I appreciate your post but its length makes it kinda hard to respond so I'll just comment on a few of your thoughts.
Thanks for your thoughtful response, and welcome back to FYM.
What if government policy is a structural impediment? Our corporate tax structure, over-regulation and inefficient labor unions all make us less competitive on the global stage. What if Obamacare and the higher taxes and mandates really is the job killer the GOP has been calling it?
I was thinking about this issue, and I should have talked about. Whether this fits into the structural category or the cyclical category is debatable, but that doesn't really matter too much. Regarding labor unions... I'm most sympathetic with your beliefs there, and I'm uncertain of my own beliefs on the matter, so I'm not going to get into a debate about them. Regarding the government... you are right, in a sense. Higher taxes, higher regulation, more demands on businesses, all things equal, all have negative impacts on job creation. What also has a negative impact on job creation? Lack of demand. Corporations create jobs to satisfy demand, and if there is cyclically depressed demand, job creation isn't helped either. So there's a careful balancing act to play. I tend to not ideologically believe that there is a correct level of taxes or regulation; rather, that taxes and regulation should be lower, and spending should be higher, when the economy is struggling. The Affordable Care Act brings a new long-term semi-structural, semi-cyclical dynamic into play. Inequality of opportunity is sorely lacking in this country, and it will probably help with that. Like I said, all things equal, mandates on businesses and whatnot hurt job creation. But so does inequality. A society of better equality of opportunity is one that can create new ideas, new products, new demand, and new opportunities that create new jobs. So, like I said, it's a balancing act.
The fact that you describe it as a "bubble" tells me you understand the housing market was artificially pumped up, by both parties. Interest rates at historic lows (they still are but they shouldn't be), government guarantees of mortgages and their derivative that were never going to be paid off. No, the subprime fiasco had to happen after the government got involved with the Community Reinvestment Act.
I don't disagree with your basic ideas here. The government (primarily Democrats, though Republicans deserve some blame, and Alan Greenspan deserves a ton) made policies that were major causes for the subprime community (although I think that both the business community and the American populace deserve blame, as well). Interest rates being low... that's something that I disagree with in strong times, and agree with in not-so-strong times. Now is clearly the latter, although I do worry about the Fed's promises to keep rates this low into 2015. But you and I probably fully agree that expansionary monetary policy and acts like the Community Reinvestment Act that are in effect when the economy is booming can have... rather negative consequences.
You are quite right to talk about cyclical downturns and cycles but if there has always been a truism it is that the deeper the recession the stronger the recovery. It was true in the 40's after the Depression and it was true after the recession in the early 80's. So I'll ask, though it would have been more painful in 2009 and 2010 would we be better off today, would the economy truly be in a recovery, if Barack Obama had not followed his policies of massive spending through stimulus, increased baseline government spending and QE monetary policies? Tarp whatever you think about it predates Obama so I don't buy for a moment that Obama saved us from a depression. Officially the recession was over 6 months into his term yet the recovery barely has a pulse.The workforce participation rate is lower than his first day in office. The whole thing seems to teter on government spending, there is no true private sector recovery.
If there are other factors involved that didn't exist in the 40's and 80's like globalization and our smaller manufacturing base (which are factors no doubt about it) then how is amnesty for 12 million or more largely low-skill workers a boon for our 2013 economy? A boon for Democratic voter roles sure...
It's silly to doubt that, all things equal, stimulus creates jobs and economic activity in a recession. Would we have gone into absolute depression without it? Maybe not, but it's hard to say. However, stimulus is historically quite useful for battling down cyclical components of recessions, when recession is more or less happening because money vanished. The recovery does not teter on government spending, anymore at least. Government employment is down as of late. Government stimulus helped create private sector employment, yeah, but stimulus isn't happening anymore. The employment-population ratio (probably the best measure of employment) is down from January 2009, but the falls in that number were more or less before the stimulus. The stimulus stopped the fall. Did it inspire a huge rebound? No. But I've seen no evidence that stimulus is the
cause of any structural woes, and I can think of nothing in Economics that would make that the case (Ricardian Equivalence would say that it's useless, but that's empirically denied). The fact that the economy isn't rebounding as quickly as it did after previous cyclical downturns points to structural issues more or less out of the government's hands.
Amnesty is a rather conservative economic position, Indy. It is economically much the same as free trade; anything else is protectionism. Its long-term impacts (a new base of workers to support our aging population, a new group of people hungry for success who can grow our economy, cheaper labor allows company to invest more in products that take more expensive labor to engineer and develop) are probably very good, and similar to the effects of free trade. I don't see you rushing out for protectionism, and for good reason. Lump of labor is a fallacy.
The money supply is one of the factors I am comparing from Obama's first day in office to now and again in 4 years I guess. You tell me if a 27% increase is warranted? It's doubled the price of gold from his first day in office if that tells you anything.
It's absolutely warranted, because of the amount of money that
disappeared with the subprime crash. The price of gold increasing so much is pretty much meaningless. I've seen people such as Ron Paul try to link increases in the price of gold to some massive devaluation of the dollar as of late, but that's ridiculous, because gold has increased at a far faster rate than CPI and GDP Deflator. If the value of our money is decreasing so much, why is everything (expect for oil and gold) not seeing its price soar? Gold is so expensive probably because paranoid inflation hawks are investing in it enough to create a gold bubble.
We weren't told about "a new structural norm" during the election speeches and debates. When did this happen? When did European-like dismal GDP growth and chronic unemployment become our new norm? I missed that.
I addressed this at length in my post, and I'm not entirely sure what you're asking. I'm suggesting that a new structural norm
may be the case, and, furthermore, that the government probably can't do much to affect it.
I can't help where people take a thread and what they wish to ask me about but I never said lower birthrates was solely a moral issue. Education, wealth, urban rather than rural life, a higher survival rate of children all contribute to the birthrate... but so does secularism. Religious people have more children than non-religious people. Europe, Russia and Japan have negative birthrates. Poorer Catholic and Muslim countries have babies. So does America but we're slowing down too.
You may think this is a good thing but Western Civilization has built up these huge welfare states with their wealth that are actually just Ponzi schemes requiring a growing population to maintain and fund. Hence the open borders of Europe and America -- culture be damned.
You are very right on your last paragraph. Immigration is a sort of solution, but the welfare states for retirees absolutely have to be cut down. In my mind, the best way to do this is by raising the retirement age... significantly. But I'm 19 years old, so maybe that's a bit of agism coming out. One concern that I have, that reaches far beyond a debate about government, is that lifespan may be rising, but I'm not entirely sure that years of productive life are rising. In other words, if people now live to 85 instead of 75, but can still only work until they're 65, and will require a lot of expensive medical care for the last ten years of their lives... that's a rather huge structural problem that I don't know how to solve. Even if secularism is contributing to declining birthrates, there are many other economic factors that are absolutely contributing too, and those aren't really possible to turn around.
Explain why Israel prospers while Arab states with more natural resources live under oppression. How a mountain range between Haiti and the Dominican Republic separates a thriving country from a 3rd world country. Why Mexicans risk life to get to Texas but Texans don't leave everything to sneak into Mexico. Who the Berlin Wall was meant to contain.
No, you have it backwards, strong economies don't produce values -- values produce strong economies. Liberal, free societies don't produce values -- values produce free, liberal societies.
It goes in both directions. Obviously, a government that values liberal democracy and generally free markets over theocracy, fascism, communism, or whatever, is going to produce a stronger economy (and a society that I would much rather live in) than a government that values autocracy. I am more interested in
why societies adopt certain beliefs. I hope we are beyond Social Darwinism here... you are probably smart enough to believe that there is not some sort of gene in non-white peoples that makes them inherently inferior to white people. So where are we left?
There are tons of empirical examples of economic situations affections societies' outlooks and values. For example, Glasnost. The Soviet Union was obviously struggling before Glasnost, but commercial openness to the West suddenly wrought more political change to the USSR than any politician could have. Or take post-WWI Germany. The Entente caused economic disaster in Germany, and... surprise! Resentment grew in Germany, and resulted in one of the worst governments ever to exist! That's a very common theme in places economically hurt by the West... a prime example of which is the Middle East. Identical religions manage to create wildly different value systems through the ages. Again, compare Europe today versus Europe in 900 CE, or the Middle East today with the Middle East in 900 CE.