Why America's economy is stuck...

[Uncle Fester]

An interesting and brief read and spot on in my opinion.

Note the last paragraph does not advocate government providing the solution!

Also the follow up.

http://www.businessinsider.com/middle-class-decline-2012-8

http://www.businessinsider.com/how-t...e-chart-2012-8

[Judy Canty]

Indeed, the final paragraph is the key and always has been. Corporate America's failure in this area is not new. It is the basis for much of the regulation passed since the New Deal Era. Big business is not going to willingly "do the right thing". It has to be forced.

[CoolOptician]

Uncle Fester...lol, love seeing that pic btw, I really *like* the articles. Excellent points in both articles....especially about the government not being able to 'fix' this. And I 'carefully' agree with Judy too...not so much about the regulation part, or the 'forced' part....unless you call it 'gently harsh encouragment' or as I like to call it 'peer' or 'customer pressure!' Lol!

I mean that we have developed very poorly in the last 15-16 years or so (only based upon what I see in my world) where MONEY has become THE ONLY reason for everything. We sell cheaper product at the same price (or more), to maximize profit. It lasts less time, and consumers become discouraged. Used to we did things for money, but understood that 'not doing right by people' could cost you the money too! Especially in the long run.

I was only a small business person and I left it because of 'regulation.' The idea that we can 'regulate' everybody into living in a way they should is unrealistic, even for corporations. Finding the balance we need in corporate regulating would benefit us overall, especially if we follow all the way down the ladder. In my world, the MORE regulation I see, the LESS people do what they are desired to do in co-living with one another. When it was 'peer or community' pressure causing people to 'act in beneficial ways' we saw better behavior and treatment of one another AND how/what goods and services were sold or offered.

I'd love to see a 'push' for people in America to DO the right thing (what they would want for others to do to them in the same situation)....and ASK companies, corporations, media and politicians to do the same thing! (big grin!) I bet there is a huge segment of our population who would jump on board right away. Then we could double our members, just by convincing all the people that politicians have arguing with one another to stop, and join our cause! Lol, now can you imagine THAT kind of 'peer pressure'....pretty powerful!

[David_Garza]

sure but the LEFT will still have you believe that MORE Government 'stimulus' is required to jump start the economy
AND
no one will have them believing anything different.......

[Uncle Fester]

sure but the LEFT will still have you believe that MORE Government 'stimulus' is required to jump start the economy
AND
no one will have them believing anything different.......

My maternal grandfather was a staunch republican until this was his only way to get a paycheck-

http://en.wikipedia.org/wiki/Works_P...Administration

I fear the current generations will have to let history repeat itself before we can again trust our economists more than our politicians.

We outgrow our deficits and right now we can borrow money at virtually ZERO interest!

I wonder how much the apple adjusted for inflation will go for today? (Not that most of those under 40 would get what I'm referring to.)

[Judy Canty]

Those who will not learn from the past, are doomed to repeat it.

Suggest reading "The Day the Bubble Burst". An oldie, but oh so familiar.

[Uncle Fester]

From comments on a WSJ neo-cons(?) article-

• David Doney Wrote:

What a load of nonsense. Amazing to see attacks on CBO credibility, as they are the umpires in the game. I'm tired of hearing WSJ Op Ed writers who act like they know better than CBO. Where does the WSJ find these guys?

1) Reagan was a Keynesian. He dramatically increased spending (to a then-record 22.4% GDP on average, more than Obama if you adjust for the aging of country) and cut income taxes while raising payroll taxes (which of course made the system more regressive). Income tax revenue fell relative to GDP, so deficits jumped. The debt rose from around $700B to $2.1T under his administration.

2) Reagan was not facing a massive overhang of household debt. Back in 1980, household debt was around 50% GDP. It peaked at nearly 100% GDP before the crisis and is now around 90%, mainly due to foreclosure. Several economists have reported that it is this household debt that is preventing consumers from spending, which in turn is preventing businesses from investing as they have fewer customers.

3) CBO does include feedback effects in its analysis, based on the best empirical studies around. CBO estimates the Bush tax cuts have added $1.6 trillion to the debt so far and will add another $3+ trillion to the debt over the next decade, if we extend them.

4) The fiscal cliff spending sequesters basically lower the rate of increase in defense and non-defense discretionary spending (departments and agencies, not entitlements) to 1.5% annually for a decade, vs. the 8%+ and 6%+ annual rates we had over the past decade. These are a good thing.

5) CBO estimates that payroll tax cuts have the most bang for the buck, much higher than income taxes. So we should not be afraid to let the Bush income tax cuts expire for say the top 50% of the population while delaying the expiration of the payroll tax cuts a year or two.

6) If we want to get out of this slump, we should be prepared to convert a lot of private mortgage debt to public debt. Relieving private debt is the key; public debt doesn't hold back the economy at these interest rates.

The layperson should assume Keynes is right. Where does that leave conservatism?

[braheem24]

I made this graph to see if there was a trend between presidents and the Dow Jones (Business), all numbers on the Dow are taken from inauguration day.