Krugman and the State of the Economy

[Sayhey]

In his latest article (http://www.nytimes.com/2003/12/30/opinion/30KRUG.html?th) New York Times columnist Paul Krugman looks at the latest holiday sales and the overall impact of the economic expansion for different strata of US society.

Commerce Department figures reveal a startling disconnect between overall economic growth, which has been impressive since last spring, and the incomes of a great majority of Americans. In the third quarter of 2003, as everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage and salary income, adjusted for inflation, rose at an annual rate of only 0.8 percent. More recent data don't change the picture: in the six months that ended in November, income from wages rose only 0.65 percent after inflation.

Why aren't workers sharing in the so-called boom? Start with jobs.

Payroll employment began rising in August, but the pace of job growth remains modest, averaging less than 90,000 per month. That's well short of the 225,000 jobs added per month during the Clinton years; it's even below the roughly 150,000 jobs needed to keep up with a growing working-age population.

But if the number of jobs isn't rising much, aren't workers at least earning more? You may have thought so. After all, companies have been able to increase output without hiring more workers, thanks to the rapidly rising output per worker. (Yes, that's a tautology.) Historically, higher productivity has translated into rising wages. But not this time: thanks to a weak labor market, employers have felt no pressure to share productivity gains. Calculations by the Economic Policy Institute show real wages for most workers flat or falling even as the economy expands.

Just whose recovery is this?

[g5man]

Well I thought it would take a year before this nonsense surfaced. But it only took one day.

This complaint has been around since Carl Marx. It is desperation time since there is nothing really left to attack. The economy is back; the jobs are coming back so the only item to bitch about is that the rich are getting richer. Well we are getting richer and we are going to kick some DNC butt because there are millions and millions of us. The middle class is very happy and growing because our taxes are lower, our stocks are higher, and our debt is close to interest free. And those of us who choose to work harder instead of asking for extensions on the unemployment benefits or praying our unions can give us raises are actually making more money every year. This will continue as we vote into office someone who actually knows what they are doing.

That felt pretty good
:D

[Ugg]

It's interesting that he doesn't bring up all those high wage, middle class jobs that are being shipped overseas. The hi tech industry is at the top of the list and it's been made very clear that virtually ever company in the US is shipping its IT work overseas. I wonder how long it will be before the IT industry becomes unionized?

The one thing that keeps coming to mind is that if there is continual downward pressure on jobs and wages in the US, who will be able to buy all the products and services of these companies that are shipping jobs overseas?

[wwworry]

Originally posted by g5man
...so the only item to bitch about is that the rich are getting richer. Well we are getting richer and we are going to kick some DNC butt....

That felt pretty good
:D

By all means, vote with your pocket book. In fact, everyone should. But let's stop pretending that the republican party is anything other than the party of the rich.

[g5man]

Originally posted by wwworry
By all means, vote with your pocket book. In fact, everyone should. But let's stop pretending that the republican party is anything other than the party of the rich.

You forgot that today someone who makes more than $35K a year is considered rich. So the GOP is actually the party of the middle class. The DNC is the party of a few middle class, the very very rich, and the lower classes. If you will go back to my GOP gaining thread you will see that the only area in which the DNC holds a major advantage is with those making under $20K a year.

[mactastic]

Originally posted by g5man
So the GOP is actually the party of the middle class. The DNC is the party of ... the very very rich...

HAHAHAHAHAHAHAHAHAHAHAHA
MUAHAHAHAHAHAHAHAHAHA
HEHEHEHEHEHEHEHE

Thanks for the laugh. That was the funniest thing I've seen in quite a while.


I actually agree with you about the definition of rich. If you aren't making $125,000 a year you aren't rich and I want you to get there ASAP. Defining rich as anything over of impoverished is no good.

[wwworry]

Who was that Rep. congressman from Virginia who thoght middle class was $300k/year?

[zimv20]

Originally posted by g5man
You forgot that today someone who makes more than $35K a year is considered rich.

...and those rich people are shopping at neiman-marcus instead of walmart. wow, looks like you and krugman actually agree.

now i'll no longer have to decide between you two for economic insight ;-)

[g5man]

Originally posted by zimv20
...and those rich people are shopping at neiman-marcus instead of walmart. wow, looks like you and krugman actually agree.



But I thought you did not like Walmart because they pay their employees peanuts and drive everyone out of business.

[zimv20]

Originally posted by g5man
But I thought you did not like Walmart because they pay their employees peanuts and drive everyone out of business.

i don't recall ever saying anything about walmart.

[g5man]

I was not referring to you personally but someone here who agrees with most of what you say and you also agree with most of what they say. I am not going to research the post, but weather you post it or any of your forum supporters to me it is the same thing

[zimv20]

Originally posted by g5man
weather you post it or any of your forum supporters to me it is the same thing

that's absolutely horrible. do you treat people like this in real life? it indicates a complete lack of respect.

in other news, i once stood in a room w/ about 10 people and argued that the conjuctive is spelled 'whether'. the dictionary, of course, proved me right.

it's always amusing to me when i'm told i'm wrong because everyone else in the room disagrees with me.

but then the facts bear me right.

[g5man]

Lets see if we can get back on topic.

Krugman claims that yes the economy is really taking off and therefore incomes should do the same. One can not argue with that notion, if one does not understand how the economy works.

Incomes are increasing and that is what is important. If he thinks that a balanced budget or universal healthcare or increases in taxes will further increase incomes, then he is crazy.

[mactastic]

A balanced budget would sure as hell keep interest rates from going up, so I don't see how you can make that arguement.

And once again, repealing a tax reduction that hasn't taken effect yet is not raising taxes. Not unless you want to call not cutting spending a spending increase too.

[g5man]

Originally posted by mactastic
A balanced budget would sure as hell keep interest rates from going up, so I don't see how you can make that arguement.

And once again, repealing a tax reduction that hasn't taken effect yet is not raising taxes. Not unless you want to call not cutting spending a spending increase too.

Actually in 98 when we had a balanced budget the interest rate on my credit card was 15% and on my house 7.25% for 30 years. With that terrible deficit houses have appreciated quite nicely as interest rates have gone down. My house has doubled in price. And there are millions of people who are experiencing this same affect. Democrats and Republicans who will vote GOP. Krugeman does not know what he is talking about when it comes to income.

Now I pay 0% on my credit card and only 4.25% for 15 years on my house.

So I am not worried even if rates went up 3 points in the next two. But they won't.

The tax cut has taken affect. We all already agreed that it contributed to the stimulus and we saw the GDP go up. Millions of families received checks for their kids. Tax cuts on capital expenses have been in affect for 6 months. Tax cuts on capital gains have been in affect as well. There was a torrid of bad predictions when the dividend taxes were past. The markets went up instead of down like it was predicted. My IRA went up over 50% in 10 months and will go up even more in 2004. That was due to good investing and a very optimistic view of the future. It does pay off to be an optimist you know.:)

[Sayhey]

Originally posted by g5man
Actually in 98 when we had a balanced budget the interest rate on my credit card was 15% and on my house 7.25% for 30 years. With that terrible deficit houses have appreciated quite nicely as interest rates have gone down. My house has doubled in price. And there are millions of people who are experiencing this same affect. Democrats and Republicans who will vote GOP. Krugeman does not know what he is talking about when it comes to income.

Now I pay 0% on my credit card and only 4.25% for 15 years on my house.

So I am not worried even if rates went up 3 points in the next two. But they won't.

The tax cut has taken affect. We all already agreed that it contributed to the stimulus and we saw the GDP go up. Millions of families received checks for their kids. Tax cuts on capital expenses have been in affect for 6 months. Tax cuts on capital gains have been in affect as well. There was a torrid of bad predictions when the dividend taxes were past. The markets went up instead of down like it was predicted. My IRA went up over 50% in 10 months and will go up even more in 2004. That was due to good investing and a very optimistic view of the future. It does pay off to be an optimist you know.:)

If you are locked into those rates, you are doing well. You should also thank Clinton for the economy that made them possible, but I suppose that is too much to ask. Now with the deficits increasing it is likely that the strain on the economy will produce higher rates and those of us not locked in like you will bear the burden. Hey, but you got yours, right?

Let mean see, part of the point of Krugman's article was that those with the highest incomes benefit mostly from this recovery and out of proportion to the rest of us. You might have just proved his point. :eek:

Sorry, I must be a marxist.

[g5man]

Originally posted by Sayhey
If you are locked into those rates, you are doing well. You should also thank Clinton for the economy that made them possible, but I suppose that is too much to ask. Now with the deficits increasing it is likely that the strain on the economy will produce higher rates and those of us not locked in like you will bear the burden. Hey, but you got yours, right?

Let mean see, part of the point of Krugman's article was that those with the highest incomes benefit mostly from this recovery and out of proportion to the rest of us. You might have just proved his point. :eek:

Sorry, I must be a marxist.

You missed my point. Under Clinton my rates were high. Under Bush they are low. But I am not giving Bush credit one bit for lower interest rates nor for the 0 inflation that I forgot to mention.

I am not rich. I know Krugman thinks I am but I am not. My house is small and my income does not even come close to $125K. And no I was not the only one who got his. There are millions and millions of us. Once again if interest rates went up things are not going to fall apart. Heck we had 18% interest rates for houses in the late 1970's.

And you are not a marxist otherwise you would have left the US long ago.:) Krugman and his people love to play with the social order of things and attribute an apparent lack of unfairness in our system to guilt people into voting Democratic.

[Sayhey]

Originally posted by g5man
You missed my point. Under Clinton my rates were high. Under Bush they are low. But I am not giving Bush credit one bit for lower interest rates nor for the 0 inflation that I forgot to mention.

I am not rich. I know Krugman thinks I am but I am not. My house is small and my income does not even come close to $125K. And no I was not the only one who got his. There are millions and millions of us. Once again if interest rates went up things are not going to fall apart. Heck we had 18% interest rates for houses in the late 1970's.

And you are not a marxist otherwise you would have left the US long ago.:) Krugman and his people love to play with the social order of things and attribute an apparent lack of unfairness in our system to guilt people into voting Democratic.

I didn't miss anything. Your interest rates are a direct result of the economic policies of the Clinton years. That's both Clinton and Greenspan's policies.

You may not be rich, but you already have a home and I would guess established credit to boot. Do you think the growing deficit will effect the prospects of young people trying to establish for themselves what you already have?

You are right on one thing - I'm not a marxist. Although, I don't shy away from any insights that Marx and Engels may have had out of some fear of contamination. Class is a real objective phenomenon. Class antagonisms can be very real things brought on by policies that exacerbate class differences and the mobility of people between classes. Krugman and others have rightfully pointed out how Bush's policies do just that.

[g5man]

Originally posted by Sayhey
I didn't miss anything. Your interest rates are a direct result of the economic policies of the Clinton years. That's both Clinton and Greenspan's policies.



Well then lets have Mrs. Clinton run and try to show us all how we are better off because of her husbands policies.

LOL:D

You must be joking. I wonder why all those democratic candidates are not using that flawed reasoning in their campaigns? Because most people are much smarter than that.

Lets see if we use that method then we can assume the boom of the 90's was a result of Reagan's policies. And the recession of 2001 as a result of Clinton's policies.:D :D

[Sayhey]

Not joking one bit. When did those interest rates start coming down? I suppose you think it was all after January 2001? When did the effects on the deficit from Bush's policies become clear? As I recall he entered the Presidency with a projected surplus. You are so good at predictions - well here is one for you. With the growth of the deficit you will also see the rise in interest rates. I'm glad you have your house and security now - though you had better hope your job can't be shipped to India.

[Ugg]

Originally posted by g5man
Lets see if we can get back on topic.

Krugman claims that yes the economy is really taking off and therefore incomes should do the same. One can not argue with that notion, if one does not understand how the economy works.

Incomes are increasing and that is what is important. If he thinks that a balanced budget or universal healthcare or increases in taxes will further increase incomes, then he is crazy.

Paul Krugman is a widely respected, Nobel prize winning economist. The Nobel Prize committee is not known for choosing crazy people for its economic and science prizes. Perhaps you'd better take a look at what he is saying before you make such silly pronouncements. He's not stupid nor do I believe you are but fanning the flames doesn't make for a good discussion it only creates a bonfire.

[zimv20]

Originally posted by g5man

Now I pay 0% on my credit card

i disbelieve you, unless you mean you pay it off every month

[zimv20]

Originally posted by Ugg
Paul Krugman is a widely respected, Nobel prize winning economist. The Nobel Prize committee is not known for choosing crazy people for its economic and science prizes.

it's valid to challenge krugman on his political tangent, but folly to take him on when he's doing economic analysis. he was the guy who predicted the crash of the asian tiger economies -- he took a lot of crap before he was proved correct.

[g5man]

Originally posted by zimv20
i disbelieve you, unless you mean you pay it off every month

No I don't pay it off every month. Remember I am not rich. For the last two and a half years I have transfered most of my debt to 0 percent cards. With my Quicken I keep good tabs on when things are due and transfer on while I pay it off in monthly payments.

Having good credit helps a great deal, but I starting getting loans since I was 16 so I have a long history with an excellent track record.

[wwworry]

Originally posted by g5man
Krugman and his people love to play with the social order of things and attribute an apparent lack of unfairness in our system to guilt people into voting Democratic.

ah the natural order of things...

You can't deny that the income gap betwen the wealthiest and the poorest is the highest since 1929. Also tax policy does have an effect. It is pretty simple if you strip away all the name calling and marxist fear mongering.

It just depends on what kind of country you want to live in - one where there are a few very very wealthy people and lots of poor people or one with a strong middle class.

When has Bush like policies ever led to a stronger middle class? We have historical precedents. Show me just one little bit of precedent that shows supply-side economics works. There are plenty of other examples that show the bottom-up economics works better for everyone.

[Taft]

Originally posted by g5man
Now I pay 0% on my credit card and only 4.25% for 15 years on my house.


How are credit card interest rates relevant?? Are you getting the 0% rate from the same company as your card during the Clinton administration? Or did you go card shopping for low rates?

In 98 I had a 0% interest card. A Visa, I believe. What does that say? NOTHING!!!

The tax cut has taken affect. We all already agreed that it contributed to the stimulus and we saw the GDP go up. Millions of families received checks for their kids. Tax cuts on capital expenses have been in affect for 6 months. Tax cuts on capital gains have been in affect as well. There was a torrid of bad predictions when the dividend taxes were past. The markets went up instead of down like it was predicted. My IRA went up over 50% in 10 months and will go up even more in 2004.

This has nothing to do with what Krugman wrote about. Whether you are willing to acknowledge it or not, there is an increasing gap in incomes between the rich and the poor. (I'll provide a link when I get more time...) Corporate incomes and the incomes of the rich are growing at a disproportionate rate to that of the poor. Statistically, this is irrefutable and this fact is very easy to show as the government releases breakdowns of the data.

Now, assuming you are onboard with this fact, there are a variety of contributing factors to this situation. I personally believe the disparity is a result of corporate ownership of our lawmakers. Note I didn't blame the situation on conservatives or republicans; I blame greed. Especially of our politicians.

GDP, tax cuts and the rest of the statistics you cite have absolutely no direct bearing on gross income. You may think those are indicators of future growth in average income, but that growth has not yet been realized.

Also, you fail to acknowledge the fact that tax cuts and other forms of economic stimulus might not benefit all Americans equally. Therefore, while the little guy might get a small boost from a tax cut, a corporation or a rich person might get a huge boost from that tax cut. That not always true, but it does frequently happen. Therefore, even though the overall economy could improve as a result of these stimuli, it would not solve the problem of the widening gap between rich and poor.

So I agree that an improving economy would probably help most Americans. But that isn't what this article is pointing out. This article is pointing out that there is an increasing concentration of wealth in the hands of the rich and corporations to the detriment of the have-nots. And, as the article points out, an improving economy would not help that situation.

Taft

[g5man]

Taft,

The point I was trying to make was this. Krugman knows the economy is growing so he needs to find ways to shoot any good news down. I do not disagree with his assertion that incomes are not growing at the same rate that the GDP is growing. But to connect the two is foolish. So for a second I will go along and make the connection.

In a good economy many things take place. If my income does not go up the cost of my debt assists me in maintaing my life style as if my income went up. A 0 inflation economy also helps a great deal since I can buy good and services at a lower cost. The appreciation of my property will assist me later in life. All those are factors that will make up for less of an increase in income. In my case because of hard work (playing on the net most of the day) my income went up as well, but that has nothing to do with the economy.

But there are much more specialized people who shoot him down much better than I with actual data.

http://www.poorandstupid.com/chronicle.asp

This guy has written some articles that make Krugman look like a 1st grader when it comes to his economic theories.

And I don't fall for that socialistic class warefare crap that he is trying to bring up. It does not work. It has not worked in Russia, it does not work in Europe, and it will never see the light of day in the US.

[Ugg]

Originally posted by g5man
And I don't fall for that socialistic class warefare crap that he is trying to bring up. It does not work. It has not worked in Russia, it does not work in Europe, and it will never see the light of day in the US.

It's interesting that you are so willing to say that social welfare doesn't work. Now we could spend hours on defining what "works" and what doesn't. it doesn't take a genius to figure out that Europeans by and large are much healthier than we are, pay less for health care and are not destroyed financially when faced with chronic illness. What of the above doesn't "work" for you?

[Sayhey]

Originally posted by g5man
And I don't fall for that socialistic class warefare crap that he is trying to bring up. It does not work. It has not worked in Russia, it does not work in Europe, and it will never see the light of day in the US.

I will repeat, class is an objective reality. It is not an invention of Karl Marx or Fredrich Engels or any other socialist writer. Some of us work for a living and are employed by others. Some others own the businesses that employ many of the rest of us. Those relationships to how goods and services are produced are not the figment of Paul Krugman's imagination. In the US the degree to which people can change their place in those relationships has waxed and waned over the years. The degree to which those of us who sell our labor can earn enough to aspire to a better life has also changed over the years. As has the percentage of people in which the mass of wealth is concentrated. If you don't like these messy little realities, fine, but it doesn't mean it they don't exist.

Krugman's article shows that so far the economic recovery has not lead to a great expansion of wages or job opportunities for the great majority of people. This has made the gulf between rich and poor that much greater. You may think this is fine, but to dismiss the facts of his article with a wave of your red-baiting hand is nonsense.

[IJ Reilly]

Paul Krugman vs. g5man .... which one has the better grasp of economics. Hmm, I'd better get back to you on that one.

[zimv20]

Originally posted by g5man
For the last two and a half years I have transfered most of my debt to 0 percent cards.

zero percent as a limited time offer or zero percent forever?

(a little OT, i know, but if a company is offering zero percent forever [which i doubt], i want one. and yes, my credit rating is stellar)

[g5man]

Originally posted by IJ Reilly
Paul Krugman vs. g5man .... which one has the better grasp of economics. Hmm, I'd better get back to you on that one.

Hey I thought you were blocking me. What are doing posting my name and refering to me? Face it I am addictive.:)

[Sayhey]

Originally posted by g5man
Hey I thought you were blocking me. What are doing posting my name and refering to me? Face it I am addictive.:)

I'm beginning to think IJ has the right idea. I would like to hear an objective analysis of Krugman's article, not this "Rove-colored" glasses view of the world.

[g5man]

Originally posted by zimv20
zero percent as a limited time offer or zero percent forever?

(a little OT, i know, but if a company is offering zero percent forever [which i doubt], i want one. and yes, my credit rating is stellar)

No it is 0% for 14 months. It used to be about 9% for 4 months a few years back.

I never looked for them they came looking for me. Wells Fargo gave me 4.25% refinance for 15 years fixed with no cost except for the notary. The economy is just fine.:D

And on a side note I have seen data that shows that every president has been re-elected if the economy was improving. And you know my views on that subject:)

[g5man]

Originally posted by Sayhey
I'm beginning to think IJ has the right idea. I would like to hear an objective analysis of Krugman's article, not this "Rove-colored" glasses view of the world.

Here read this.

http://www.poorandstupid.com/chronicle.asp

And by the way if my view is described as Rove-colored, then you will be amazed how many were looking through them next election.:cool:

[zimv20]

Originally posted by g5man
No it is 0% for 14 months.


i no longer disbelieve you.

Wells Fargo gave me 4.25% refinance for 15 years fixed with no cost except for the notary. The economy is just fine.:D

it's likely more a product of your credit rating than the overall economy.

e.g. i just got a mortgage for 24x my 2003 income. that magic is courtesy of my finances, not the economy.

[mactastic]

Originally posted by g5man
Actually in 98 when we had a balanced budget the interest rate on my credit card was 15% and on my house 7.25% for 30 years. With that terrible deficit houses have appreciated quite nicely as interest rates have gone down. My house has doubled in price. And there are millions of people who are experiencing this same affect. Democrats and Republicans who will vote GOP. Krugeman does not know what he is talking about when it comes to income.

Now I pay 0% on my credit card and only 4.25% for 15 years on my house.

So I am not worried even if rates went up 3 points in the next two. But they won't.

So let me see if I understand you here. Interest rates were lowered to counteract a bad economy, and you cite those low rates as evidence that the economy is good. You also imply that the high rates you paid before were the result of a bad economy. So if the rates are raised again, which will have to happen if the economy is as good as you say it is - they can't go down much more - that will be a sign that the economy is in bad shape again?

The tax cut has taken affect.

Not all of it has. Very little of it has actually taken effect yet. And many of the provisions are due to sunset, and you can bet your 0% interest rates that the Bushies will work very hard to make them permanent at almost double the current cost. The tax cut has NOT fully taken effect yet.