It's the Economy, stupid - Languishing & Lingering after the Great Recession

I think my broader point is that it's not likely that the U.S. economy could have recovered substantially faster than it did. It's not that easy being the largest and the fastest.

This is like saying, "OMG, Obama sucks because the economic recovery has only been good. It should have been fantastic!"

I know you're not saying he sucks. (I think your biggest criticism is that he's not clear.) I just think that there are other things to be concerned about. The recovery overall has been good, but there are a lot of shitty things about the U.S. economy (flat wages, economic disparity, etc.).

 

I find that it's easy to play armchair economist, and it's always easy to say how things could have been better in hindsight. Also, it takes a lot of time and effort to enact change at the federal level, especially with the way Congress has been lately. But it's not like Obama ignored small business entirely. Are you saying the Small Business Jobs Act of 2010 should have been beefier? How so? $30 billion was provided for loans. Should this have been more?

[qu0te]My response is to those who say things like - he does not get credit...or he deserves credit...he has done little to help the economy and many things to hurt it. I hold the position that the Presidential powers are limited in this regard, but Presidents can make a difference through leading.[/quote]True enough, the federal government has a limited impact on the economy. But I can't see how Obama has hurt the economy more than help it. Is this all based on whatever "vibes" people get from his leadership? I'm not sure what you're suggesting exactly.

What makes you think he lacks this understanding? Did Reagan?

Obama Outperforms Reagan On Jobs, Growth And Investing - Forbes

You will have to give me some specific examples. Pointing out the problems inherent in the growing wealth gap, economic inequality, the concentration of wealth, and the recovery benefiting some more than others isn't "class warfare rhetoric"; it's called economic realities.

Is there any indication that businesspeople in particular make good politicians? (I can only think of Mitt Romney and Ross Perot as high profile examples.) Has he overlooked anyone in particular? Why would these people fare better in these key positions?

His redistribution tendencies aren't strong enough. Is that what you're talking about? Economic inequality in the U.S. is doing far more damage than any "redistributive tendencies" that I can think of.

 

To quote The Princess Bride, "You keep using that word. I do not think it means what you think it means."
Meaning...Leading.

You say this as if it is some magic skill...where NO president has this, certainly not with all the "wanna-be" presidents with egos in Congress
and especially with an intransigent opposition.

I haven't seen ONE president yet, "lead" to get others to do what they don't want to do.
Those little "limitations" that you note keep them from doing it.

And if they do Executive Orders, then you turn around and say its unconstitutional or overboard. (again, something that really hasn't been said about most presidents in the past)

So you're contradicting yourself and having unrealistic expectations.
You cannot "lead" an obstinate animal...much less a group of them. At least when you cannot "pick them up" and carry them where you want...not with them hissing and scratching.

There is no magical leading. I have seen no leader like that. None.

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On another note, with lingering affects of the Great Recession. (no fault of either President)
We see this...
Four Ways Millennials Are Still Scarred From the Recession


And I say, this is occurring for all generations...it is a cascading affect.
Baby Boomers cannot retire as they thought, their savings lowered, costs higher...and are working longer.
Gen X'rs aren't getting into higher management for the lack of openings. Their investments just starting to rebuild.
Millennials have no openings, no decent wages...and I wouldn't think they'd be decent investors, this takes experience...it doesn't just magically happen. AND you have to have spare cash too...

All this is from the Corporations and Management, setting up rules, fees and structure to benefit themselves.
And they're allowed to...they're in this for business...but the trend has become an extreme...and there's no investiment growth on their part...they're still quaking from the Recession too.

Action, reaction.
Confidence and resources.

Simple as that.

And it's not going to change, until businesses start reinvesting into their own...and for the future.
It's one thing to make a profit for the now...but how do you invest into your people and development???

Progressives aren't going to solve it with government and regulation.
Conservatives aren't going to have solutions catering to self-involved businesses and removing safety-nets.

The ones that are comfortable and stable now...these are the exception, not the rule.
For any generation.

Someone has to encourage corporations to start investing.
Not just sitting on their money.

 

As a followup from yesterday...

While I agree with what Mr. Krugman is noting as one of the aspects of the issues lingering in the US and the world in general,
I don't agree with his suggestions for solutions...the Wealthy themselves is not the problem. (that's top down, trickle down) Minimum Wage is a factor, but not the whole (that's bottom up, trickle up...)

Yes, the problem is lack of investment...or reinvestment. (this will hit ALL levels, at once...and relatively quickly)
For some reason, corporate management after the Great Recession has forgotten how to kick themselves in the ass, create things and empower their staffs.
All they do is exist on the status quo.
Or they are more likely to trim...than build.

But I don't think focused taxes are going to do it...they never do. If anything, it will backfire.
How about you ENCOURAGE reinvestment.
Get them back into the mindset of doing for the staff, R&D, new ideas, new ventures, etc...

There is no need to stop the leak anymore, they're sitting on money.
Encourage them to make that money work.
They'll get better quality and productivity from not constantly starving the "beasts of burden"
Cause a skinny mule can't climb a mountain well.

Hard part, the Obama administration is horrid at mindset campaigns.
And the Dems aren't good either.
And the GOP is not into it that way now, they'll oppose it...if it isn't for their benefit or their idea. (they're good at it IF they come up with it)

Do something to change the momentum.
Not just plug a hole.

 

And they've done this, but there is only so much impact policymakers have on the economy without being too heavy-handed (like in a command economy). The U.S. didn't buy into the austerity insanity that gripped Europe. The notable example of American austerity was during a boom (when it makes sense to apply it). That in itself should tell you that America's policies were among the best in the world in response to the crisis.

Now America is headed into a phase of deflation. Some are saying it will be short-lived. Others are blaming energy prices exclusively.

Either way, this is a real risk because I'm among those who believe America is in a liquidity trap. This is probably what has made deflation possible (and we're talking real deflation here, not disinflation). People are hoarding cash, aggregate demand is still too low. In this situation, people don't want bonds; they want cash. The interest rate is hovering not far above zero (0.25%). All this means is that monetary policy will have almost no impact on interest rates.

So in terms of policymaking, it's about figuring out how to get people to spend money. U.S. consumer spending has been weak in recent months (like, 2009 bad).

I'm not sure what's in store from Congress on what to do in this regard.

I don't know. Obama says the economy will do well this year, so maybe things are already lined up.

Obama report: Economy poised for good year

So this is basically what was reported vs. what an official company spokesperson says? Is this your best example? From what I ready, Obama's statement still makes sense despite what the spokesperson said—even, arguably, despite whether the flyers were a real thing.

Honestly, you'll have to give me some other examples.

The bottom line (I'm a big-picture guy) is that the Republicans turned out a bad economy twice, and the Democrats fixed it twice.

I think for that, you should be satisfied.

 

It's not entirely obvious to the average American as to why wages remain low or why unemployment is difficult to rein in.

I'm a big picture guy, and I'll outline a few big factors here (in other words, there are more).

First, declining union participation is directly correlated to wealth disparity. The U.S. has a devastating history when it comes to unions. Aggressive policies from both business and government have both decimated and demonized unions. Unions represent the greatest political power of workers, and yet to this day unions are relatively impotent when it comes to political power.

Another big one is a slew of policies that have enabled America's corporate managers to capture ever larger shares of economic growth. Economic growth over the past few decades has been driven in large part by technological advances. Most of this economic growth has gone to the wealthy despite workers now requiring more training and education to participate in the economy. The cost of post-secondary education has skyrocketed, as has student debt, yet the incomes of most Americans remains flat. And in a lot of cases, graduates need post-degree certificate training to get proper qualifications for specific jobs. In other words, more is expected from workers, yet less is given to them.

• Student Debt Crisis is Slowing Household-Formation for Millenials | The New Republic
• Why the Gap Between Worker Pay and Productivity Is So Problematic - Promising Practices - Management - GovExec.com

A big overarching one is, in general, globalization policies. Free trade, or an open and liberalized global market, is viewed as the be-all and end-all of economic prosperity, yet we now know that this is objectively false. NAFTA alone has had a net negative impact on American jobs. We simply need to look at the impact of globalization regarding many Asian nations to see that the impact is far-reaching.

• Globalization and Unemployment | Foreign Affairs
• COLUMN-As free trade pacts expand, U.S. trade deficit soars. Why add one more?| Reuters
• How trade deals boost the rich and bust the rest - CSMonitor.com
• How Our 'Free Trade' Policies Kill Jobs | Dave Johnson
• Globalization has lowered wages for American workers, new EPI study finds | Economic Policy Institute

Looking at these three aspects alone should tell anyone capable of rational thought that simply cutting taxes for the wealthy and corporations isn't going to do very much at all, and it could (and has in the past) have a negative impact overall.

Also, this:

• U.S. Companies Hold Record $1.64 Trillion in Cash - Bloomberg Business
• U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes - Bloomberg Business

 

If Economists Were Right, You Would Have a Raise by Now

I don't know why it's confusing...it's NOT a numbers thing,
it's a human dynamics thing (which economists hate) ...specifically business management.

The Great Recession encouraged them to keep wages down...and showed them what people were willing to put up with. (something is better than nothing...)
Until employees demand, the wage supply won't flow
It's a seller's market. (perhaps an inverse bubble)

Wonder what will happen when it pop?

 

A case could be made that the lion's share of the increase in productivity is due to capital investment and the more efficient use of capital, not more productive employees. This is true in manufacturing, and especially true in distribution.

 

Deskilling.

It's why we'll end up with either a Star Trek world or a Mad Max world.

We'll see either post-scarcity or hyperscarcity.

 

U.S. companies hoard record amount of cash

Only about 1.4 Trillion (or ~ 1,400,000,000,000 dollars)

So, the companies are doing the exact same thing that people are doing now...SAVING, avoiding credit.
The companies don't spend on reinvestment...including wages.
People don't feel comfortable...so they save, not spend.
Neither wants to over-do credit again...or they're paying back their debt.
Then BOTH are complaining that either isn't spending. (people buying, businesses paying...)

It's a vicious cycle.

See what happens when you do "irrational exuberance"?
What a hangover.
You don't want to be having that cool toilet again anytime soon...
--- merged: Mar 23, 2015 at 1:25 PM ---
Having to hug that cool toilet... (damn editor isn't working at my work)