Your ideas/thoughts on what should to be done to return to healthy economy grow.

[VFK57]

Whisper66: It's always very interesting to me the different perspectives we all have on our economy.
I wish the positive thinkers are correct yet what worries many others that our trade deficit is huge and it is like this for a very long time, as we need to pay off the dis-balance we borrow and print money ($US is still main reserve currency in the world but other countries understand how it works), our largest ever in the world history Debt continue to grow with budget deficit as well and middle class (the back bone of every great society) is shrinking. Is not it is something to worry about?

 

[Hamlet]

IMHO they should change the taxes so that it benefits companies to invest in the US instead of holding cash offshore.

I think this is something that most people could be sold on that could have a noticeable impact. It's insane to me that Apple, Cisco, and Microsoft (stocks I own, but there are dozens like them) have 10s of billions that they have sitting offshore in treasuries because they don't want to pay the taxes necessary to bring the money back.

We've build a system that has given them a perverse incentive to just sit on cash. Apple has a $100+ offshore but is borrowing money to fund their stock buybacks and dividends. That is a goofy situation created by an illogical tax system.

There would be a lot of fighting over the exact form changes would take, depending on peoples' politics, but at the end of the day, I don't really care too much about the details. I'd take a low-tax holiday that let them repatriate the money like we did in the past when the R's controlled things. I'd also accept a system that forced them to pay taxes on the offshore money ( As a shareholder, I'm obviously less excited about that option ). What I don't want is to continue a system that encourages companies to irrationally sit on cash forever to avoid a tax.

There are lots of options to improve this specific situation. I'd like my representatives in Congress to pick one.

 

[marko]

I think this is something that most people could be sold on that could have a noticeable impact. It's insane to me that Apple, Cisco, and Microsoft (stocks I own, but there are dozens like them) have 10s of billions that they have sitting offshore in treasuries because they don't want to pay the taxes necessary to bring the money back.

We've build a system that has given them a perverse incentive to just sit on cash. Apple has a $100+ offshore but is borrowing money to fund their stock buybacks and dividends.

+1
What's even more insane is the argument that to allow a lower repatriation tax is "helping big businesses" (somehow considered a bad thing) so nothing is done, and in doing nothing they're "helping big businesses"!

As long as it remains legal, I'm all for putting money offshore. Management is just doing the responsible thing for their shareholders. (Oh, I forgot, shareholders are the soon-to-be new boogeymen)

 

[marko]

Ah, yes, the all powerful prescription to "cut regulations." As obviously agreeable to all who hear it as it is vague. Quite like "cut waste, fraud and abuse" in this way.

But when pressed, few can name any specific examples of regulation reforms that clearly generate more in savings than they cost. That's why every new administration promises to reform regulations and "make government smarter." And after every administration the regulatory apparatus is largely unchanged.

There's just not as much meat there as people hope / pretend. And focusing on these things that nobody seems to be able to do distracts attention and effort from the things we can.

I think folks are talking about OVER regulation.

Sarbox is a good example of being little more than a big job creator for the accounting departments. In our company, the only thing it changed was the need to hire about 15 new accounting staff to keep track of the compliance regulations.

Ok, it created jobs, but WE didn't pay for it, our higher prices to the public did.

 

[photoguy]

I don't think sarbox is universally considered "over-regulation". Certainly the view that it was nothing more than job creation for the accounting firms may have been widely held, especially by those who had to pay for it, but I don't think that was born out in retrospective studies.

 

[Gone4Good]

So the standard was . . .

When pressed, few can name any specific examples of regulation reforms that clearly generate more in savings than they cost.

And we have a contender . . .

Sarbox is a good example of being little more than a big job creator for the accounting departments.

Let's go to the video tape . . .

A significant body of academic research and opinion exists regarding the costs and benefits of SOX, with significant differences in conclusions.

Sorry, repealing Sarbox fails the "clearly generates more savings than costs" standard.

----------

In our company, the only thing it changed was the need to hire about 15 new accounting staff to keep track of the compliance regulations.

Among the quantifiable benefits found is "that borrowing costs are much lower for companies that improved their internal control, by between 50 and 150 basis points."

 

[marko]

Among the quantifiable benefits found is "that borrowing costs are much lower for companies that improved their internal control, by between 50 and 150 basis points."

Well, in the case of my company it did nothing for us but increase cost.

We were a small company (Public, $400MM) but with $80M in cash and no debt, never borrowed.

 

[samclem]

Ah, yes, the all powerful prescription to "cut regulations." As obviously agreeable to all who hear it as it is vague. Quite like "cut waste, fraud and abuse" in this way.

But when pressed, few can name any specific examples of regulation reforms that clearly generate more in savings than they cost.

Like shooting fish in a barrel. For starters:
1) Eliminate the ethanol mandate
2) Eliminate sugar price supports
3) Reform the Davis-Beacon act ("prevailing wage legislation")
4) Reform licensing: A huge amount of the existing licensing and certification requirements serve as nothing more than guild protection rackets. Example: In my state it takes 1500 hours of classroom instruction and (mostly) "supervised practice" to be a beautician or cosmetologist. It's about 1000 hours to get a barber's license. Now, I'd be fine with mandatory health and safety training (hygiene, proper use and disposal of dangerous chemicals, etc), but nobody ever died from a bad haircut. I don't need the State's protection from a bad haircut (not that the present rules eliminate them). Why is the government involved in this? 1500 hours for these and similar trades is ridiculous, and serves only as an artificial bar to entry for new people wanting to get into the trades, and a way for schools to charge students a lot (and these schools assure the right candidates get paid off). For comparison, it takes a minimum of just 45 hours for a person to get a private pilot's license. Is there really 33 times more material to learn in order to color and cut hair than to fly an airplane? Are the public consequences of ineptitude 33 times as great for the beautician as for a pilot?

Anybody that sets out to defend existing government regulations as lean and unwasteful will be assured of a lifetime hobby.

 

[i7000]

Engine of growth will come from innovation or discovery of new energy sources. To do that for our future generations,
1) send ur kids to college and make sure they finish it with good grades;
2) send them to engineering school instead of law school;
3) don't blame others for your incompetence in failing to compete in anything in life.
From an economist


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[razztazz]

Anybody that sets out to defend existing government regulations as lean and unwasteful

Nobody's doing that

Engine of growth will come from innovation or discovery of new energy sources. To do that for our future generations, '

1) send ur kids to college and make sure they finish it with good grades;

Money? Where's it come from?

2) send them to engineering school instead of law school;

yeah so we do have enough lawyers but there's other sht that needs to be done. Teh engineer's lobby won't permit anyway

3) don't blame others for your incompetence in failing to compete in anything in life. From an economist

Yes. Some people actually think mf'in' government regulations keep them from being competitive. Why would "failing" to compete be caused solely by incompetence?

Send that fake economist back to school. No wonder people see economists as useless

 

[photoguy]

Well, in the case of my company it did nothing for us but increase cost.

That's not surprising as sarbox was primarily designed "To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes."

Of course, nobody thinks their company is going to be involved with fraud so it seems like a waste of money.

 

[Gone4Good]

Like shooting fish in a barrel. For starters:
1) Eliminate the ethanol mandate
2) Eliminate sugar price supports
3) Reform the Davis-Beacon act ("prevailing wage legislation")
4) Reform licensing: . . .

Anybody that sets out to defend existing government regulations as lean and unwasteful will be assured of a lifetime hobby.

Fair enough. And my bad for not adding a disclaimer regarding things that are de minimis in nature.

Cost estimates for the ethanol mandate is something like $10B, sugar price supports another $2B or $3B, Davis-Beacon repeal saves less than $2B in an $18 trillion dollar economy. We're talking about initiatives that save about 5 basis points of annual GDP on the high end and quickly drop to around 0.01% of GDP as we move down the list.

That's not to say these things aren't worth doing. They're just not the big ticket items supporters claim. And certainly not a meaningful answer to the title question - which I assumed was the whole point.

 

[LOL!]

... and middle class (the back bone of every great society) is shrinking. Is not it is something to worry about?

The middle class is only shrinking because people are moving up out of it to higher income. So it is not really something to worry about. Instead it is something to celebrate.

 

[Gone4Good]

The middle class is only shrinking because people are moving up out of it to higher income. So it is not really something to worry about. Instead it is something to celebrate.

That's mostly true. According to Pew:

The share of American adults living in middle-income households has fallen from 61% in 1971 to 50% in 2015. The share living in the upper-income tier rose from 14% to 21% over the same period. Meanwhile, the share in the lower-income tier increased from 25% to 29%. Notably, the 7 percentage point increase in the share at the top is nearly double the 4 percentage point increase at the bottom.

Of course incomes in the middle have stagnated while they've soared at the top.

So the "envy factor" has gone through the roof.

 

[razztazz]

The middle class is only shrinking because people are moving up out of it to higher income. So it is not really something to worry about. Instead it is something to celebrate.

I really like political satire

 

[cyber888]

Nothing needs to be done.
We still have a healthy economic growth, and unemployment is less than 5%.

The problem is the 'wall of fear' surrounding Wall St .. irrational fear pegged on low oil price. Once everyone is tired of that fear, the market will goes back up. The big boys & hedge funds programmed their stock trades pegged to the price of oil. When oil goes down, equities go down. This programmed trading is causing the problem and keeping markets out of wacked. China won't have much effect on us.

I understand that most of us are not economists by training yet what do you think should be done to return to healthy economy grows?
I could be wrong but think that our problems come from big negative trade dis balance for many years. The largest is with China. Therefor the ideas of some unorthodox politicians who calls for fair trade rules, up to trade control might work and return at least some manufacturing back to US. Like if we sell to China $116 billions then same amount of imports from China is not taxed. Chinese $365.5 billions trade surplus should be heavily (equally spread between manufacturers)taxed so some manufacturers would be forced to move factories back to US soil. The alternative is to continue our Debt grows indefinitely what eventually will destroy the dollar.

 

[audreyh1]

I understand, that most of us have no idea what should be done for the economy to return to healthy grow.

That was in the past. Things have changed - probably the biggest being demographics as the boomers retire and fewer folks remain in the workforce.

Thinking that the 80s and 90s bull market and economic expansion was somehow "normal" and that it's possible to somehow adjust global conditions to get back to that, will just frustrate you.

Isn't this a glass half empty problem - discounting the progress made today because it pales in comparison to the rah-rah days of yesteryear?

U.S. is better off economically than most of the rest of the world right now. I don't understand all the griping.

 

[LOL!]

That was in the past. Things have changed - probably the biggest being demographics as the boomers retire and fewer folks remain in the workforce.

My milllennial children have informed me that there are already more millennials than baby boomers.

https://www.washingtonpost.com/news...omers-depending-on-how-you-define-millennial/

Given the ages of Millennials, many of them are just starting out in their first jobs. This means they do not have the incomes of folks who have worked for 10, 20, 30 years or more. It also means many of them start at the bottom: retail and food service. Or they are still in school.

So millennials have increased the rolls of the lower income tier, but so what?
I've done the same thing by losing my job.

See also: https://www.washingtonpost.com/news...-but-dont-expect-politics-to-change-just-yet/

The Census reports that there were more 22-year-old Americans in 2013 than any other single age — making it the first time a non-Baby Boomer age has been the most populous since the Baby Boom began.

 

[Markola]

Nothing needs to be done.
We still have a healthy economic growth, and unemployment is less than 5%. .

+1. And, as for all the concern above that America no longer manufactures anything, well, actually, we're second only to China, and wouldn't we all rather have our problems than China's? See:

https://www.mapi.net/blog/2015/09/china-solidifies-its-position-world’s-largest-manufacturer


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[GrayHare]

Nothing needs to be done.
We still have a healthy economic growth, and unemployment is less than 5%.

+1 A little temporary deflation is A Good Thing as it helps weed out marginal endeavors.

 

[VFK57]

I really like political satire

+1
Many economists are pointing out an opposite that despite some of middle class people moved up, the bigger part had moved down.

 

[Gone4Good]

That was in the past. Things have changed - probably the biggest being demographics as the boomers retire and fewer folks remain in the workforce.

My milllennial children have informed me that there are already more millennials than baby boomers.

I think the fact that reconciles both of these statements is that while the Millennials are slight larger in absolute terms than the Boomers (both generations are about 75MM people) they have a far smaller impact relative to today's much larger population.

In the past, the generation that was retiring was much smaller than the one just entering the workforce. Not so with the Boomers and Millennials.

 

[CaliforniaMan]

During a past presidential election cycle debate, one of the moderators asked the candidates something like what were their examples of the difference between strategy and tactics. I don't remember their answers but in my opinion both just presented different examples of tactics.

They both missed one of the best examples of strategy in the postwar period which in my opinion is this:

When president Dwight D. Eisenhower, the previous Supreme Commander of the Allied Forces in Europe, was presented with an existential military threat from the Soviet Union what did he do? He built the U.S. Freeway system. Not only did this allow for the rapid movement of military units and supplies during wartime, but it also immensely added to American productivity, helping to create an economy that later simply overwhelmed the Soviets.

While I think there are many good (and some bad) ideas floating around here and elsewhere they are really just immediate tactics and do not give us any strategy to deal with the inevitable future changes being caused by automation and globalization. We cannot ignore these changes if we want to continue to be a world leader, have a powerful economy, a sufficient military, and good life for our people. We have to have a strategy to deal with them, and to come out on top of these changes. We have to be the world leader.

Long term there is only one way for a nation to come out on top of the others with all the changes caused by automation and globalization. And that is to have the best educated and most creative population. In the long run, there is simply no other solution. Whatever tactics we choose to employ, long therm we have to end up with the worlds most educated and most innovative workforce.

If we don't do it, this century will belong to the ones that do. I hope and believe it can be us. But the strategy is to build the best schools at all levels, get the most people educated, and make it a priority that is as vital as defense. Because it is.

 

[samclem]

Long term there is only one way for a nation to come out on top of the others with all the changes caused by automation and globalization. And that is to have the best educated and most creative population. In the long run, there is simply no other solution.
. . . .

If we don't do it, this century will belong to the ones that do. I hope and believe it can be us. But the strategy is to build the best schools at all levels, get the most people educated, and make it a priority that is as vital as defense. Because it is.

I'd say education is necessary but not sufficient. The world has many countries with education systems that are really good (better than ours), but with economies that never quite match the clear talents of their workforces (India is a clear example that comes to mind). So, yes, we need a great education system that does significantly better than the one we have now, but we also need a vibrant, flexible economy that allows those talents to be put to productive use. There are many well-known means of doing this, primarily centered around re-orienting our economy (and our workforce, and our capital) to respond to "true" market forces (as opposed to centrally-directed priorities), and to reduce government incentives that run counter to that goal. We'll know that we're headed in the right direction when there's a vast increase in the demand for engineers and a reduction in the demand for lawyers. The necessary discussion of specifics here would bring out the pig, so I don't think we'll be having a meaty discussion like that.

 

[purplesky]

I understand that most of us are not economists by training yet what do you think should be done to return to healthy economy grows?
I could be wrong but think that our problems come from big negative trade dis balance for many years. The largest is with China. Therefor the ideas of some unorthodox politicians who calls for fair trade rules, up to trade control might work and return at least some manufacturing back to US. Like if we sell to China $116 billions then same amount of imports from China is not taxed. Chinese $365.5 billions trade surplus should be heavily (equally spread between manufacturers)taxed so some manufacturers would be forced to move factories back to US soil. The alternative is to continue our Debt grows indefinitely what eventually will destroy the dollar.

The issue is 30 years of zero meaningful wage growth for American workers and a shrinking American middle-class.

The giganomics Millennial generation has no cash. No money there.

With these extremely low fuel prices consumer spending should be through the roof. But the average American has no cash to blow at Walmart. No growth there.

Do you really think that the losers who outsourced the crap out of America really care about bringing back manufacturing to the United States?

Lets just play along with "The responsibility to shareholders excuse".

So the "race to the bottom economy" continues and wage(wealth) inequality is just going to get worse.

Wages are the issue.