US real GDP growth from Q1 2009 to Q3 2017. The green line is a linear fit to the GDP over the three years from Q1 2014 to Q1 2017.
St. Louis Federal Reserve District Bank / FRED
I have have just updated the leading and coincident economic indicators I am following, the first update I have done since last May. That means it is time to take a more analytic view of just what is happening to our economy, and why.
The time evolution of the Atlanta Federal Reserve Bank’s GDPNow forecast for the second quarter of 2017.
Image and Data Credit: Atlanta Federal Reserve District Bank / Center for Quantitative Economic Research
Just a few days ago, in my post U.S. Economy and Stock Markets, May 2017, I noted there were of a number of economic statistics pointing to current and future economic growth somewhat greater than the stagnant levels to which we became accustomed under Obama. In just those few days, I have found even more economic tea leaves for us all to ponder.
Alas! Real GDP growth is still trending downwards.
Data and Image credit: St. Louis Federal Reserve District Bank / FRED
It is now time to take our periodic look at how the U.S. economy fairs. My last survey was last February, with my tardiness in making a new one due to a hope that the new Trump regime would cause something new to happen in the economy. Although there are indeed new signs for hope, nevertheless the new administration’s biggest economic ambitions still await fruition. Given the true enormity of the political and economic problems, I suppose it could be no other way.
An Indian plowman in West Bengal working in India’s largest industry: Agriculture
Wikimedia Commons / ILRI
In my last two posts, I have taken looks at the history of leftist revolutions and of Europe to glean lessons about what works and does not work in economies. In this essay I will try to explore what the underdeveloped and developing economies of the world have to teach us.
GDP per capita in Europe in 2014. According to the World Bank, the U.S. GDP per capita in the same year was $54,540.
In this post, I will continue my look at what history can tell us about economics and politics. In my last essay, I briefly examined what lessons the major leftist revolutions — the French Revolution and the communist revolutions of Russia and China — could give us. In this post I will investigate how the economic and political history of post-French Revolution Europe might cast a light on the current American progressive-neoliberal conversation.
Revolutionary Images: Lessons to be avoided like the plague!
Left: A barricade erected by revolutionaries in Moscow, 1905. Wikimedia Commons / Imperial War Museum
Right: People’s Liberation Army entering Beijing, 1949. Socialist Worker
How to further the conversation between progressives and neoliberals? That was the the question I left with you at the end of my last post. The fact we desperately need such a conversation is underlined by the almost hysterical reaction of the American Left to the election of Donald Trump. From their reaction, one would think Trump is one of the Four Horsemen of the Apocalypse. Either that or he is merely a Russian agent.
Considerations (c) Can Stock Photo / radiantskies
We are experiencing currently probably some of the most important clashes of ideas since the Age of Enlightenment. If you pay attention to current events around the world, and if you have read The Structure of Scientific Revolutions by Thomas Kuhn [S2], you can probably discern the developing paradigm crisis with the paradigms countries use to rule themselves. Of course the revolution we face is not a scientific revolution per se, but Kuhn’s description of scientific revolutions is just as applicable to a revolution in our conceptions of social and economic reality. In all countries with liberal (here I mean classically liberal) ruling institutions derived from the West’s Age of Enlightenment, their peoples are experiencing severe problems with their economies, and a wide-spread disenchantment with democratic government and ideals. Just do a Google search with the search phrase “disenchantment with democracy” to see how much many see this as a problem.
Josef Stalin and Adolf Hitler: One dictator of the Left and one of the Right?
Photo Credit Stalin: Wikimedia Commons / Workers Library Publishers (1930)
Photo Credit Hitler: Wikimedia Commons / German Federal Archive
This post is my last essay in a series answering a comment by a reader Cai, who objected to elements of neoliberal ideology. You can find the original comment at the end of the post Will Automation Require Progressive Unemployment Solutions?. My answers began with the essay Concerning Ethics, Economics, and Social Reality, continued with The Growing American Ideological Conflict, and finishes with this essay. If you are new to my posts and are confused by the term “neoliberal”, allow me to make my by now obligatory remark that neoliberalism is often mistaken as conservatism in the United States. The term “conservative” as applied to most Americans so-labeled is a misnomer, just as the label “liberal” is a misnomer for progressives.
Come now, and let us reason together … Isaiah 1:18
(c) Can Stock Photo / photography33
Following my post Will Automation Require Progressive Unemployment Solutions?, a reader called Cai left a comment to register his profound disagreements. In fact Cai’s comment compared with the message of the essay forms a perfect contrast between the alternative views of Reality held by the political Left and Right. This contrast and the causes for their profound differences beg to be examined. Continue Reading…
Incoming and outgoing international trade in San Francisco Bay
Wikimedia Commons / National Oceanic and Atmospheric Administration
Arguments over U.S. tax policies are moving toward a controversial tax proposal around which all other tax discussions are centering. That tax proposal, offered by House Speaker Paul Ryan (R-WI) and House Ways and Means Committee Chairman Kevin Brady (R-TX), is the Border Adjustment Tax (BAT). If this proposal cannot pass Congress, it is quite possible absolutely no tax reform will pass this year, a prospect that would be catastrophic not only for Republicans, but for the country as well.
Container shipping has revolutionized foreign trade by greatly reducing costs of transportation by ship, rail, and truck.
Wikimedia Commons / Hafiz343
I have written several times about why foreign trade is always a win-win proposition when the selling country has a comparative advantage of producing the traded good. Yet, the issue of foreign trade is becoming increasingly divisive, and the costs of unintended consequences of repressing foreign trade are becoming more apparent. In addition, the foreign trade issue might well cause proposals for corporate and middle class tax cuts to be scuttled through congressional quarrels over the federal government’s increasingly desperate financial condition. This is an excellent time to reconsider this divisive issue.
Real U.S. Per capita GDP in chained 2009 dollars (blue curve) and its percent change year over year (maroon curve). The thick green line is a linear fit of the maroon curve over the recovery years from the Great Recession.
St. Louis Federal Reserve District Bank / FRED
I have not made a general survey of the U.S. economy for some time, the last one having been in October of last year. What caused me to take longer in producing a new one was the (for me) unexpected surge in GDP in the third quarter of 2016. From the Atlanta Fed’s forecast called GDPnow, plus
the other bearish indicators I was watching, I firmly expected third quarter GDP to come in at or below two percent. Instead, it showed at a very respectable 3.5 percent! What was going on? I decided to wait and watch before pontificating, searching for understanding before I wrote.
The four greatest neoclassical economic philosophers: from top left clockwise,
Adam Smith (Wikimedia Commons / Scottish National Gallery),
J.B.Say (Wikimedia Commons),
Carl Menger (Wikimedia Commons / Mises.org) ,
and David Ricardo(Wikimedia Commons / National Portrait Gallery).
After my last post, Say’s Law Vs. Keynes’ Law: At the Heart of the Argument, a reader left the following comment.
I think it’s silly to call something a law which is far from universally true, which both of these things are (far from universally true)… while I don’t see any Keynesians claiming what you’ve called Keyne’s law to be a law, I do see conservatives defending Say’s generalization as a “law”. Why the pretension of “law” at all?
Left: Jean-Baptiste Say (5 January 1787 – 15 November 1832), Wikimedia Commons
Right: John Maynard Keynes (5 June 1883 – 21 April 1946), Wikimedia Commons / National Portrait Gallery
At the very heart of the argument between neoclassical economists and Keynesians is the dispute over which economic law best reflects reality: Say’s Law of Markets or Keynes Law. Much of the discord between dirigistes and neoliberals (aka conservatives or classical liberals) would evaporate if this argument could be settled to general satisfaction. At its core the argument is about what changes affect market supply-demand balances the most: changes in supply or demand.
The Robert F. Kennedy Building in 2006, the headquarters of the U.S. Department of Justice. DOJ’s Operation Choke Point is an important case study in how democracies can evolve toward authoritarian government.
Wikimedia Commons / Sebmol
It is sometimes very hard for some people to envisage just how we could possibly lose the freedoms the American people have enjoyed since the founding of the republic. To some of my acquaintances, bringing up such a possibility is the height of hyperbole and a totally ridiculous thought. Yet, over the past eight years we have come closer to realizing that nightmare than ever before.