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How To Explain Economics To A Liberal - Video

Here's just one link

I typically ask posters to cite excerpts, but since yer a moderate, and because that was a short piece, I will comment on it. Gee, aren't you lucky?

Increase the range and supply of goods, the supply-sider says, and demand—the other critical part of the economic equation—will take care of itself.​

How will that occur? If consumers don't have any disposable income, how can they buy more stuff, even if there's a large supply of it? Otoh, if they get their hands on more money, businesses will surely produce products for them to purchase in order to earn profits.

[Keynesians argue that] since government has lots of money, it can stimulate growth faster by spending it quicker.​

Well, if the economy is in a downturn, consumers will spend less, which can lead to a downward spiral. Gubmint can step in and spend money through deficits and thereby create demand that turns things around.

The supply-sider sees this formula as wrong-headed. The marketplace, as opposed to government, knows best where economic effort should go to satisfy demand based on consumer tastes.​

Keynesians do not argue that gubmint "knows best where economic effort should go to satisfy demand based on consumer tastes." They see it as a "demander" of last resort.

upply-siders favor various kinds of economic deregulation — so investment is free to go where it can do the most good


Keynesians agree that overregualtion is of course bad. They support adequate regulation. Like, e.g., enough regulation of mortgage derivatives to avoid a housing bubble and an event like the Great Recession.

[Supply-siders also favor] tax cuts, especially cuts in capital gains and in marginal tax rates on higher income brackets.​

Keynesians are not opposed to low levels of taxation for those areas. Otoh, they do want sufficient revenues collected to avoid large deficits. If the political will exists to limit gubmint spending and thereby allow for those tax cuts, I don't see a problem. I'll generally support tax cuts that are paid for by reduced spending.

President Obama and his advisers tried the Keynesian "stimulus" formula to get the country back on track after the 2007-8 recession. The result has been the slowest economic recovery in modern history.​

The reason the recovery has been so slow is that this was not a business-cycle recession like the ones we've seen over the past seventy years, but rather a near-collapse of the financial sector akin to the Great Depression. Consumer and business confidence are severely shaken by such an event, and it takes years for them to recover psychologically.

President Ronald Reagan self-consciously tried the supply-side formula​

I think he must have meant "consciously," but I don't see the reason to include even that. Sorry, copyeditor's sidenote.

The result was 12 years of sustained economic growth in a row—the longest unbroken expansion in American history—with an average GNP growth rate of 3.2 percent.​

I don't find that to be accurate, cherry-picking aside. Economists generally look at real GDP. If you use annual figures, first you need to recognize that the economy shrank in 1982, I'd say in response to Reagan's policies. It wouldn't do it again until 2008. That's a lot more than twelve years. Using quarterly data, we had growth Q4 1982 - Q4 1990, which is eight years, not twelve. Nominal GDP doesn't work either, with a steady expansion annually 1950-2008, and quarterly Q2 1982 - Q4 1990.

No big deal, but eight years, not twelve. Funny though that there were twelve years of Republican presidents. Maybe that's what he was thinking of.

[G]government revenues rose—a paradox created by the fact that the increased economic activity generated more taxable income.​

Yeah, revenue did increase … eventually. A large part of the "increased economic activity" he speaks of was … gubmint spending, up 85% 1981-1990. Revenues grew by only 11% 1981-84, and by 72% 1981-1990.

[Keynesians] admit economic growth happened in the Reagan years, but insist it was the "wrong" kind of growth because it was aimed at satisfying fleeting consumer tastes, instead of creating new infrastructure or green jobs or something.​

Not "wrong," but rather "suboptimal." We in fact did not make adequate public investments in infrastructure and education during the Reagan era. That would not have made sense, of course, since "gubmint is the problem."
 
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AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."


Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!

-Rudyard Kipling
 
Anyone can find something on the internet that they agree with. I lack the patience to endure right wing hot air taken from the internet. If that video has anything worth listening to, explain it in your own words. If you can't do that, you do not understand it yourself.

And you don't think that there is any such thing as left wing hot air taken from the internet?
 

There are a few extremely well known economists from history who have very different views on economics and many, many more other economists who also have very different views on economics. Of course with all the economists out there you are bound to find a few on both sides who actually agree with each other or with economists of the past. I have yet to see one who has been declared the God of economics and is declared right all the time by everyone. By the way, I actually am a moderate and don't necessarily agree hook, line, and sinker with supply side economics as a whole and I definitely do not agree with the liberal economic theories presented here on DP that even most Democratic Congressman don't even agree with. All I wanted to show is that for every fact, statistic, and graph the left can present as evidence there are also facts, statistics, and graphs the other side can use to prove their points. Any time there are opposite viewpoints on topics the other side can find facts to cherry pick. As I said, you can take the bible and one side can cherry pick facts to prove their religious beliefs while another side can cherry pick facts out of that very same bible to prove their case. The bible hasn't changed, only it's interpretation. Same with economics. All anyone can do is interpret the facts in their own prejudiced ways. The trouble is the left refuses to believe they are nothing more than cherry pickers while I'm in the middle enough to acknowledge that ALL sides cherry pick their facts.
 
Let's start with the notion that banks do not loan money to people starting businesses. Banks loan money to established businesses OR asset rich individuals that are starting businesses who are individually credit worthy.
Cannot tell if you agree, from your simple statement, with whether banks should, or not, lend to other than to those stated. But since I see your lean I will go this way:

Your side of the argument makes up approximately 1/3 of the population with my side being about another third and about a 1/3 more or less in the center. All figures are appoximate. There are plenty of you, and plenty of those being pretty darn rich folk with Ds behind their names [Buffet, Rockefellers, Kennedys...]...so here is a novel idea, why don't you folks pool some of your money and start some banks of your own. Do the whole CRA, community reinvestment act, style thing on whatever scale and whatever venues you care to. Myself, I think very quickly these banks would go to too little to care if they failed...but hey, giver 'er a try, you know?

While we can all go around picking a choosing the stats we want and don't want... I don't believe that, eclectically, it can be disproved that the overall explosion of wealth and utility worldwide, and the sharing of all this, has come from the employment of more or less capitalistic means. More than less free markets, competition, private ownership of property, patents to reward innovation, voluntary exchange...

Certainly we want low barriers to entry, so maybe your 'team' can figure out a way to loan to un or under-qualified credit risk folks. There is capital out there. Myself, I would rather it be up to those desiring capital funding to go out and convince those that have it that those wanting have a particularly good and marketable idea. Then let those who have it make a free choice as to if they are willing to invest. If it is truly a good idea, somebody will most probably, desiring that other capitalistic incentive, the profit motive, that desire for more moola, invest.
 
Cannot tell if you agree, from your simple statement, with whether banks should, or not, lend to other than to those stated. But since I see your lean I will go this way:

Your side of the argument makes up approximately 1/3 of the population with my side being about another third and about a 1/3 more or less in the center. All figures are appoximate. There are plenty of you, and plenty of those being pretty darn rich folk with Ds behind their names [Buffet, Rockefellers, Kennedys...]...so here is a novel idea, why don't you folks pool some of your money and start some banks of your own. Do the whole CRA, community reinvestment act, style thing on whatever scale and whatever venues you care to. Myself, I think very quickly these banks would go to too little to care if they failed...but hey, giver 'er a try, you know?

While we can all go around picking a choosing the stats we want and don't want... I don't believe that, eclectically, it can be disproved that the overall explosion of wealth and utility worldwide, and the sharing of all this, has come from the employment of more or less capitalistic means. More than less free markets, competition, private ownership of property, patents to reward innovation, voluntary exchange...

Certainly we want low barriers to entry, so maybe your 'team' can figure out a way to loan to un or under-qualified credit risk folks. There is capital out there. Myself, I would rather it be up to those desiring capital funding to go out and convince those that have it that those wanting have a particularly good and marketable idea. Then let those who have it make a free choice as to if they are willing to invest. If it is truly a good idea, somebody will most probably, desiring that other capitalistic incentive, the profit motive, that desire for more moola, invest.

I was not making a qualitative statement (suggesting things are not as they should be), only a statement of fact. I was merely pointing out that banks do not loan money to start-ups. So, your long response is off target as far as I am concerned. BTW, I am not sure who you think "my team" is?

I was trying to dismiss the notion of the video that rich people give money to banks to fund start-ups, because banks are not in that business. That aside, there is truth to the notion that capital is aggregated by financial institutions from the wealthy and loaned or invested in businesses. There are various types of those institutions that service various types and stages of business. Start-up's receive money first from the entrepreneur himself, and then from Angel investors and venture capital. As businesses grow and stand on their own, there are other types of financial institutions there to help.

The SBA has been a great source of early stage capital, both to the individual and to backing specialized venture capital firms. It has generally been a good program.
 
And you don't think that there is any such thing as left wing hot air taken from the internet?

Of course there is. My point is that posters on an internet forum should compose their own arguments, using the internet only to document factual assertions. At the very least they should excerpt important parts of an article they found on the internet; they should restrict the excerpts to one computer page; they should follow this with a web address of the article they excerpted.

Those who find the article interesting can click on the web address.
 
Of course there is. My point is that posters on an internet forum should compose their own arguments, using the internet only to document factual assertions. At the very least they should excerpt important parts of an article they found on the internet; they should restrict the excerpts to one computer page; they should follow this with a web address of the article they excerpted.

Those who find the article interesting can click on the web address.

In other words, both the left and the right posters here on DP should prove their arguments by cherry picking their facts.
 
I was not making a qualitative statement (suggesting things are not as they should be), only a statement of fact. I was merely pointing out that banks do not loan money to start-ups. So, your long response is off target as far as I am concerned. BTW, I am not sure who you think "my team" is?

I was trying to dismiss the notion of the video that rich people give money to banks to fund start-ups, because banks are not in that business. That aside, there is truth to the notion that capital is aggregated by financial institutions from the wealthy and loaned or invested in businesses. There are various types of those institutions that service various types and stages of business. Start-up's receive money first from the entrepreneur himself, and then from Angel investors and venture capital. As businesses grow and stand on their own, there are other types of financial institutions there to help.

The SBA has been a great source of early stage capital, both to the individual and to backing specialized venture capital firms. It has generally been a good program.
Fairly good information other than the "team" thing. Anybody can read you are a progressive. Anybody can see your [false] signature statement about the GOP at the bottom. If nothing else, its not our side of the argument.

Sidebar: If you are going to be playing the make the folks guess game, best not to act so surprised when somebody goes ahead and takes a stab at it.
 
Any time there are opposite viewpoints on topics the other side can find facts to cherry pick.

I think I understand what yer saying, and I'd say that yer being reasonable. I agree that it's often important to be cautious in making judgements. But I would also encourage you to go ahead and make a judgement regarding this topic to the extent that you reasonably can. Supply-side economics is WAY oversold by the Right. It's been tried twice in my lifetime, and it's clearly failed both times. The numbers are there to back that up.

Republicans like to talk about the spike in GDP in 1984 — more than seven percent. But check out this graph:

real_GDP_1978_1990.jpg

Notice that GDP was nearly flat 1978-83, up only about eight percent for that six-year stretch.

I've been looking at economic data for more than forty years, and one of the most useful conclusions I've come to, a rather obvious one, is that the so-called "fundamentals" of an economy are a major determinant of outcomes. For something like GDP, there's an underlying upward slope produced by things like population growth and increases in productivity. Exogenous variables — events like the 9/11 attacks and factors like gubmint policy (fiscal, monetary, regulatory, etc) — can affect the rate of expansion.

When you look at GDP in the late 1970s and into the early 1980s, we had what can be described as "pent-up" demand in the economy. I'd say this was caused in large part by things like the oil shocks and the associated inflation, the early effects of globalization and automation, a general "correction" back to a growth rate without the expansionary fiscal policy associated with the conflict overseas 1965-74 and the various Great Society programs, and then to some extent by the application of SSE policies by the Reagan administration. Working- and middle-class consumers with money in their pockets spend it, and that creates expansion. SSE doesn't make that happen. It shoves money at upper-income households through tax cuts, and it produces deregulation that allows for growth that is more likely to be unsustainable and often ends up being exploited by criminals and other unscrupulous types. That's how bad things happen.
 
I don't like supply side economics insofar as tax cuts just for the wealthy...that is wrong.

I don't like big government either...with massive deficits, corruption and wasted capital.

I like low taxes for everyone (no taxes for the poor), I like the government staying out of the economy as much as humanly possible (no Fed, balanced budgets, no job programs or corporate bailouts), I like a reserve-based armed forces with a VERY small full time armed forces (100,000 is plenty), I like a welfare system that provides for the needs (not the wants) of those who need it; the more they need it, the more help they get - but I prefer it to be based on government shelters rather then sending checks to people and finally I like full government health care assistance for children, the old (only ages 65-80) and the disabled plus basic-only government healthcare for everyone else...those that need more, use charities.

To me?

- supply siders are mostly the greedy rich wanting to pay less taxes

- Krugmanites are mostly well-intentioned, macroeconomic ignoramuses (and/or mooches) who want to throw money from helicopters with disastrous long term consequences.
 
In other words, both the left and the right posters here on DP should prove their arguments by cherry picking their facts.

Arguments should be fact based. One should be able to evaluate evidence sufficiently to know which facts are important, and which sources of facts are credible.
 
I think I understand what yer saying, and I'd say that yer being reasonable. I agree that it's often important to be cautious in making judgements. But I would also encourage you to go ahead and make a judgement regarding this topic to the extent that you reasonably can. Supply-side economics is WAY oversold by the Right. It's been tried twice in my lifetime, and it's clearly failed both times. The numbers are there to back that up.

Republicans like to talk about the spike in GDP in 1984 — more than seven percent. But check out this graph:

View attachment 67198631

Notice that GDP was nearly flat 1978-83, up only about eight percent for that six-year stretch.

I've been looking at economic data for more than forty years, and one of the most useful conclusions I've come to, a rather obvious one, is that the so-called "fundamentals" of an economy are a major determinant of outcomes. For something like GDP, there's an underlying upward slope produced by things like population growth and increases in productivity. Exogenous variables — events like the 9/11 attacks and factors like gubmint policy (fiscal, monetary, regulatory, etc) — can affect the rate of expansion.

When you look at GDP in the late 1970s and into the early 1980s, we had what can be described as "pent-up" demand in the economy. I'd say this was caused in large part by things like the oil shocks and the associated inflation, the early effects of globalization and automation, a general "correction" back to a growth rate without the expansionary fiscal policy associated with the conflict overseas 1965-74 and the various Great Society programs, and then to some extent by the application of SSE policies by the Reagan administration. Working- and middle-class consumers with money in their pockets spend it, and that creates expansion. SSE doesn't make that happen. It shoves money at upper-income households through tax cuts, and it produces deregulation that allows for growth that is more likely to be unsustainable and often ends up being exploited by criminals and other unscrupulous types. That's how bad things happen.

I like to think outside the box and not take ANY economic theory as being 100% correct. If I were forced to choose between liberal economics and supply side, I would choose supply side. If I could I would certainly not follow that 100%. There are actually a lot of truths to many of the things liberals post on here regarding economics but they are only looking at things from a present perspective and not from a future perspective. Yes, many of their ideas would prove beneficial in the short term but they refuse to accept that money does not grow on trees (such as in the video) and you can't just borrow and spend and print money into oblivion. While I understand that they will correct me in saying that they do not say "into oblivion", but in truth, that really is what they are saying because they say we are nowhere close to being in trouble for our debt and our easy money policies. Our national debt to GDP ratio is at extremely high levels and we can't just keep on going down this same road where eventually our biggest expense will be the payments on the national debt and before we know it we will be slapped in the face with 18% interest rates, a real Middle East war, and facing a depression far worse than the great one. I want to head this off at the pass now instead of constantly flirting in the neighborhood and then getting caught with our pants down. We need a belt to hold our pants up now because we may not be able to find a belt later. It's called fiscal responsibility instead of reckless monetary policy.
 
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Arguments should be fact based. One should be able to evaluate evidence sufficiently to know which facts are important, and which sources of facts are credible.

The term "cherry picked facts" includes the word "facts". There is a reason for that, because they are facts. It's like Obamacare for example. There are plenty of facts that say Obamacare has been good. There are plenty of facts that say Obamacare has been terrible. You can find polls that show most are in favor of Obamacare. You can find polls that show most people are opposed to Obamacare. They are all "facts", just cherry picked facts.
 
The term "cherry picked facts" includes the word "facts". There is a reason for that, because they are facts. It's like Obamacare for example. There are plenty of facts that say Obamacare has been good. There are plenty of facts that say Obamacare has been terrible. You can find polls that show most are in favor of Obamacare. You can find polls that show most people are opposed to Obamacare. They are all "facts", just cherry picked facts.

Whenever someone says that something is good for the economy you need to ask "Whose economy?" The Affordable Care Act has certainly benefited those who previously needed health insurance but could not afford it. This included those who were rejected because they had pre existing conditions.

ACA has not benefited those who were previously content with their health insurance policy and whose premiums have increased.

Those who use facts to argue for or against the ACA should be specific about the significance and restrictions of the facts. Changes in economic policy nearly always benefit some people at the expense of others.
 
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Yeah, no.... Middle class economics is what we had until Ronald Reagan. The days prior to his reign, I use the word advisedly, were when the US boasted the highest standard of living in the world. Reagan ushered in a a change in the paradigm that took us from middle class economics to business class economics, and now we are living with the results.

Economic policy is determined by focus and priority.
 
There are plenty of facts that say Obamacare has been terrible.

Those "facts" typically include calculations that are misleading. E.g., because ACA participants receive subsidies, the premiums they pay are often much less than the market rate. When they increase, which they of course do like all rates, the percentage increase is a lot more. If you pay $100 month on a policy and it increases $25 ($300/yr), that's a 25% increase. People can look at that and think that maybe next year the policy they pay $4000 a year for may jump to five grand.

Health insurance continues to be expensive and its cost continues to rise. I'd say the weight of the evidence clearly indicates that Obamacare has had a very large net benefit in terms of both cost and quality, in both healthcare and health insurance.

>>You can find polls that show most are in favor of Obamacare [and that] most people are opposed to Obamacare. They are all "facts", just cherry picked facts.

Poll results are inevitably inconsistent.
 
Yeah, no.... Middle class economics is what we had until Ronald Reagan. The days prior to his reign, I use the word advisedly, were when the US boasted the highest standard of living in the world. Reagan ushered in a a change in the paradigm that took us from middle class economics to business class economics, and now we are living with the results.

Economic policy is determined by focus and priority.

Oh geez. Blame everything on Reagan, who was president 25 years ago? Might as well blame it all on George Washington.
 
Oh geez. Blame everything on Reagan, who was president 25 years ago? Might as well blame it all on George Washington.

It's not so much Reagan as it is the agenda. If an agenda has a representative that can sway public opinion, then it's a lot easier to follow and initiate an agenda.
 

Like so many things you can find on the Internet that take partisan views: he has it half right. Interesting points; most true as to content but missing significant content to make it fully true.

A decent explanation of supply side. But economics is about both supply and demand. It is a yin and yang. As soon as you decide its all about one or the other, then you twist off into the half truths of never-never land where this guy is trekking. Its a shame that economics is not as simple as how he conveys.

The things I found wrong with this at first blush.

1) The wealthy do provide the capital that grease the skids of capitalism; but often are not involved in the start-up.
2) Starting a business is far more complicated than going to the bank, which have NO role in the start-up game. Its usually the middle class that start the business and fund its early development. The very early seed capital does not typically come from the wealthy, but from the broke entrepreneur, who boot straps. You want more start-ups? figure out how to put more money in the hands of the middle class.
3) A businessman will not invest without evidence of demand. yes, new markets are created, and businesses will take some supply side investment, but only AFTER someone has interpolated the demand. No one just invests from the supply side.
4) Lowering taxes does not grease the skids of capitalism. In fact, capital is better formed when the investor has a incentive to look long term. Those incentives can be low capital gains taxes and HIGHER marginal rates (and maybe an Investment Tax Credit), so the in essence, he is lowering his current taxes more and having the government essentially subsidize his investment.

So, the net-net is that the wealthy do provide capital which does work to expand jobs, but seed of a business is much more grassroots than this guy. Jeff Bezios did not start UBER, as he implied. In fact, Bezios did not become involved with the company until it had been operating 2 years and already had a couple of rounds of financing. He should get ZERO credit for the start-up financing (speculation: He turned out earlier opportunities until he saw evidence of take-up or demand)

It was started by too broke entrepreneurs: Garris Camp and Travis Kalnick...who likely worked for free for a year to 18 months putting together the technology and writing the business plan, which contained elements such as market sizing and addressable markets; which build a case for demand that their seed investors bought into.

https://en.wikipedia.org/wiki/Uber_(company)
Jeff Bezos hops on Uber, invests in private car service - GeekWire

So, nice half message.
 
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