Protectionism, does it work?

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Milo
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Re: Protectionism, does it work?

Post by Milo » Sat Jul 21, 2018 10:12 am

cassowary wrote:
Sat Jul 21, 2018 7:12 am
SteveFoerster wrote:
Fri Jul 20, 2018 10:55 pm
cassowary wrote:
Fri Jul 20, 2018 7:41 pm
But at least Trump got his policies right except for Trade.
Other than that, Mrs. Kennedy, how did you like Dallas?
On balance, his economic policies create growth. Two good and one bad. The net result is still good.
I don't think you understand the actual meaning of the quote.

neverfail
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Re: Protectionism, does it work?

Post by neverfail » Sat Jul 21, 2018 3:42 pm

cassowary wrote:
Sat Jul 21, 2018 7:10 am

You are ideologically blinkered, Neverfail.
Sorry cass but I have long had the impression that it is YOU, not I, who is the ideologically fixated one among us. As for me I do not see myself as having any fixed ideological commitment - unless you consider freethinking to be "ideology".
cassowary wrote:
Sat Jul 21, 2018 7:10 am
When will you admit that lower taxes and deregulation spurs growth.
You see. This is the sort of inflexible, black and white, thinking of yours that demonstrates the truth in my allegation that you are the ideologically blinkered one. As though the consequences of lower taxes and deregulation are supposed to be always good and beneficial.

It depends on circumstances. To give you half a loaf of the bread you crave from me: yes, I can see occasions where selective deregulation along with strategic tax cuts can and do engender additional economic growth. I am also aware of other occasions where improved regulations and increased taxes can be more effective in ensuring continuing prosperity for all - including business people. A good macro- economic manager can tell the difference in circumstances and act accordingly. It is not an inevitable, always works, A + B = C formula the way you seem to believe.
cassowary wrote:
Sat Jul 21, 2018 7:10 am
These are the very policies leftists abhor.
Those who do so are unwise. Better for even "leftists" to be flexible in their approach to policy.

neverfail
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Re: by the way.....

Post by neverfail » Sat Jul 21, 2018 4:58 pm

...are you aware that the US Federal Reserve Bank is currently in the process of raising interest rates - with more likely to come in the near future?

No borrower enjoys paying higher interest and bank fees schedule. But sometimes like higher taxes and/or higher interest rates are a necessary evil to preempt a greater evil.

Higher interest rates like higher taxes take spending power out of the community. This is intentional to avert an out-of-control inflationary spiral.

An inflationary spiral has almost inevitably ends in an economic recession. I have seen it happen more than once during my lifetime.

Tax cuts (or increased public spending)when the business cycle has bottomed out early in his first term or in the early phase of economic recovery are well justified as a stimulus to stronger growth - but that is not the phase the US economy is at now. It is now operating at full capacity with the inevitable constraints on growth by utilising unused production capacity characteristic of recessed conditions. In short the risk is now of an "overheated economy as costs get out of control.

In that respect Trump's tax cuts, because of their timing, can be seen as recklessly irresponsible fiscal policy. Of course the Fed has to raise interest rates to counteract the potentially negative effects of releasing more spending power into the community when it can only invite inflation. A monetary policy remedy for a fiscal policy problem.

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Sertorio
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Re: Protectionism, does it work?

Post by Sertorio » Sat Jul 21, 2018 5:10 pm

neverfail wrote:
Sat Jul 21, 2018 3:42 pm
cassowary wrote:
Sat Jul 21, 2018 7:10 am

You are ideologically blinkered, Neverfail.
Sorry cass but I have long had the impression that it is YOU, not I, who is the ideologically fixated one among us. As for me I do not see myself as having any fixed ideological commitment - unless you consider freethinking to be "ideology".
cassowary wrote:
Sat Jul 21, 2018 7:10 am
When will you admit that lower taxes and deregulation spurs growth.
You see. This is the sort of inflexible, black and white, thinking of yours that demonstrates the truth in my allegation that you are the ideologically blinkered one. As though the consequences of lower taxes and deregulation are supposed to be always good and beneficial.

It depends on circumstances. To give you half a loaf of the bread you crave from me: yes, I can see occasions where selective deregulation along with strategic tax cuts can and do engender additional economic growth. I am also aware of other occasions where improved regulations and increased taxes can be more effective in ensuring continuing prosperity for all - including business people. A good macro- economic manager can tell the difference in circumstances and act accordingly. It is not an inevitable, always works, A + B = C formula the way you seem to believe.
cassowary wrote:
Sat Jul 21, 2018 7:10 am
These are the very policies leftists abhor.
Those who do so are unwise. Better for even "leftists" to be flexible in their approach to policy.
Growth, as Keynes very well knew, depends on an increase in aggregate demand. Which may result from lower taxes, from more public spenditure, from more investment, from higher disposable incomes... The only thing which is not acceptable to spur aggregate demand is a greater recourse to debt, if debt payments exceed the capacity to save. In addition to that, the trick is finding the best way to increase aggregate demand without increasing inflation beyond reasonable limits, and without increasing inequality.

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cassowary
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Re: Protectionism, does it work?

Post by cassowary » Sat Jul 21, 2018 11:17 pm

Milo wrote:
Sat Jul 21, 2018 10:12 am
cassowary wrote:
Sat Jul 21, 2018 7:12 am
SteveFoerster wrote:
Fri Jul 20, 2018 10:55 pm
cassowary wrote:
Fri Jul 20, 2018 7:41 pm
But at least Trump got his policies right except for Trade.
Other than that, Mrs. Kennedy, how did you like Dallas?
On balance, his economic policies create growth. Two good and one bad. The net result is still good.
I don't think you understand the actual meaning of the quote.
I do. Steve was saying that Trump's trade policies have outweighed whatever good he did for the US economy. I disagree. While I admit, protectionism makes imports more expensive and slows down economic growth, I would like to point out that China is far more protectionist that the US.

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cassowary
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Re: Protectionism, does it work?

Post by cassowary » Sat Jul 21, 2018 11:29 pm

Sertorio wrote:
Sat Jul 21, 2018 5:10 pm
neverfail wrote:
Sat Jul 21, 2018 3:42 pm
cassowary wrote:
Sat Jul 21, 2018 7:10 am

You are ideologically blinkered, Neverfail.
Sorry cass but I have long had the impression that it is YOU, not I, who is the ideologically fixated one among us. As for me I do not see myself as having any fixed ideological commitment - unless you consider freethinking to be "ideology".
cassowary wrote:
Sat Jul 21, 2018 7:10 am
When will you admit that lower taxes and deregulation spurs growth.
You see. This is the sort of inflexible, black and white, thinking of yours that demonstrates the truth in my allegation that you are the ideologically blinkered one. As though the consequences of lower taxes and deregulation are supposed to be always good and beneficial.

It depends on circumstances. To give you half a loaf of the bread you crave from me: yes, I can see occasions where selective deregulation along with strategic tax cuts can and do engender additional economic growth. I am also aware of other occasions where improved regulations and increased taxes can be more effective in ensuring continuing prosperity for all - including business people. A good macro- economic manager can tell the difference in circumstances and act accordingly. It is not an inevitable, always works, A + B = C formula the way you seem to believe.
cassowary wrote:
Sat Jul 21, 2018 7:10 am
These are the very policies leftists abhor.
Those who do so are unwise. Better for even "leftists" to be flexible in their approach to policy.
Growth, as Keynes very well knew, depends on an increase in aggregate demand. Which may result from lower taxes, from more public spenditure, from more investment, from higher disposable incomes... The only thing which is not acceptable to spur aggregate demand is a greater recourse to debt, if debt payments exceed the capacity to save. In addition to that, the trick is finding the best way to increase aggregate demand without increasing inflation beyond reasonable limits, and without increasing inequality.
Tax cuts will increase aggregate demand as you put money into people's pockets. They will either spend or invest. On the other hand, when you cut taxes, you need to cut spending or you are not being fiscally prudent. This will reduice demand from the public sector. So. it depends on how efficiently that money is spent.

The people know what their needs are better than the government bureaucrats who usually spend wastefully. It is not their money, you see. So they don't care as you and I would when spending our money. The collective action of millions of people will send price signals to producers who then will produce the goods and services the people want. So the economy is more efficient than a bunch of bureaucrats can design. That is why cutting regulation is usually beneficially to the economy.

I use the world, "usually", because I accept that there are occasions when the free market does not do well in allocating resources.

neverfail
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Re: Protectionism, does it work?

Post by neverfail » Sun Jul 22, 2018 12:14 am

cassowary wrote:
Sat Jul 21, 2018 11:29 pm


Tax cuts will increase aggregate demand as you put money into people's pockets. They will either spend or invest. On the other hand, when you cut taxes, you need to cut spending or you are not being fiscally prudent. This will reduice demand from the public sector. So. it depends on how efficiently that money is spent.
I know all about that particular verity cassowary. The point I tried to make above (which I hope you did not miss) is that Trump chose the wrong point in the current business cycle to make tax cuts. The US economy had been growing fine even before the tax cuts took place - to the point where unemployment was/is at an historic low and there would be by now no more underutilised (or unutilised) productive capacity to put back to use. Any further expansion would require large scale new investment and that both comes at a cost and takes time to bear fruit. In other words the crest in the current business cycle is pushing against the productive constraints in the US economy. A scenario that invites inflationary pressures.

So to counter these the US Federal Reserve, after permitting years of historically the lowest interests rates on record, is now in the process of raising interests rates. When George Bush Jr. implemented his round of tax cuts back in 2002 the Fed did not raise interest rates because it did not need to. Those tax cuts coincided with a time when the US economy was only beginning to recover from the tech wreck recession that began in 2000. So tax cuts at this time were potentially a welcome source of needed stimulus.

That was then but this is now!

Our trouble is that when discussing economics you and I do not speak the same language. I think in terms of sound, practical macro-economic management whereas you keep on trying to prove some pet neocom doctrine.

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Sertorio
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Re: Protectionism, does it work?

Post by Sertorio » Sun Jul 22, 2018 3:08 am

cassowary wrote:
Sat Jul 21, 2018 11:29 pm

Tax cuts will increase aggregate demand as you put money into people's pockets. They will either spend or invest. On the other hand, when you cut taxes, you need to cut spending or you are not being fiscally prudent. This will reduice demand from the public sector. So. it depends on how efficiently that money is spent.

The people know what their needs are better than the government bureaucrats who usually spend wastefully. It is not their money, you see. So they don't care as you and I would when spending our money. The collective action of millions of people will send price signals to producers who then will produce the goods and services the people want. So the economy is more efficient than a bunch of bureaucrats can design. That is why cutting regulation is usually beneficially to the economy.

I use the world, "usually", because I accept that there are occasions when the free market does not do well in allocating resources.
Cutting taxes only helps growth when the private sector is dynamic and expectations are positive. Otherwise you may need public intervention, and thus no cuts in taxes. Public investment and an increase in wealth distribution may then create the right conditions for aggregate demand to increase. Thinking that governments spend wastefully is ideological. There is no reason to think that governments cannot spend well public funds. On the other hand, manipulation of markets by powerful corporations may prevent private agents making the right decisions as far as consuming or investing. And speculative bubbles must be avoided at all times, or else overindebtedness will kill any growth possibilities.

Mr. Perfect
Posts: 568
Joined: Sat Jan 07, 2017 11:24 pm

Re: Protectionism, does it work?

Post by Mr. Perfect » Sun Jul 22, 2018 8:24 pm

neverfail wrote:
Sat Jul 21, 2018 3:42 pm

Sorry cass but I have long had the impression that it is YOU, not I, who is the ideologically fixated one among us. As for me I do not see myself as having any fixed ideological commitment - unless you consider freethinking to be "ideology".
You are a passive aggressive leftist.

Mr. Perfect
Posts: 568
Joined: Sat Jan 07, 2017 11:24 pm

Re: Protectionism, does it work?

Post by Mr. Perfect » Sun Jul 22, 2018 8:25 pm

Sertorio wrote:
Sun Jul 22, 2018 3:08 am
Cutting taxes only helps growth when the private sector is dynamic and expectations are positive. Otherwise you may need public intervention, and thus no cuts in taxes. Public investment and an increase in wealth distribution may then create the right conditions for aggregate demand to increase. Thinking that governments spend wastefully is ideological. There is no reason to think that governments cannot spend well public funds. On the other hand, manipulation of markets by powerful corporations may prevent private agents making the right decisions as far as consuming or investing. And speculative bubbles must be avoided at all times, or else overindebtedness will kill any growth possibilities.
Compare Venezuela with the US, all your questions will be answered.

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