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Your ideas/thoughts on what should to be done to return to healthy economy grow.
Old 02-14-2016, 03:35 PM   #1
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Your ideas/thoughts on what should to be done to return to healthy economy grow.

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.
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Old 02-14-2016, 05:51 PM   #2
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I understand, that most of us have no idea what should be done for the economy to return to healthy grow.
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Old 02-14-2016, 05:56 PM   #3
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Until we get jobs that pay higher wages here in the USA, any manipulation with the Fed or other economic 'tricks' will be wasted.

We need wage growth.
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Old 02-14-2016, 06:07 PM   #4
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Until we get jobs that pay higher wages here in the USA, any manipulation with the Fed or other economic 'tricks' will be wasted.

We need wage growth.
Agree. Manufacturing job was always of middle class pay in most cases. Service jobs are mostly requiring Government assistance on borrowed or printed money.
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Old 02-14-2016, 06:16 PM   #5
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The more governments take directly & indirectly thru regulations, the less available to invest in the economy. Pretty straightforward.
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Old 02-14-2016, 06:49 PM   #6
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Agree. Manufacturing job was always of middle class pay in most cases. Service jobs are mostly requiring Government assistance on borrowed or printed money.
Those manufacturing jobs were not more lucrative than service jobs simply because they were manufacturing jobs. The reason manufacturing jobs paid better and people could build a life around them was because they became heavily unionized. That was part of the charm of those happy, glorious, productive, halcyon 1950's days so many people yearn for. Before they became unionized they used to be just as low paying, and in fact even lower paying, than current service jobs. There is no magic in manufacturing although there is a sort of economic force-multiplier in production of things that isn't there in simple service providing. That does not mean any of those jobs will pay more though
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Old 02-14-2016, 06:51 PM   #7
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Accelerate projects to repair and replace our aging and deteriorating roads and bridges. This work will need to be done eventually one way or another and it will create lots of jobs and those will have a multiplier effect.
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Old 02-14-2016, 06:56 PM   #8
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Capital is like water. It flows to the place of least resistance. Overhead via regulations is stifling.

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Old 02-14-2016, 07:03 PM   #9
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The more governments take directly & indirectly thru regulations, the less available to invest in the economy. Pretty straightforward.
Governments don't take money --out-- of the economy with regulations. Regulations require that money be spent improving safety, properly disposing of hazmat, keeping better track of things, and hiring people to do these things etc etc. That's money spent and therefore dumped, trickled down, as it were, back into the economy. What happens when all, 100% of any and all regulations are pulled? There will still be unemployment. Underemployment. Businessmen will still manage to find ways to go out of business. All the things that we suffer from now will still exist only with no way to address them.

Regulation, like taxes, should be as low as possible, while simultaneously being as high as necessary.
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Old 02-14-2016, 07:13 PM   #10
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The more governments take directly & indirectly thru regulations, the less available to invest in the economy. Pretty straightforward.

But pretty incorrect. The government is critical in creating some of the most wildly economic beneficial initiatives, such as the nation highway system. The government is usually responsible for creating situations to encourage capital risk in fledgling industries, like wind and solar. They kept the auto industry afloat, proving me wrong on my call to let them die.

But is there tons of waste, yes, but many regulations are quite useful, such as ensuring there is no lead in your drinking water, ie Flint.


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Old 02-14-2016, 07:55 PM   #11
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Without proper regulations, the average joe is either cheated, deceived or poisoned, so let's not fall into that trap.


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Old 02-14-2016, 07:59 PM   #12
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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?
Is economic growth not healthy right now in the US? What level of growth do you consider healthy?

Also when you say "done", to whom are you referring? the fed, congress, the executive, or state governments?

Generally I think things are going pretty well and I'm not sure we need a major course correction. But I'm no longer in the workforce and plenty happy with market returns.

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Until we get jobs that pay higher wages here in the USA, any manipulation with the Fed or other economic 'tricks' will be wasted.

We need wage growth.
It appears that wage growth has finally started to uptick at the median. Hopefully the trend will continue (graph from atlanta fed). I imagine people at the top 10-20% have seen much better growth.
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Old 02-14-2016, 08:36 PM   #13
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Harrumph! Higher wages? That'll cut into profits. Fortunately, the cost of robots is dropping rapidly, and should wage costs for jobs rise above the depreciated capital cost plus operating expenses of a robot, the robot will get the job.

Decoupling productivity from employment is a magical thing.

Many desk jobs and service positions can be replaced with narrow artificial intelligence systems over the next decade as wages near AI system expenses.

Fortunately, the outlook is bright for director-level and C-suite positions, where savings realized by correcting for rising wage expenses can contribute to profit sharing and performance bonuses.


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Old 02-14-2016, 08:43 PM   #14
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Is economic growth not healthy right now in the US? What level of growth do you consider healthy?

Also when you say "done", to whom are you referring? the fed, congress, the executive, or state governments?

Generally I think things are going pretty well and I'm not sure we need a major course correction. But I'm no longer in the workforce and plenty happy with market returns.



It appears that wage growth has finally started to uptick at the median. Hopefully the trend will continue (graph from atlanta fed). I imagine people at the top 10-20% have seen much better growth.
Normally the "healthy growth" would be when economy does well without any assistance from the Feds, and we do not need to print or borrow money to cover the trade deficit, there are strong and growing middle class and healthy stream of Taxes to the Treasury. Of course it is in my understanding. If you think that living on printed/borrowed money is normal, I would strongly disagree with you.
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Old 02-14-2016, 09:14 PM   #15
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Accelerate projects to repair and replace our aging and deteriorating roads and bridges. This work will need to be done eventually one way or another and it will create lots of jobs and those will have a multiplier effect.
+1 Roads, Rails, Bridges, Tunnels, Water, Power & Distribution etc. All the great infrastructure that keeps the country running is where I would like to see massive investment of both capital and people (put em to work!!).
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Old 02-14-2016, 09:20 PM   #16
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+1 Roads, Rails, Bridges, Tunnels, Water, Power & Distribution etc. All the great infrastructure that keeps the country running is where I would like to see massive investment of both capital and people (put em to work!!).

I agree 100%


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Old 02-14-2016, 11:56 PM   #17
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VFK -- I'm trying to clarify in quantitative terms what you mean by healthy growth. It's hard for me to think about the discussion in generic terms and having specific numbers/targets/goals helps.

For example, in 2015 US GDP growth was 2.4%. On one hand you can see this as very healthy because the US is way ahead of most other advanced economies. On the other hand, growth is lower than in past periods in US history (median is 3.4% since 1930).

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Normally the "healthy growth" would be when economy does well without any assistance from the Feds, and we do not need to print or borrow money to cover the trade deficit, there are strong and growing middle class and healthy stream of Taxes to the Treasury. Of course it is in my understanding. If you think that living on printed/borrowed money is normal, I would strongly disagree with you.

Actually I think running a trade deficit and budget deficit is normal. In fact, the US has run trade & budget deficit almost every year of my life (i'm in my early 40s). In that time frame, I'm sure there were more than a few years of good growth.

As noted on the other thread (US National Debt hit $19 trillions/Your thoughts on how it is going to affect USD) a country is not like a household in that the debt needs to be payed down. For a country, the debt can still grow every year without problem (as long as the growth rate isn't too large). The US deficit has shrunk dramatically over the past few years and the trade deficit is also shrinking. The specific numbers matter (i.e. their relative size to GDP) because some deficits are sustainable and not a cause for concern, whereas other amounts will lead to bad outcomes.

Regarding shrinking middle class, that is something specific that I can understand and it also worries me somewhat. But the shrinking middle class is probably mostly due to the upper deciles moving up and out of the middle as opposed to the bottom deciles getting hammered down (they are staying mostly flat).
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Old 02-15-2016, 12:05 AM   #18
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Harrumph! Higher wages? That'll cut into profits. Fortunately, the cost of robots is dropping rapidly, and should wage costs for jobs rise above the depreciated capital cost plus operating expenses of a robot, the robot will get the job.
As someone who has no desire to spend any more of my own human capital, I don't know if I should be happy by this trend (better for my portfolio I assume) or worried (due to social unrest).
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Old 02-15-2016, 12:43 AM   #19
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Old 02-15-2016, 06:22 AM   #20
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Harrumph! Higher wages? That'll cut into profits. Fortunately, the cost of robots is dropping rapidly, and should wage costs for jobs rise above the depreciated capital cost plus operating expenses of a robot, the robot will get the job.

Decoupling productivity from employment is a magical thing.
This does create a question of, "does anyone in america even have to work?"

When robots take a position that an employer has, productivity increases dramatically. The robot can work 24x7, 365 days a year. No overtime, no OSHA, no workers comp, no pension, etc. Savings produced by robots could be distributed to the people, much like Alaska oil revenues.

Assuming we could tax a robots productivity, you could pay the three people the prevailing wage that a robot is saving, and the company would still save money. If the robot was paid a wage, and the wage was paid in as a tax, there would still be no employer taxes, workers comp, etc. It would still be a huge savings to the company.

People could work on their own endeavors, without needing college or long days. It may save healthcare costs and free up medical resources, as many people use some sort of medical excuse not to work. FIRE would be come a thing of the past, it would be automatic at age 18 if you want.

People could spend the money they receive and generate economic activity.

I think if robots become more prevalent, it may even help the economy. Assuming the extra productivity was distributed properly.
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