Economic News

[sringwal]

That baffles me because the core of the political divide in this country is rooted in money and how people want to spend other people's money. The term "fair share" that the left likes to throw around (its a top 10. Right behind bigot) has always rubbed me the wrong way. Who are people paying less than me to determine what my "fair share" is?

Going off on a tangent, I have been thinking a lot lately about the useful life of capitalism as it relates to the widening wealth gap in the country. How do you preserve it but slow down the increasing gap without tanking the economy? The most readily identifiable ways are taxation, revolution, and g'ment regulation. I'm thinking it may be possible to do it with some form of g'ment regulation tied to education. In any case, it can't go on indefinitely without dire consequences.

I think part of the disconnect is a lack of understanding of just how much the truly wealthy make. I’m not even talking about the 1%, but instead the 1% of the 1% of the 1% of the 1%. They truly have an unnecessary amount of wealth, as far as how more that they have then they, or their children, or their children’s children could ever hope to spend.

I got it, but I didn’t really get it, until I was introduced to this interactive chart about Elon Musk’s wealth. I don’t know if you have seen it before, but it is worth a look.

How Rich is Elon Musk? - Visualization of Extreme Wealth - Engaging Data

This visualization shows how rich Elon Musk is by comparing his extreme wealth to other large quantities of money and showing them on the same scale.

engaging-data.com

They have expanded the content on this website since I last visited - these are some other fascinating charts.

How much wealth do the world's richest billionaires have? - Engaging Data

This graph shows the relative wealth of the top billionaires in the world, organized by country or industry.

engaging-data.com

 

[sringwal]

At what point does an average person care more about power than money? Where do the two cross on a line graph? If we could improve education to a level of 50% above our current level of functional education how many generations would it take to reduce poverty by 50%?

Depends on what you mean by 50% improvement in educational level. How do you measure that? Rise in IQ scores? Literacy rates?

Because the first simply isn’t possible. The second sounds good, and potentially could have been manageable in the 90s, early 2000s, but shows a general lack of understanding of where we are today. Phones and other digital distractions have won. Almost nobody under the age of 18 reads anymore. You’d be shocked at how bad it has gotten. The goal now is to simply slow the bleed. We are moving rapidly towards a post literate society. The only question is “what comes after”?

Real talk? As someone who has been in education for the last 20 years - a lot of you have no idea how much of a generational gap there is over the last 20 years. And things have gotten so much worse since COVID.

Now is not the time to be cutting funding and fighting public schools. Because what is being asked of teachers and other educators simply isn’t realistic right now. And it is only going to get worse.

 

[superrific]

First, it's economic orthodoxy that consumption taxes are more efficient, even with acknowledged drawbacks. That doesn't mean that the orthodoxy is unchallenged by any means.

Eh, it's only more efficient at high income levels. Let's say there's an income level X, which is the minimum income needed for most Americans to think about saving. X is probably the cost of basic necessities plus basic life style choices. Like, nobody needs to go out to eat, but most families would prefer to go out once a month or once every two months than save that money. People like to go a ball game now and then. Or a movie.

The point is, when people make less than X, the efficiency is exactly the same. All incentives are the same, because all income is being spent. The income tax is probably more efficient, actually, in those circumstances.

And at higher incomes, where they can be more efficient, consumption taxes can't raise enough money. This is why, I think, all European countries with VATs also have income taxes. They get, roughly speaking, the same amount of revenue from income and consumption taxes.

The real advantage of a VAT, in my view, is that it is hard to evade.

 

[superrific]

My general point is that there is a sound economic basis for tariffs, if applied carefully, reluctantly and consistently.

I disagree. Tariffs are a horrible form of consumption tax because they are distorting. No common tax that I'm aware of is more distorting than a tariff. I don't know if NYC still has its "mansion tax" but that was incredibly distorting. It was, IIRC, 2% tax above a million and 0% below. Like, literally, you'd do better selling your house for $990K than $1.05M.

Tariffs combine all the worst features of tax regimes. They are regressive like consumption taxes. They are more economically distorting than income taxes. And they are hard to consistently enforce, are easily evaded, and are subject to all sorts of political fuckery.

 

[Huh?]

But tariffs are the most efficient way to ensure protection for (a) industries that are critical to national security (e.g. airplane manufacturing and (b) industries that are critical inputs to other manufacturing processes that can be affected by global supply disruptions (e.g. semiconductors).

Also, while free trade has worked extremely well for the economy as a whole over the last 40 years, it has not worked well for low-skilled and semi-skilled manufacturing workers. The communities that were reliant on these jobs (inner cities like Baltimore and rural communities) have been disproportionately affected. We talked a big game about retraining these workers and it didn't work because of a combination of underinvestment and unrealistic optimism about their retrainability. Going forward, we need to find a place for these workers in the economy, and AI isn't going to make it easier.

 

[superrific]

But tariffs are the most efficient way to ensure protection for (a) industries that are critical to national security (e.g. airplane manufacturing and (b) industries that are critical inputs to other manufacturing processes that can be affected by global supply disruptions (e.g. semiconductors).

I disagree. I don't know the literature relative to b), but the literature I do know -- on tariffs generally -- protection rarely works. Usually tariffs are the most efficient way to build inefficient industry. If you want to retain domestic industry, subsidies are considerably better. That way, you get exactly what you want and no more.

The issue of free trade and its relation to low skilled workers is complex and there is no clean answer. One factor that it often ignored is the fact that the jobs we lost to foreign competition are typically horribly unpleasant jobs. Think working in a fast food place is bad? Try a textile sweatshop or garment factory. That's what I find crazy about the coal mining industry. You would think people would be running away from coal mining jobs as fast as possible. They are dangerous and unhealthy and physically taxing. It's one of the worst things you can do to your body. It's questionable how well it pays after accounting for the risks of disability or death.

 

[UNCatTech]

Sure, but you understand that terminology turns a lot of people off and puts them on the defensive.
Democrats can stick to their messaging if they want, but changing “fair share” to “optimal” is easier for a lot more people to accept, I think.

The samecwith white privilege. Just doesn't resonate and gives the wrong impression.

I think @Callatoroy has blocked me, I'm hurt.

 

[finesse]

how do I get this lifestyle??

Practice, practice, practice.

Waking and baking is easier to pull off.

 

[nycfan]

 

[altmin]

2 million Americans are collecting unemployment in highest figures since pandemic

The new unemployment numbers come after last Friday’s grim July jobs report

www.independent.co.uk

 

[BillOfRights]

The BLS will release CPI and PPI numbers this week. I expect higher inflation, but I expect trump to call the numbers "fake" and "rigged", or the numbers will be lower than expected and I will call them "fake" and "rigged".

Simply put, fewer people across the spectrum will trust the numbers, which is a goal of fascists.

 

[UNCatTech]

I'm really considering moving all of my investments to the safest option I have and getting out of the market.

I'm just afraid of a crash coming when all the things happening cause the system to finally collapse.

 

[nycfan]

The U.S. Marches Toward State Capitalism With American Characteristics​

President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy​

—> https://www.wsj.com/economy/the-u-s...8?st=RdZth8&reflink=desktopwebshare_permalink

“A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.

Recent examples include President Trump’s demand that Intel’s CEO resign; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France.

So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.…”

 

[nycfan]

The U.S. Marches Toward State Capitalism With American Characteristics​

President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy​

—> https://www.wsj.com/economy/the-u-s...8?st=RdZth8&reflink=desktopwebshare_permalink

“A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.

Recent examples include President Trump’s demand that Intel’s CEO resign; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France.

So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.…”

“… Many in the West admire China for its ability to turbo charge growth through massive feats of infrastructure building, scientific advance, and promotion of favored industries. American efforts are often bogged down amid the checks, balances and compromises of pluralistic democracy.

In his forthcoming book, “Breakneck: China’s Quest to Engineer the Future,” author Dan Wang writes: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.”

To admirers, Trump’s appeal is his willingness to bulldoze those lawyerly obstacles. He has imposed tariffs on a broad array of countries and sectors, seizing authority that is supposed to belong to Congress.…”

 

[nycfan]

“… Many in the West admire China for its ability to turbo charge growth through massive feats of infrastructure building, scientific advance, and promotion of favored industries. American efforts are often bogged down amid the checks, balances and compromises of pluralistic democracy.

In his forthcoming book, “Breakneck: China’s Quest to Engineer the Future,” author Dan Wang writes: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.”

To admirers, Trump’s appeal is his willingness to bulldoze those lawyerly obstacles. He has imposed tariffs on a broad array of countries and sectors, seizing authority that is supposed to belong to Congress.…”

“…There are reasons state capitalism never caught on before. The state cannot allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

… State capitalism is an all-of-society affair in China, directed from Beijing via millions of cadres in local governments and company boardrooms. In the U.S., it consists largely of Oval Office announcements lacking any policy or institutional framework.

“The core characteristic of China’s state capitalism is discipline, and Trump is the complete opposite of that,” Wang said in an interview….”

 

[nycfan]

“…There are reasons state capitalism never caught on before. The state cannot allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

… State capitalism is an all-of-society affair in China, directed from Beijing via millions of cadres in local governments and company boardrooms. In the U.S., it consists largely of Oval Office announcements lacking any policy or institutional framework.

“The core characteristic of China’s state capitalism is discipline, and Trump is the complete opposite of that,” Wang said in an interview….”

“… State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020 Alibaba co-founder Jack Ma, arguably the country’ most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities. …

… Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

Trump has long admired the control Xi exercises over his country, but there are, in theory, limits to how far he can emulate him.

American democracy constrains the state through an independent judiciary, free speech, due process and the diffusion of power among multiple levels and branches of government.

How far state capitalism ultimately displaces free-market capitalism in the U.S. depends on how well those checks and balances hold up.”

 

[nycfan]

A New Generation of ‘Buy the Dip’ Investors Is Propping Up the Market​

Investors were told to fear the crash and instead learned to love the dip​

—> https://www.wsj.com/finance/stocks/...c?st=UMcFxU&reflink=desktopwebshare_permalink

“… When markets swooned this spring in the face of tariff turmoil, individual investors jumped in to buy the dip. They helped propel a rebound in stocks to record levels and even resurrected meme trades.

For many Wall Streets pros, this is yet another sign of froth at a time when stocks, especially the biggest tech names, are historically expensive. The meme-stock trades are rekindling memories of the dot-com boom.

But the resilience of individual investors may signal something more than just misplaced optimism. Their willingness to stick with stocks may be more enduring than many veterans realize. That, in turn, may help temper any eventual reversion to the mean for highflying stocks.

… Take the financial crisis. Investors yanked almost $50 billion from U.S. equity funds in 2008 and continued pulling money for four consecutive years even after stocks bottomed in March 2009, according to EPFR data. Those who sold missed out on the beginning of the longest bull market since the S&P 500’s inception.

Meanwhile, after the dot-com bubble popped, the S&P 500 didn’t claim a new high for around seven years.

… This has occurred at a time of a wider societal shift: Trading and betting has morphed into entertainment for many Americans. Group chats pop with comments from friends on sports, hot stocks and memes. Everyone seems to know someone who made millions overnight in cryptocurrencies.

Changed attitudes toward gambling have coincided with tech advances that have made it easier, and cheaper, to trade a wide variety of assets. Some brokerages have sought to “gamify” investing, creating the look and feel of a casino within their apps. At the same time, they also offer high-octane trades on things such as options and prediction markets….”

 

[nycfan]

A New Generation of ‘Buy the Dip’ Investors Is Propping Up the Market​

Investors were told to fear the crash and instead learned to love the dip​

—> https://www.wsj.com/finance/stocks/...c?st=UMcFxU&reflink=desktopwebshare_permalink

“… When markets swooned this spring in the face of tariff turmoil, individual investors jumped in to buy the dip. They helped propel a rebound in stocks to record levels and even resurrected meme trades.

For many Wall Streets pros, this is yet another sign of froth at a time when stocks, especially the biggest tech names, are historically expensive. The meme-stock trades are rekindling memories of the dot-com boom.

But the resilience of individual investors may signal something more than just misplaced optimism. Their willingness to stick with stocks may be more enduring than many veterans realize. That, in turn, may help temper any eventual reversion to the mean for highflying stocks.

… Take the financial crisis. Investors yanked almost $50 billion from U.S. equity funds in 2008 and continued pulling money for four consecutive years even after stocks bottomed in March 2009, according to EPFR data. Those who sold missed out on the beginning of the longest bull market since the S&P 500’s inception.

Meanwhile, after the dot-com bubble popped, the S&P 500 didn’t claim a new high for around seven years.

… This has occurred at a time of a wider societal shift: Trading and betting has morphed into entertainment for many Americans. Group chats pop with comments from friends on sports, hot stocks and memes. Everyone seems to know someone who made millions overnight in cryptocurrencies.

Changed attitudes toward gambling have coincided with tech advances that have made it easier, and cheaper, to trade a wide variety of assets. Some brokerages have sought to “gamify” investing, creating the look and feel of a casino within their apps. At the same time, they also offer high-octane trades on things such as options and prediction markets….”

“… Of course, every bull market ends. And the higher that valuations are at that point, the more jarring the fall can be.

But if there has been a meaningful change in investor psychology, there could be an underappreciated cushion that limits the damage. Today’s new, bullish investors might function like short sellers did previously, stepping in to buy when everyone else was selling.

Charles Schwab recently surveyed its customers and found that around 80% said they planned to buy if markets grew volatile in coming months.

The impulse to stay invested might be more powerful, and durable, than many in markets appreciate.…”

 

[nycfan]

“… State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020 Alibaba co-founder Jack Ma, arguably the country’ most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities. …

… Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

Trump has long admired the control Xi exercises over his country, but there are, in theory, limits to how far he can emulate him.

American democracy constrains the state through an independent judiciary, free speech, due process and the diffusion of power among multiple levels and branches of government.

How far state capitalism ultimately displaces free-market capitalism in the U.S. depends on how well those checks and balances hold up.”

Related:

 

[lawtig02]

Related:

Those Trump Checks that are coming in September 2026 have to be funded somehow.