There are plenty of investors with lots of money to throw around. They often have no clue what they are doing as we are continually reminded by crashes in various markets.

January 5, 2018

January 5, 2018

January 5, 2018 (Jobs Byte)

ICYMI, the new GOP tax law has a provision specifically designed to punish Democratic-leaning states with relatively high taxes that reflect that state’s commitment to providing better social services to low- and moderate-income people. California and New York are the two most prominent states targeted for this tax punishment. Both states are intrigued by CEPR’s hack, championed by senior economist Dean Baker, as a way to thumb their collective noses at the trifling GOP tax antics.

Baker published a simple hack in the New York Daily News that New York and other states could enact to do an end-run around the GOP’s petty misuse of the tax law; it’s the employer-side payroll tax. It has also sparked the imagination of the press and Blue state leaders still smarting from the GOP using their states as target practice. Click on any of these links for a full explanation of Baker’s hack.

Dean Baker
The American Prospect, January 2, 2018

The NYT had an article touting the fact that businesses are investing more under Donald Trump than before he was elected. It notes that non-residential investment has risen at an annual rate of 6.2 percent in the first three quarters of 2017. It attributes this increase to a removal of regulations leading to a newfound sense of confidence among investors.

There are two important points worth noting about this increase in investment. First, it is not an especially rapid rate of growth. There have been many periods in both the recent and more distant past when it grew at a more rapid pace.

For example, under President Obama, from the third quarter of 2013 to the third quarter of 2014 investment grew at a 9.1 percent annual rate. It grew at an even more rapid 11.4 percent annual rate from the first quarter of 2011 to the second quarter of 2012. Investment growth averaged 8.9 percent annually over the eight years of the Clinton administration.

The other important point about the growth of investment thus far during the Trump administration is the extent to which it has been concentrated in the mining sector. Investment, as measured in 2009 chained dollars, has risen by $102.0 billion from the fourth quarter of 2016 to the third quarter of 2017. Investment in mining exploration, shafts, and wells has accounted for $39.8 billion of this increase, while mining and oil field machinery have accounted for another $4.4 billion.

That one isn't mine, it actually is the title of a Bloomberg column. (The "OMG" is mine.) This one may be a bit over the top: it complains both that we have too many people on the planet and that we have rising ratios of old to young, but it shows that all is fair when it comes to attacks on Social Security and Medicare.

Now that the Republicans have just shifted another big chunk of national income to the one percent, it is only natural that the media would focus on the need to cut Social Security and Medicare, put in the guise of generational equity. I'm sure I'll have more occasion to write about this issue, but the basic issue is idiocy from the word go.

Will people on average have higher standards of living 20 or 30 years from now than they do today? I know of literally no economic forecast that shows otherwise. The "robots taking our jobs" folks are arguing that they will have hugely higher standards of living, even if they are too confused to know it.

Is it possible that most workers won't be sharing in these gains? Absolutely, but that is a story of intra-generational inequality, not inter-generational inequality. It's really that simple.

Okay, I know it was not deliberate, but how about in 2018 we get news reporters and columnists to think seriously about the concepts they are using? After all, at least the ones at elite outlets like the Washington Post are pretty well paid and have prestigious positions.

When Dan Balz discusses the Democrats political prospects for 2018 and asks about their economic policy, what does he mean when he asks:

"What is their response to concerns among many workers about the impact of globalization — more free trade or a rollback?"

The reality is that most formal trade barriers in the form of tariffs or quotas are already zero or very low with US trading partners. There is not much room to lower them further with "more free trade." The trade deals that have been recently under negotiation, like the Trans-Pacific Partnership or the Trans-Atlantic Trade and Investment Pact, don't have much to do with reducing traditional trade barriers. Instead, they are primarily about locking in a regulatory structure that is highly business friendly.

This structure includes special tribunals in which foreign investors can bring complaints. These tribunals would overrule domestic laws at the national, state, or local level. (Let me preempt some deliberate stupidity on this issue: the tribunals can't actually take the laws off the books, they can just make the relevant government pay a huge price for keeping the law in question on the books.)

Dean Baker
Truthout, December 26, 2017

Dean Baker
HuffPost, December 21, 2017