NO ONE - can accurately predict the economic future in the short term - its chaotic like the weather.
But the biggest indicator of economic health is demographics - and the US wins in this category hands down compared to other developed countries.
While Japan, Germany and other countries are rapidly aging - the united states continues to be culturally very open and meritocratic.
Britain tried being "open" but it backfired in a big way.
The United States will continue to dominate - its biggest rivals are of'course China and India. China is facing a huge demographic cliff while India even though it has the demographic advantage does not have the energy reserves nor is able to fully get rid of structural corruption ( US too has corruption but everything is relative )
At the end of the day - growth is just an anomaly - the longest state of the universe is decay.
The rate of growth as measured is slower. Example: Assume Netflix lacks the cash flow that Blockbuster had but provides better service - you don't have to drive to take the movies back.
This means there's more consumer surplus but it's harder to measure.
I really find that hard to believe, and historically real growth has averaged about 2% year over year. Just because it has had short-run highs in the 1950s and 2000s does not mean that right now is abnormally low.
This is good news. Economic growth has an inverse relationship with sustainability.
In the natural world we see ecosystems that exist in balanced cycles of equilibrium because the ecosystems that consume unsustainably have destroyed themselves. Natural selection selects that which is stable over that which is fit.
Modern civilization is an unsustainable ecosystem. It will not last and it will eventually be selected for self termination.
What will be left in the end are societies that do not grow but remain in equilibrium with the natural world. Keep in mind that we as modern humans living in a modern civilization are use to continuos compounding economic growth. The reality of the world is that growth is actually a temporary and very unnatural anomaly. The true state of the world is one of zero growth and total equilibrium.
The final question is, are we living in a sustainable society today? Or at least will the society we live in today be able to transform itself into a sustainable civilization before it inevitably self terminates as a result of uncontrollable growth?
Equilibrium and steady state are two very different things. Strictly, the path we eventually want to tread is not even steady state, since internal variables can change dramatically (e.g. switching from fossil fuels to nuclear/solar/wind). Only the large-scale metrics need to be steady state.
To give an analogy, the earth's climate is far from equilibrium (same temperature everywhere), but it is fairly close to steady state (same average temperature over long periods of time).
What is funny ( and I'm the poster child for this ) but we have massive defense engineering disasters and corporate IT is one bloody trench battle after another, yet we seem to have no other ideas for "fixing" things.
And then we overmeasure the wrong things and make it worse.
The US is going to be stuck in stagnation unless it can solve its structural problems and the solution to that will take decades plus political sanity. Political sanity is something we are very much lacking. :/
Honest question: Do people think that Trump believes the ignorant (and racist) rhetoric he spouts? Isn't it clear that he's just doing what it takes to get elected?
I think attributing it to real ignorance and racism is .... misdirected. YMMV, but Scott Adams ( the Dilbert guy ) is calling Trump like I see him.
He's just a phenomenal salesman.
I am especially loath to call some of the simply tone-deaf things he says "racism". After all, it might be technique at play, modulating your willing suspension of disbelief.
If he is any racist at all, it's probably that annoying residual racism that comes from being older but is hard to characterize.
Every single Trump supporter I've heard from says that they admire the way that Trump speaks his mind and says what he thinks, rather than lying and pandering like normal politicians.
I don't know about the rest of us, but do we matter for this?
The only redeeming thing about this whole Trump fiasco is that his apparent popularity is highly misleading, since he's merely the frontrunner of a completely awful field.
So by being politically incorrect, he "proves" that he "just speaks his mind," and ends up gaining voter trust! I do think he's an expert salesman, something I've only recently grown to admire. His book might actually be worth reading...
I don't think he believes it, really. Not to the extent that he spouts; there are though charges of racism stemming from his time as primarily a landlord in the 80s and 90s.
What I think rather is that this is just another reality show for him. He loves being in the spotlight. In his biography, he said as a kid he admired Broadway musicals and wanted to grow up to be a producer. This is a man who loves show and spectacle. Remember, he was in the WWE (the phony wrestling organization) for a time. No billionaire needs to do that. He did it just because he wanted to be part of the show.
He doesn't really care about becoming president or fixing the country, either. It would be nice for him, a bonus, but it wouldn't be his life's crowning achievement like it would for the other politicians in the race. It's more about the process for him.
So to answer your questions, 1. No, he doesn't believe it, but 2. No, he's not just doing what it takes to get elected; he's doing what it takes to _stay in the spotlight_. That's more important to him than being elected.
The odds makers are giving him a fair shot at it next best after Hillary. If you disagree that he has a shot against her you can make some cash from it.
Good question. I think he's doing all he can to become president, while knowing that his presence in the national spotlight is only benefiting his career as a television personality. I think he's well-informed enough, behind his political facade, to look at the polls and prediction markets to see where he stands in the running.
I think we have the potential to have the best period of structural reform in the postwar period. The Speaker of the House is one reason why: https://www.youtube.com/watch?v=Xwv5EbxXSmE
long-term viability of the enterprise is about DEBT. representative democracy is off the rails as electability is determined by promises to spend on things (look at the above list). when are we going to start electing people who can do basic financial math?
That's not at all how national economies work, especially when debt is denominated in the nation's own currency. You simply can not compare a national economy to a single household's finances. At present, the US is incentivised to borrow, because the cost of borrowing in nearly zero. When you compare paying down debt with an interest rate of nearly 0%, to almost any other investment, paying down debt loses. Or put another way, any expenditure that has a return greater than the cost of borrowing is a better investment than paying down debt.
The cost to the US to service its debt in 2015 was $220 billion, its GDP in the same year was 16 trillion. I have a hard time believing that what accounts for only 1.3% of the productive output of the US is the number one determanent of its economic well-being, especially when 65% of that money goes right back into the US economy (i.e. interest on domestic debt).
Perhaps more than basic financial math is required to understand the economy?
Why compare that actual cost to GDP? Compare it to federal tax revenue. It's about 8% of federal tax revenue. There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US
> Why compare that actual cost to GDP? Compare it to federal tax revenue.
Because we are talking about determinants of the health of the economy, not determinants of the health of government finance.
> There is not a lot of room for the federal government to increase revenue as total taxes (incl state and local, sales, payroll, property, etc) are not low by any means in the US
That's not particularly true; the US is pretty close to the bottom of total tax revenue to GDP ratio among OECD countries; there is plenty of room to increase tax revenue.
with interest rates at zero, it's pretty easy to see why debt service doesn't currently amount to much. how great do obama's deficits look if he's dealing with the same interest rates as reagan, bush, clinton, bush jr?
Why would you evaluate policy outcomes by what they would be in different conditions than the ones that they actually exist in? Certainly, the current cost of borrowing ought to be a factor in making fiscal policy decisions.
I mean, would any business make decisions about financing based on what the costs would be in of those decisions in past decades rather than what the costs are reasonably expected to be in the conditions that actually exist?
And yet you the U.S. has birthright citizenship and none of the big EU countries (France, UK, Germany) do. Even those like Trump who oppose it have limited their attacks to illegal immigrants, while in the big EU countries even the children of legal immigrants aren't automatically citizens.
Also, consider the shitstorm over Syrian refugees. Just a few years of dealing with the kind of illegal immigration Americans have faced for decades, and Europeans got really racist really fast.
I'm not sure Europeans are really as open-minded as they seem to be portrayed to be.
When I was in Berlin in 2009, I regularly encountered opinions from Berliners regarding mostly Turkish immigrants that wouldn't be unlikely to hear from a good-ole boy in Appalachia talking 'bout them damn Mexicans... But then there were also people drunks I encountered on May Day that were dancing and chanting Obama. Weird contrast.
I do believe it's going to get a little ugly dumping that many immigrants into such homogeneous populations.
Trump is in no way representative of the country as a whole. He exists as a phenomenon because a relatively small minority really likes him, and because the Republicans have not managed to find any candidate even slightly worthwhile.
When you see that Trump is polling at 31% or whatever, keep in mind that 31% of early Republican primary voters is a pretty small number of people. With a more normal candidate you might take that as being in some way representative of the wider population, but Trump is probably not going to gain much more support than he already has, since he's so extremely polarizing.
> but Trump is probably not going to gain much more support than he already has, since he's so extremely polarizing.
I doubt that's true; that 31% is with the conservative establishment pouring an order of magnitude more money into the campaign of establishment candidates (particular Jeb Bush) that are getting no traction despite the vast spending; there's already signs that significant parts of the establishment are coming around to Trump of the least-bad viable candidate (and others parts of the conservative establishment going to Cruz, who is similarly situated with regard to the establishment, and likewise seeing success despite the vastly greater spending and conservative establishment support for other candidates that are not gaining traction).
When the flood of conservative establishment resources that has been deployed against Trump/Cruz begins being split by Trump and Cruz -- and most of it finally lines up behind one of them if, as seems likely, they secure the party nomination -- they'll do much better than they do with those resources opposing them.
If by "small minority" you mean "blue collar working class" then yes. These are the losers of globalization and they are seething with rage and would vote for Hitler if it would bring back jobs.
I was being a bit hyperbolic but I think the level of anger is nearly there, yes. For all but the highest skill brackets of the workforce, real wages have fallen since around 1970 while everything else (food, energy, real estate, tuition, health care) has gone up. You can't do that to people and expect anything good to come of it.
I think Trump (and to a lesser extent Sanders) is only a preview. We'll see a full-blown fascist or hard-line socialist candidate eventually if this doesn't reverse.
I also wasn't meaning to badmouth blue collar folks. On the contrary, I was trying to communicate just how much anger there is out there outside of BubbleLand. Sometimes you have to be hyperbolic to get your point across and get people to wake up and see what's happening. The middle of America has been in a depression since 2000... that's going on 15 years.
>Hmm... tell that to Trump, the frontrunner for one of your two parties.
Trump's politics are reactionary, and play on a fear that the demographics and culture of the US are becoming too open and "meritocratic." His success is actually a sign that this phenomenon exists, and that people are terrified of it.
Are Trump's politics actually reactionary, or not? I am not sure I have a good sense of what his actual policies would be. Saying things that he's said about immigration might appear reactionary, but I'm not sure it's not as much a play to Peoria, where the lower and middle class whites that still make up the majority of the electorate are feeling the pain of globalization and the erosion of their traditional economy.
As a big business New Yorker, I suspect he'd be a lot more of a centralist on many issues than anyone else in the race right now, possibly on either side of the aisle.
> Are Trump's politics actually reactionary, or not?
His politics are actually reactionary, yes.
> I am not sure I have a good sense of what his actual policies would be.
Whether his actual policies would be reactionary is a different question from whether his actual politics are reactionary.
> Saying things that he's said about immigration might appear reactionary, but I'm not sure it's not as much a play to Peoria, where the lower and middle class whites that still make up the majority of the electorate are feeling the pain of globalization and the erosion of their traditional economy.
Sure, its populist; that doesn't stop it from also being reactionary. (Sanders, likewise, is populist, but rather the opposite of reactionary.)
Reactionaries actually have sort of a program. Trump leans more towards hucksterism-for-its-own-sake. He's brilliant
at that but I'm not sure that's right for politics per se. Hucksterism works better when you can fold your tent and move on. Professor Harold Hill hadda leave town for it to truly work.
I don't think he's dishonest about it. There's just in general copious amounts of what they used to call "free-floating anxiety" and somebody's gotta exploit it. I think he's sincerely trying to help. I would hate to be him if
he ever figures out this won't work.
The problem is media in general, and media in general is not incented to report widely on the problems of media in general. I suppose it would be considered too frivolous, but I think teaching some entry-level media criticism skill to, say, junior high kids would go a long way towards making this less of a thing.
I at least tried to make sure my kids knew this and had basic algebra skills with an eye towards being able to enforce some degree of rigor. I'm happy with the results, but it really confused them while I was telling them this.
At one point, I'd have said Canada does not have this problem but since then, it's started.
Or that there are just "more brown people about". That doesn't mean America is becoming more open as a society, there is still rampant discrimination against blacks at all levels of society. The last lynching/crow laws are within living memory for gods sake.
With the federal reserve pumping out money like nobodies business, the resulting inflation is a major brake on the economy. It also results in less profits for companies, less income growth for employees etc.
The only people it really benefits are wall street and other politically well connected entities (solyndra et. al.)
The government is basically sucking up all of the value from advances in technology ,and redirecting it to the political class who then profit from the carry trade of investing it in the stock market and the like.
Ironically, of course, none of the mainstream candidates for president will fight this, though many of them are trying to get elected on the backs of the outrage over "income inequality"... and this comment is likely to be buried because it points out a crime committed under both Bush and Obama and nobody wants to admit their guy is a bad guy.
Inflation rates were very low in 2015 (sometimes even slightly negative) [0], and historically have been relatively constant at around 1-5% (even during the economic crisis of 2008).
Aside from extraneous years of course where it hit high teens.
So, yea, if there is a break on the US economy, it doesn't appear to be stemming from inflation.
The United States has an extremely diversified economy, plenty of natural resources, an abundance of talent, a relatively low population, incredible military strength, technological dominance in many areas, a healthy population (unlike, as pointed out, some countries which are declining in population, or about to hit cliffs where the majority of the population is above the working age), and huge geographical buffers.
Some economists say the dollar might be too strong for short term gains for the American worker, and the Fed is having trouble hitting inflation targets between 1-3%.
The private sector benefits primarily from government funding of research.
So I'm just not sure where you're basing your analysis from?
> The only people it really benefits are wall street
People with net dollar-denominated asset balance (e.g., net holders of financial capital denominated in dollars) lose value with inflation (people with net dollar-denominated liability balance -- net debtors -- are the winners with inflation.)
> The government is basically sucking up all of the value from advances in technology ,and redirecting it to the political class who then profit from the carry trade of investing it in the stock market and the like.
To the extent that's true at all, that's a product of fiscal policy (particularly, the favorable tax treatment of capital gains compared to "vanilla" income, and the additional taxation in the form of payroll tax on top of income tax levied on labor income compared to "vanilla" income) rather than monetary policy.
Which, rather than being a distinct problem from "income inequality", is actually the same problem as income inequality.
The people who benefit most from monetary inflation are those with large amounts of debt, not those with large amounts of cash. The middle class has the highest debt-to-cash ratio, so they benefit the most.
However, the point is moot because there has not been significant monetary inflation. Only asset prices have really risen in response to quantitative easing (perhaps this is why you said it only helps wall street); this is a somewhat intuitively obvious result since the fed is buying assets, not printing money.
But the biggest indicator of economic health is demographics - and the US wins in this category hands down compared to other developed countries.
While Japan, Germany and other countries are rapidly aging - the united states continues to be culturally very open and meritocratic.
Britain tried being "open" but it backfired in a big way.
The United States will continue to dominate - its biggest rivals are of'course China and India. China is facing a huge demographic cliff while India even though it has the demographic advantage does not have the energy reserves nor is able to fully get rid of structural corruption ( US too has corruption but everything is relative )
At the end of the day - growth is just an anomaly - the longest state of the universe is decay.