NationStates Jolt Archive

http://news.yahoo.com/s/huffpost/20060619/cm_huffpost/023345

With tax cuts, massive spending and wars, Bushenomics does pump a lot of money into the economy. But what Bushenomics doesn't do is create places for the money to go. It does not enrich the vast mass of working people who are the ultimate consumers, so their spending does not increase.

Actually, as wages are driven down, pension funds are under funded or looted, public services are cut and the public debt is increased, it means that the money Bushenomics is spending is from the general population. In that circumstance, corporate profits are not so much profits, but a transfer of value and productivity into cash. It is a sort of hollowing out of our businesses and indeed of the entire country.

This article expresses much of the same concers I've had about the economy. It's creating MONEY, but not wealth.

Likewise, more money to business owners does not mean more business for owners, which means expanding their business (thereby creating jobs,) doesn't make much sense. One expands one's business when there is more demand than one can supply.

I do not trust the article because Bushonomics is not spelt with an 'e'. Also its yahoo, an organisation that would sell out the truth (and peoples' lives) to make a quick buck.

Okay... also, I didn't read the article, but I maintain that right wing economics is stupid and dumb.

I do not trust the article because Bushonomics is not spelt with an 'e'. Also its yahoo, an organisation that would sell out the truth (and peoples' lives) to make a quick buck.

Okay... also, I didn't read the article, but I maintain that right wing economics is stupid and dumb.
Well, if you're talking about one of our favorite trolls, it's Bushanomics (and laberal, but that's another story altogether), and Yahoo in this case is only acting as a host for the story, which is taken from the Huffington Post. Even though I like the HuffPo, I hesitate to recognize it as a "news" source. It's a glorified blog, and makes no bones about its lack of objectivity.

http://news.yahoo.com/s/huffpost/20060619/cm_huffpost/023345

This article expresses much of the same concers I've had about the economy. It's creating MONEY, but not wealth.

Likewise, more money to business owners does not mean more business for owners, which means expanding their business (thereby creating jobs,) doesn't make much sense. One expands one's business when there is more demand than one can supply.

The money gets reinvested. Rich people have a habit of reinvesting money - they either spend it, in which case it stimulates the economy, or they invest it, which stimulates the economy.

Don't know about your neck of the woods, but the economy in my area is the best it's been in decades.

The money gets reinvested. Rich people have a habit of reinvesting money - they either spend it, in which case it stimulates the economy, or they invest it, which stimulates the economy.

Don't know about your neck of the woods, but the economy in my area is the best it's been in decades.
The article notes that--it says that that's the reason many companies are cash-flush right now. They've been capitalized by rich people investing their money. But that hasn't translated into job creation or capital investment.

The article notes that--it says that that's the reason many companies are cash-flush right now. They've been capitalized by rich people investing their money. But that hasn't translated into job creation or capital investment.

Sure has in my area (Washington D.C - Metro Area).

The company I work for has tripled its number of employees in the past year, and will be expanding by another 50% in the next year.

Yep, it's not translating into job creation or capital investment. I guess that's why the Carlyle Group plans to invest money in us over the next five years.

Leftist economy=vodoo economy

The idea that central planning can be more effective than the market is astonishingly stupid and naive.

Laissez-faire people.

The article notes that--it says that that's the reason many companies are cash-flush right now. They've been capitalized by rich people investing their money. But that hasn't translated into job creation or capital investment.
They're collectively waiting for the right time to invest the money in capital and hiring.

Leftist economy=vodoo economy

The idea that central planning can be more effective than the market is astonishingly stupid and naive.

Laissez-faire people.

Uh oh, now we've got name-calling on both sides. :rolleyes:

But I doubt there are too many people here and in the world in general today who would advocate a complete centrally planned economy. The real conflict is between free markets and socialist/mixed economies.

Sure has in my area (Washington D.C - Metro Area).

The company I work for has tripled its number of employees in the past year, and will be expanding by another 50% in the next year.

Yep, it's not translating into job creation or capital investment. I guess that's why the Carlyle Group plans to invest money in us over the next five years.I'm guessing Defense technology, since the Carlyle group is interested. Of course your company is doing well, then. But that doesn't translate to the economy as a whole.

I'm guessing Defense technology, since the Carlyle group is interested. Of course your company is doing well, then. But that doesn't translate to the economy as a whole.
We don't do any government work at all.

Purely private industry, unrelated to anything government.

Well, I know my dad lost his job to outsourcing a few months back...

...outsourcing to Iowa.

And all's well, he got another job before his last day at the job that got shipped to Iowa. After deciding he didn't like that job, he got yet another job at another place. Seems to be the job market for someone with marketable skills seems to be pretty decent.

Well, we had to pump money in to the economy. What many people don't realize is that the bursting of the dot-com bubble, 9/11, corporate scandals and the stock market decline in 2002 destroyed over $7 trillion dollars of assets in the US economy and smaller amounts around the world.

This is compounded with the 1998 Asian financial crisis to form a massive destruction of money in the economy. The tax cuts were necessary to pump money in to the economy to keep it afloat and to prevent deflation from occurring, which would have savaged the US export sector even more than it was. Interest rates had to be slashed to open the floodgates of the money supply and to stimulate lending and investment.

It would have likely been a lot worse had we not pumped trillions of dollars in to the economy; the sudden acceleration of the economy in 2003 following all of the indicators of a second recession does not appear to be a coincidence, but coincides with the effects of the 2001 and 2003 tax cuts. Looking forward, it will be a different situation but during the time those cuts were necessary.

The article notes that--it says that that's the reason many companies are cash-flush right now. They've been capitalized by rich people investing their money. But that hasn't translated into job creation or capital investment.

Well, a lot of that is the product of the dot com bubble. Companies overinvested trillions of dollars in equipment and hiring that ultimately was proven unnecessary and had to be divested or laid off to cut costs; they also had a lot of debt from speculation on the markets that was destroyed further worsening their situation. As a result, until 2004 or so companies were reluctant to hire because productivity upgrades and cost cutting were still necessary to reduce overcapacity.

Now, the situation is different; companies need to upgrade and expand their investment to increase capacity and make more money which has translated in to more hiring and capital spending. The psychological side of the issue can't be forgotten, either; companies are still afraid to make risky investments due to the memory of the late 1990's binge and the aftermath of it. This is just like a milder version of the 1929 or Nikkei bubbles, which produced similar fear for over a decade following the actual event and its effects wore off.

Sure has in my area (Washington D.C - Metro Area).

The company I work for has tripled its number of employees in the past year, and will be expanding by another 50% in the next year.

Yep, it's not translating into job creation or capital investment. I guess that's why the Carlyle Group plans to invest money in us over the next five years.
Remember, up is down, down is up, and one place = the whole United States.

We need higher taxes for the rich so that we can all have prosperity. We are the richest country in the world, but we are unequal. The whole point of America was for everyone to be equal.

We need higher taxes for the rich so that we can all have prosperity. We are the richest country in the world, but we are unequal. The whole point of America was for everyone to be equal.

Equal in opportunity, not equal in income. Social mobility was, and continues to be to a lesser degree, the underpinning of the American system in which a doorman could one day rise to own the largest corporation on Earth.

The money gets reinvested. Rich people have a habit of reinvesting money - they either spend it, in which case it stimulates the economy, or they invest it, which stimulates the economy.

Don't know about your neck of the woods, but the economy in my area is the best it's been in decades.

Not all stimulations are created equal. What we're lacking right now, due to the decreasing purchasing power of the middle and lower class, is the huge push of demand that disposable income among the masses brings.


Sure has in my area (Washington D.C - Metro Area).

The company I work for has tripled its number of employees in the past year, and will be expanding by another 50% in the next year.

Yep, it's not translating into job creation or capital investment. I guess that's why the Carlyle Group plans to invest money in us over the next five years.

Get out of town! You mean business is booming in Washington right now? I never never never would have guessed that! (sarcasm.) Hmmm, I guess lobbyists are good for business. Once again, as seems to be habitual with you, Kimchi, you think your little microcosm represents the norm.

Get out of town! You mean business is booming in Washington right now? I never never never would have guessed that! (sarcasm.) Hmmm, I guess lobbyists are good for business. Once again, as seems to be habitual with you, Kimchi, you think your little microcosm represents the norm.

Well, actually it's all of Virginia that is doing well. Texas, Florida, New York and Washington are also doing well. The main place doing poorly is the Midwest.

Get out of town! You mean business is booming in Washington right now? I never never never would have guessed that! (sarcasm.) Hmmm, I guess lobbyists are good for business. Once again, as seems to be habitual with you, Kimchi, you think your little microcosm represents the norm.

Gymoor once again thinks that Kimchi does something government related, or that the company he works for does something government related.

Far, far from it. We have never done government work at our company, and never will. Neither do our clients.

So we have nothing to do with lobbyists. However, we do have a lot to do with what happens when you pick up the phone (in the US and in other countries) or use your computer, or go to the grocery store. We're not a telecom, not an IT company, and not Walmart.

With the exception of a few clients in Northern Virginia, all of our clients are across the US and worldwide.

Sorry to burst your bubble.

I would add that the main problem of the middle class is unsecured consumer debt - a problem that will never be solved by a burgeoning economy. That's why, even when wages go up by, say, 10%, the middle class still doesn't have any extra money to spend. They are servicing their debt.

Gymoor once again thinks that Kimchi does something government related, or that the company he works for does something government related.

Far, far from it. We have never done government work at our company, and never will. Neither do our clients.

(looks at his post) Nope, I didn't say a thing about you working for the government. All I did was express mock astonishment that the DC economy might be booming, what with unprecidented money being thrown around there. Man, how DO you function without any reading comprehension whatsoever?

So we have nothing to do with lobbyists. However, we do have a lot to do with what happens when you pick up the phone (in the US and in other countries) or use your computer, or go to the grocery store. We're not a telecom, not an IT company, and not Walmart.

Again, I didn't say YOU had anything to do with lobbyists. I said the DC ECONOMY had to do with lobbyists.

With the exception of a few clients in Northern Virginia, all of our clients are across the US and worldwide.

Sorry to burst your bubble.

You didn't burst a thing. All you did was make me scratch my head in wonderment how you seem to be reading posts from an alternate universe.

I would add that the main problem of the middle class is unsecured consumer debt - a problem that will never be solved by a burgeoning economy. That's why, even when wages go up by, say, 10%, the middle class still doesn't have any extra money to spend. They are servicing their debt.

They must be following the government's example.

I would add that the main problem of the middle class is unsecured consumer debt - a problem that will never be solved by a burgeoning economy. That's why, even when wages go up by, say, 10%, the middle class still doesn't have any extra money to spend. They are servicing their debt.

That's true; if you look at the data for consumer credit, you see that consumer debt-to-income has been falling since its peak in 2002. The reason why people have little extra to spend is because they are paying down debt rather than buying more things with credit.

Consumer Credit and Debt-to-Income (http://www.nasdaq.com/asp/econodayframe.asp?page=http://www.nasdaq.com/econoday/reports/US/EN/New_York/mba_purchase_applications/year/2006/weekly/25/index.html)

Notice how both new debt and debt-to-income are falling. People are paying down debt rather than taking on more of it, so it shows that the situation will start to improve in the future once they have reduced it to a comfortable level.

There have always been two sides to an economic argument. Economics is the science of making choices.

Before MBA's came oozing into existence, and the whole rebirth of Keynesian economics (courtesy of the Reagan administration), the free market economy worked well within the restrictions placed on it by sensible regulation.

Now I sense Vetalia will argue with me over this, in fact I KNOW Vetalia will argue with me on this, but I will lay this out anyway.

When the airline industry deregulated a number of things happened. It allowed unrestricted competition where the national flag carrier airlines competed with cheap, regional feeders. This had the immediate effect of keeping airline ticket prices low, but it had a nasty side effect. It cut into the quality of services provided by airlines. In order to compete with the cheap airlines, the majors has had to reduce services that passengers got for the price of an airline ticket to keep those ticket prices artificially low. It started with the catering services (Marriot lost out to low cost, lower quality caterers like Gate Gourmet, years ago), it has now become common practice to charge for a meal ($5.00 for a crappy gnosh bag that wouldn't whet the appetite of pygmy) on the few routes that offer food (usually cross-country or international). Now you have passengers bringing food onto an airplane and the atmosphere is like a circus, or a tourist bus in Bombay. It used to be common practice for airlines that had to cancel flights for ticketed passengers in mid-route to put those passengers up in a hotel if there was no reasonable alternative to getting them a connecting flight. Now airlines keep the passengers at the airport until the last straw is grasped, offer them a hotel room, and then wake them up less than eight hours later with the early morning flight, after keeping them up until 4 AM and transporting them to the cheapest hotel alternative so they get in bed at 5 AM or so and then actually get awakened by 7 AM (this has happened to me on more than one occasion). Luggage now has kerb side costs, not voluntary tipping of the skycaps anymore, in order to put luggage on an aircraft you must pay 2-3 dollars a bag. It used to be clearly understood what seperated airlines from each other was service. Now, it's like going Greyhound in the air. They stuff passengers onto overcrowded flights like sardines, offer them poor quality food at a premium price, charge them for bags and kerb side service, and soon those little patches of cloth they call blankets and pillows will cost money too, in addition to the poor excuses for headsets.

This is just ONE industry under deregulation. Reduced or non-existent services, poor on-time service and uncomfortable seating as airlines go back to maximized seating plans. If I wanted this type of service I would have flown People's Express (except they died because customers found their service poor and performance poor). Plus now, most routes have seen fare hikes that deregulation was supposed to prevent.

So where's the benefit? I would pay twenty to thirty more dollars more per ticket if the airlines returned to a higher standard of service and cut down the hassles.
________________________________________________________

Economic choices. You cannot rely on the top 25% of wage earners to both DRIVE the economy and CONSUME at the rate demanded to keep the economy healthy. You need the lower 75% of the brackets to have a disposable income above the necessities line. You don't get that with "trickle-down" theory. The tax load gets assigned to the middle class and the shrinking of that middle class makes it harder and harder to sustain a growing economy. This is just simple economic common sense.

There have always been two sides to an economic argument. Economics is the science of making choices.

Before MBA's came oozing into existence, and the whole rebirth of Keynesian economics (courtesy of the Reagan administration), the free market economy worked well within the restrictions placed on it by sensible regulation.

Now I sense Vetalia will argue with me over this, in fact I KNOW Vetalia will argue with me on this, but I will lay this out anyway.

When the airline industry deregulated a number of things happened. It allowed unrestricted competition where the national flag carrier airlines competed with cheap, regional feeders. This had the immediate effect of keeping airline ticket prices low, but it had a nasty side effect. It cut into the quality of services provided by airlines. In order to compete with the cheap airlines, the majors has had to reduce services that passengers got for the price of an airline ticket to keep those ticket prices artificially low. It started with the catering services (Marriot lost out to low cost, lower quality caterers like Gate Gourmet, years ago), it has now become common practice to charge for a meal ($5.00 for a crappy gnosh bag that wouldn't whet the appetite of pygmy) on the few routes that offer food (usually cross-country or international). Now you have passengers bringing food onto an airplane and the atmosphere is like a circus, or a tourist bus in Bombay. It used to be common practice for airlines that had to cancel flights for ticketed passengers in mid-route to put those passengers up in a hotel if there was no reasonable alternative to getting them a connecting flight. Now airlines keep the passengers at the airport until the last straw is grasped, offer them a hotel room, and then wake them up less than eight hours later with the early morning flight, after keeping them up until 4 AM and transporting them to the cheapest hotel alternative so they get in bed at 5 AM or so and then actually get awakened by 7 AM (this has happened to me on more than one occasion). Luggage now has kerb side costs, not voluntary tipping of the skycaps anymore, in order to put luggage on an aircraft you must pay 2-3 dollars a bag. It used to be clearly understood what seperated airlines from each other was service. Now, it's like going Greyhound in the air. They stuff passengers onto overcrowded flights like sardines, offer them poor quality food at a premium price, charge them for bags and kerb side service, and soon those little patches of cloth they call blankets and pillows will cost money too, in addition to the poor excuses for headsets.

This is just ONE industry under deregulation. Reduced or non-existent services, poor on-time service and uncomfortable seating as airlines go back to maximized seating plans. If I wanted this type of service I would have flown People's Express (except they died because customers found their service poor and performance poor). Plus now, most routes have seen fare hikes that deregulation was supposed to prevent.

So where's the benefit? I would pay twenty to thirty more dollars more per ticket if the airlines returned to a higher standard of service and cut down the hassles.
________________________________________________________

Economic choices. You cannot rely on the top 25% of wage earners to both DRIVE the economy and CONSUME at the rate demanded to keep the economy healthy. You need the lower 75% of the brackets to have a disposable income above the necessities line. You don't get that with "trickle-down" theory. The tax load gets assigned to the middle class and the shrinking of that middle class makes it harder and harder to sustain a growing economy. This is just simple economic common sense.


Isn't it hilarious how in the end, both a deregulated free market and government socialism arrive at the same crap level of non-service, where we are all equally miserable?

-snip-
So where's the benefit? I would pay twenty to thirty more dollars more per ticket if the airlines returned to a higher standard of service and cut down the hassles

It is a valid point that the quality of service has declined; however, the cost of airlines in real terms has dropped considerably even with a 600% increase in oil prices in the past few years. It's the rise in oil prices and costs from 9/11 and labor that are driving all of these additional fees, not deregulation.

The main benefit of deregulation has been the expansion of routes and the fall in cost; if we were to return to regulation, we would pay more and likely get better service, but you would not be able to fly anywhere in the country like you can now. The rapid expansion of routes is tied directly to the deregulation of the industry. It also helped alleviate the congestion problem at airports by opening more to direct flights. The question is: Do you want to pay more for better service but sacrifice the ability to travel wherever you want?

You can either pay less, recieve inferior service and be unlimited in the places you can fly to and from or you can pay more, recieve better service, and have to deal with a lot more congestion and many more limitations on the places you can fly to and from. It's either one or the other; the nature of the industry means you have to make a tradeoff between diversity of choices or luxury unless you are willing to spend a lot of money.

Isn't it hilarious how in the end, both a deregulated free market and government socialism arrive at the same crap level of non-service, where we are all equally miserable?

...and both sides will jump to tell you, "Well that's because the socialists are screwing up the free market!" or "That's because the free market is inherently flawed!"

...and both sides will jump to tell you, "Well that's because the socialists are screwing up the free market!" or "That's because the free market is inherently flawed!"

I offer the following hypothesis.

If Clausewitz said that war is a continuation of politics by other means, then politics are a continuation of economics by other means.

Which means that socialists are really engaged in market economics, where they are in absolute monopoly.

And any market where someone has an absolute monopoly, the customer (the rest of us) get screwed.

You can arrive there by socialism or free market, but the end is the same.

Well, actually it's all of Virginia that is doing well. Texas, Florida, New York and Washington are also doing well. The main place doing poorly is the Midwest.
So places without major tourist attractiones and large streams of businessman?
I wonder why they are doing well :rolleyes:

So places without major tourist attractiones and large streams of businessman?
I wonder why they are doing well :rolleyes:

Hmm... most of Virginia doesn't have the "major tourist attractions" and "large streams of businessmen". It's a largely rural state.

Hmm... most of Virginia doesn't have the "major tourist attractions" and "large streams of businessmen". It's a largely rural state.
Well are you talking about DC or Virginia? I get the impression that it is the former.

Well are you talking about DC or Virginia? I get the impression that it is the former.

I live in Virginia. We do much better than DC.

So places without major tourist attractiones and large streams of businessman?
I wonder why they are doing well :rolleyes:

Texas, Flordia, and Virgina are three of the biggest economies in the country and are adding tens of thousands of jobs each year. They're centers of our oil and gas industry, IT, financial services, architectural design, engineering, biotech and a host of others.

Texas, Flordia, and Virgina are three of the biggest economies in the country and are adding tens of thousands of jobs each year. They're centers of our oil and gas industry, IT, financial services, architectural design, engineering, biotech and a host of others.
That too.

The money gets reinvested. Rich people have a habit of reinvesting money - they either spend it, in which case it stimulates the economy, or they invest it, which stimulates the economy.

Don't know about your neck of the woods, but the economy in my area is the best it's been in decades.

That's the theory, but it has proven not to be the case.

In reality, they invest when the economy growing. When it's slow or not growing quickly enough to meet demand, they tend to just hoard it.

When the money is redistributed downwards it stimulates the economy. Poor people don't save because they can't afford to.

Poor people don't save because they can't afford to.

And/or they simply aren't good with money. Which means the money ends up the the hands of the rich anyway. But at least some mouths got fed along the way.

And/or they simply aren't good with money. Which means the money ends up the the hands of the rich anyway. But at least some mouths got fed along the way.
Isn't that the same as stimulating the economy?

Isn't it hilarious how in the end, both a deregulated free market and government socialism arrive at the same crap level of non-service, where we are all equally miserable?

Yes indeed, DK.

Except in the deregulated free market we get to pay for the priviledge.

It is a valid point that the quality of service has declined; however, the cost of airlines in real terms has dropped considerably even with a 600% increase in oil prices in the past few years. It's the rise in oil prices and costs from 9/11 and labor that are driving all of these additional fees, not deregulation.

REAL TERMS? Listen to me very carefully. When a system is faulty to begin with, any change in the balance of the system (cost of oil rising, cost of labor increasing) will cause drastic problems. You get a pogoing effect. The airlines under deregulation are built on a house of cards and instead of concentrating on what would stabilize the industry, once again CEO's concentrate on what will affect the bottom line in the short term. Any drastic change in market conditions will result in an equally drastic change on the short and long term bottom line.


The main benefit of deregulation has been the expansion of routes and the fall in cost; if we were to return to regulation, we would pay more and likely get better service, but you would not be able to fly anywhere in the country like you can now. The rapid expansion of routes is tied directly to the deregulation of the industry. It also helped alleviate the congestion problem at airports by opening more to direct flights. The question is: Do you want to pay more for better service but sacrifice the ability to travel wherever you want?

NO. The main "benefit" of deregulation was unfettered competition. Airlines opened new routes to compete without the benefit of realistic analysis as to whether certain routes would be profitable in the long term. Rapid, uncontrolled expansion is rarely good for any long term prospects in any business. Controlled, measured growth allows a company to expand while keeping a strong foundation from which to grow beneath the company's feet. Too many companies get greedy and overreach for the sake of a short term spike in the bottom line.

The congestion problem in the air and on the ground did not enjoy any improvement under deregulation. More feeder and start-ups purchased aircraft and started flying. There was a net increase in air traffic congestion and worse "on time" numbers as conditions on the ground demand longer layovers to transfer passengers and luggage in addition to more "tin" being pushed around the ATC vectors.

I would very much prefer better service and a more stable industry. I would pay more money for that willingly.


You can either pay less, recieve inferior service and be unlimited in the places you can fly to and from or you can pay more, recieve better service, and have to deal with a lot more congestion and many more limitations on the places you can fly to and from. It's either one or the other; the nature of the industry means you have to make a tradeoff between diversity of choices or luxury unless you are willing to spend a lot of money.

With a reregulated industry the number of "cheap" airlines would decrease as companies who NEEDED to go out of business would finally surrender and go belly up like they should. The number of aircraft in the sky and on the ground would go down temporarily as the feeders and cheapies default on the plane contracts. The diversity of choices is a false mantra. Airlines cannot discipline themselves as to what a sound route expansion choice is. As the theoretical President of UAL, I am not going to sign off on route expansion when there is a limited profit potential. You don't grow your airline by offering daily non-stops to Missoula, Mt. You grow your airline by expanding into markets that offer a real potential in growing profits.

And you know dick about the "nature of the industry" much less what is healthy for it. Remember supply comes before demand. If you are supplying a route in which you get 60 passengers and 3 tons of baggage, and very little air freight demand, you are running a fundamentally unprofitable route. Trimming route maps to unprofitable small markets is part of the business of the business.

I am not asking for luxury. I am asking for the service that I pay for. Right now, the industry supplies inferior service and is charging for services that when impacted on the bottom line are a very small part of the overall financial instability problem. The issue with baggage charges is not that every passenger having two bags is too expensive, the issue is making room for the much more profitable per square foot air freight.

I personally prefer, and I think most air passengers would prefer fewer routes with better service and greater stability than unlimited choices to small markets. The smaller markets can benefit more from a robust ground transportation system (rail, bus and rental car) more than a few prop driven aircraft provided by some weak feeder or regional carrier whose passengers are too damn impatient to get there now.