Re: Re: Clinton economics; eat my soiled boxers!!!
Originally posted by Rower_CPU
Two words: consumer confidence
Tax hikes are meaningless if the people spending are confident in the economy.
How's that tax cut doing for you? What, you put it away in savings because you're scared about your economic stability? How is that supposed to stimulate the economy?
Consumer confidence: not a bad point. Despite decades of macroeconomics, most of which I personally consider weak, aggregate psychology is important. However, it is a speculative phenomenon. It can dampen macroeconomic non-equilibrium effects. But it can also severely worsen an economy as well. Can we thank Clinton for consumer confidence? Nonsense! The consumer confidence was manifest from a strong, booming economy and the speculative bubble of the dot com wave. Clinton did an excellent job of portraying himself as creating/stimulating economic growth. While that in itself can mean that confidence in him therefore can mean more confidence in the economy, it still boils down to no contribution by Clinton. Perception is unstable and often wrong, particularly in macroeconomics.
A little discussed key to economic growth is equilibrium. The economy is a web of interdependent suppliers and buyers. Excess inventory is the difference between suppliers and buyers. Consumer confidence is very destablizing. A sudden change in either direction increases inventory, promotes non-equilibrium.
Investment generated and sustained growth is much more stable and effective because consumption dollars thrown into the economy are diffuse and dilluted in the way in which they ultimately flow into job creation and retention. A consumption dollar doesn't consider ROI, which implicitly accounts for risk BTW. A consumption dollar tends to go after subsistance and luxuries, contributing less to job creation infrastructure than informed, focused investment. A tax increase reduces the amount of capital that targets high ROI, which means more jobs and stronger economy.
The tax cut, I presume you're referring to the $300/single and $??? for married...., was more of a consumption stimulation. It was consumption stimulation because it was a small payout. It did little to encourage investment. Our economy was/is troubled by non-equilibrium: excess inventory, dot com bust, and btw, increased energy prices. Had we created tax breaks for corporations to write off inventory, etc., provided it would have been large enough of course, that would have done more to help. Don't get me wrong, the pay-out tax cut did help the economy. However, the vast bulk of the tax cut passed last year hadn't taken effect in 2001.
As for money in bank, savings is good for the economy because banks use it for investment. Banks look for ROI, so they generally invest it wisely, which generally creates more jobs than increased low-end consumption spending. Increased potato chip sales doesn't help the semiconduct industry much does it?
Blame Clinton for the dot com bust? Well, that would be a bit much. But, he did contribute, as did the Congress. Had the numerous SEC/accounting reforms been passed, that Clinton and many members of Congress opposed, investors would have had considerably more insight into actual earnings. Those reforms would likely have prevented the Enron crash, for example, though that was something like a run on the bank. Those reforms still haven't been passed! The so-called 'efficient market' is self-correcting, although as Enron illustrates, it can also 'over-correct'.
I must be tired because I only now realized that we've achieved orbit around one of the classic partisan arguments (tax policy), which is a waste of time because partisans seek arguments to justify their positions, not to seek truth to formulate their positions.
I entered this fray because I'd like to hear someone make a credible case as to what Clinton did to deliver the economic growth that we enjoyed. So far, all I've read here so far is: consumer confidence. Well, that's hogwash. He really didn't create that either. The fact that he didn't create consumer fear through absurd behavior does not a consumer confidence builder make!
Did Clinton substantially reduce/simplify regulatory costs on businesses to reduce economic entropy? No. Did he simplify the tax code in anyway, again to reduce economic entropy? No.
Let me help you a bit. He allowed more illegal aliens to cross the border, this was good for the economy. Many low-paying jobs were filled rather than jobs being exported or capacity not being filled. But sorry, he did this out of politics, not economics.
He allowed for greater expansion of work visas, which did help the high-tech sector. But, he was hardly a champion for this cause; he went along with it.
He pushed for increases in education spending. That will help our economy. But, it does take many years for that stimulant to act. Unfortunately, with all of the money that he helped through into education, he did so without meaningful reform, such as results-oriented incentives that Bush and Kennedy just passed last year. America was already spending more on education per capita than nearly every country in the world. But with such a large percentage of this not directly going to educating the students, well, there you are.
You see, I very much appreciate the insight posts on Apple and technology in general. Many of them are high quality. But, what we've seen on this subject praising Clinton, well...
Eirik
