what is true or good. The truly hard work is building understanding of what is true and good.

If the majority believes the nation can ignore major issues, such as climate and debt, the rubber never hits the road, and eventually the car runs into a ditch.

Taylor wrote:I get that Co2 reduction is a slippery slope, Decarbonization as it is sometimes proposed carries heavy downside implications for the individual much less the global economy. I can see where decarbonization is a dramatic push to the left as it would be gov't regulation that drives it.

Thanks for that comment which I completely agree with. What we have in the traumatised divisions over climate is the politics of class warfare transposed onto the politics of climate change, even though the issues are different and this class approach makes no sense. Decarbonisation, the war on coal, is a policy whose concealed leftist agenda is increasing the power of the state over society. As well, emission reduction just won’t work as a way to stabilise the climate. The sensible elements of the right see these basic problems, but because popular politics only gains traction at the mythic level, the only effective popular counter to climate fanaticism is denial.

Taylor wrote:It would be heavy handed totalitarianism and the conservatives are correct in their push back.

Yes, except the pushback is quite incoherent, standing in denial of the toxic externalities of fossil fuel emissions. The principle of opposition to totalitarian tendencies of the left is sound, but the right also has its dictatorial traits.

Robert Tulip wrote:An excellent book on this topic is The Constitution of Liberty by Friedrich Hayek, the Nobel Prize-winning economist who was the main inspiration for British PM Margaret Thatcher (Chicagoist summary of Hayek's book). The conservative libertarian view is that the purpose of the state is to secure rule of law. Everything else is better delivered by the private sector. Now I accept that getting to that ideal is difficult, given pervasive market failure, but it remains a worthy goal, since in principle competitive markets will generate greater wealth than a command economy, including for the poor.

Thanks for sharing the Hayek link: I spent the better part of my Saturday reading the material.

I found it interesting that Hayek rejected conservatives based on their acceptance of supernatural intervention. Similarly Hayek rejects libertarianism on the grounds that he accepts the need for ' a given minimum for sustenance for all' ( Hayek endorses a need for some level of social security). By extension he is agreeing to some level of redistribution. Hayek even includes means testing as part of S.S. requirements.

On the progressive tax Hayek prefers something along the lines of a flat tax as the progressive tax can be used as a weapon by the poor against the rich, which can be true but I think that it is unfounded, in other words it has not been used as a confiscatory tool.
Personally I like a progressive tax as I think when used properly it generates necessary revenues. (Please don't make me get into the weeds of the tax code ). Those who have the most to lose should be willing to protect what they have got and they do. It is a feed back loop and posibly a good one.

Hayek also seems to support a public health system: ' the obvious solution is to compel 'individuals' to insure (or othewise provide) against' the hazards associated with old age, unemployment, sickness and so on. Although 'the community may not force a person to act in his own interest it may nontheless compel him to do what is in the communities interest, which is preventing harm to its members, Compulsion is justifiable in this case because people who neglect to make provision 'would become a charge to the public' . Hayek correctly tells us that this system has to be designed so as to accomodate re-evaluation of avaiable resources.

It seems to me that at some level Hayek makes the case for compromise with heavy doses of caution, further I would suggest he is even pragmatic with regards to government and perhaps even laissez-faire. Hayek: 'Laissez faire or non-intervention do not provide us with an adequate criterion for distinguishing between what is and what is not admissible in a free system' further 'it is the character rather than the volume of government activity that is important'. The fundamental question of how big or small is arbitrary.

Robert Tulip wrote:What do you mean by ‘anti-federalist’?

My meaning here is mostly emotional I admit. It is derived from a revulsion developed over the last several years from 30 years of right-winger fear mongering and exaggeration about the lefts desire to over-throw the U.S. government in favor of some socialist utopia of command control. It simply has not been bourn out. Our system won't allow it, our heritage won't allow it. America is to unique, we have shown the world democracy works, we demonstrate both public and private altruism.

It may seem tentative but Kant's admonition to ' always recognize that human individuals are ends, and do not use them as mere means to your ends"
is secure. So by anti-federalist I have in mind a constant conservative refrain that left wingers are unamerican while right wingers are true and good, they ignore what I call the easy cop-out of their simplistic rhetoric against a federal supremacy, they presume that the individual states should be supreme and it is this very argument that gave us slavery. The individual states will act in their perceived self interest, it is at the state level that heinous laws get enacted, it is where most civil rights violations happen. The founding fathers recognized that the country would grow into a complex organism. It has taken many years to get where we are at and it is good. There is no doubt. So I am willing to give credit where credit is due. The right is a guard rail but they're only blocking one ditch they are not the ones to trust with both sides of the road.

Robert Tulip wrote:No, that analysis is flawed. Centrism is the locus of compromise and the art of the deal, based on what can command majority support rather than what is true or good. The truly hard work is building understanding of what is true and good. If the majority believes the nation can ignore major issues, such as climate and debt, the rubber never hits the road, and eventually the car runs into a ditch.

Flawed is not that far off the mark. Co2 reduction as a primary tool against AGW isn't the left jumping off the deep end into a fools paradise, It can be looked at from the perspective of the right-wingers jumping off the deep end of uninhibited corporate self-interest. The left is necessary to protect that particular ditch. As to debt, There is more hypocrisy coming from the right, This latest tax revision proves that.

I'd challenge the private sector to commoditize pollution and make a market killing but they are killing it in the market as it is.

Robert Tulip wrote: What is fascinating here is that Mises presents sound money as a core ethical principle, while advocates of unsound money cynically suggest that balancing budgets and preserving value is just a corrupt stratagem to steal from the poor.

My thoughts on the Mises article: Per head capital invested is through the roof right now, yet wages are stagnant and the wealth gap grows. So I think that currently sound money is looking pretty sound to the corporations that are hording cash while at the same time singing the blues over tax rates. Labor unions are currently not in a position to inflate labor cost and their position only weakens. Sky rocketing stock prices demonstrate that government regulations are not stagnating the private sector from generating huge profits. Inflation has averaged 1.6 percent for the past 10 years, The average rate of inflation from 1914 to 2017 has been3.28 percent.

Robert Tulip wrote:Political centrists tend not to have strong ideological views and tend to believe in compromise, and include swinging voters with either little interest in politics or ability to be swayed by bribery. The further one goes to the extremes of right and left the stronger becomes the 'take no prisoners' attitude. As I said in the other thread, power results from the base persuading the uncommitted to support them.

Strong ideological views may be necessary but as you say "take no prisoners'" is really more of a last ditch survival technique, we are not living in such desperate times.

Taylor wrote:
How long would China last without central control of its economy?

Harry Marks wrote:Mostly the central control is gone. State-owned enterprises are still a larger share of its economy than is typical, but they are a burden on the rest of the economy, not a necessary element to make things run well.

What I mean here specifically is that China is a single party state. Without the aid of the U.S. it is likely that China would have devolved into the chaos of civil war. I personally fear for any peoples living under single party rule, which is part of the reason why I am trying to hammer the GOP. It would be interesting to witness China become a democracy, and is that even possible?, Is it desirable? .

Robert Tulip wrote:Obama doubled US national debt from $10 trillion to almost $20 trillion. Not sustainable. Cut the military.

Obama inherited an economy that was reeling from the real estate bubble, which required the next president to pass a stimulus package. If John McCain had been elected, he would have certainly passed a stimulus package as well. There were other factors at play as this article states . . .

. . . While the large increase in borrowing occurred "under Obama," it's an overstatement to blame Obama's actions as the sole cause of the ballooning debt, according to the bipartisan Committee for a Responsible Federal Budget.

The debt would have risen by $3 trillion because of tax and spending policies that were already in place. Plus, the Great Recession drove up spending on safety net programs, such as Medicaid and food stamps, without the president or Congress doing a thing.

This is not to say that Obama had zero impact on the debt during his two terms in office. His 2009 stimulus plan and his making most of the Bush tax cuts permanent in 2012 contributed to the debt. But the 2011 Budget Control Act, which curbed government spending, helped slow the projected growth in debt.

Also, keep in mind that Obama can't take any financial steps without Congress' approval. And Republicans controlled the House for six years of his term and the Senate for two years.

http://money.cnn.com/2016/10/19/news/ec ... index.html

If you look at deficit spending by president, you don't see much difference between Democrats or Republicans. If anything Republicans since Reagan are more inclined to increase deficits. Republicans have paid only lip service to fiscal conservatism. Now they don't even do that.