
If There Is Such a Thing as Economic ‘Good Times,’ These Are They - Four_Star
http://thesoundingline.com/taps-coogan-if-there-is-such-a-thing-as-economic-good-times-these-are-they/
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LarryDarrell
I think the next downturn will prompt the investigation for new indicators to
measure economic health. What does the number of food assistance enrollees
measure if the government makes it much harder to receive assistance? What
does the labor participation rate matter if you have millions of low-wage
workers completely miserable (and from my experience, start abusing drugs
because of that misery).

I'm just blowing steam here, but it feels like the economy and it's measures
has been decoupled from a large segment of society.

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NickM
GDP is a pretty terrible measure of the economy, even if you're trying to look
at the big picture and ignore the day-to-day impact on individuals, because it
only measures _creation_ of value and not _consumption /destruction_ of it.

If you destroy a city, GDP is not affected, but then if you rebuild it GDP
gets a huge boost. In the end you're back where you started, but the numbers
look great.

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simonh
>If you destroy a city, GDP is not affected

Of course it is. Cities are engines for producing GDP. New construction,
rolling infrastructure upgrades, the wages of all the people employed in it,
the profits of corporations based in it, all add to GDP. Take away the city
and all that GDP disappears off the books with it.

~~~
NickM
My example is a bit contrived, but it's a well-studied phenomenon that natural
disasters tend to cause a net boost to GDP because of all the extra work
needed to repair/rebuild/replace stuff.

We can write this kind of thing off as a statistical quirk, but if we actually
attempt to increase GDP via policy changes, then there are definitely some
perverse incentives that arise.

~~~
simonh
The immediate effect may be lots of economic activity, presumably paid for by
borrowing, but consider the longer terms effects. Disruption of infrastructure
reducing (or increasing the costs of) economic activity, disruption of
businesses reducing profits and costing jobs which reduces wages. Death and
injury of workers again reducing wage receipts by making more people non-
contributing. These affects could last decades. Obviously I’ve not performed
any studies on this, but it seems to me there would be significant impact on
GDP. I’d be interested to see the results if a full case study.

I would find it hard to believe that the GDP of Puerto Rico, including
reconstruction, has increased overall. It may depend on the scale though. A
storm that knocks down a few trees and damages some buildings might generate a
net gain if it’s not too disruptive but that gain must come from somewhere.
Maybe increased future insurance costs, borrowing, increased taxation etc
which would be difficult to quantify.

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tabtab
We should be paying down the national debt during the upper-side of the
business cycle so that we have stimulus funds for slumps. The tax-cuts are
_reverse_ Keynesian economics. They are "doing it wrong".

~~~
squirrelicus
Not to mention failure to raise interest rates to bleed the artificially cheap
money out of the economy after quantitative easing. But you can't find a
political party these days that supports doing a Keynesian strategy. Everyone
wants to have their cake and eat it too, as it were.

~~~
jayd16
This is pretty dismissive. The Obama admin was very cognizant of keeping ACA
deficit neutral, for example. Far cry from the current spend and don't tax
policies.

~~~
squirrelicus
You are confusing fiscal policy with monetary policy.

~~~
jayd16
Ah. The comment you replied to was about tax cuts. I misunderstood your point.

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0x8BADF00D
> So while times are looking good, and there will inevitably be a certain
> momentum to that fact, there is no better time to contemplate what has
> always come next: not good times.

I’d argue that the good times are not good to begin with. Americans don’t
save. Everyone is heavily indebted and creditors keep lending without
restriction. How can economy be healthy if people don’t buy capital goods and
are indebted in order to buy consumer goods? It’s quite the opposite.

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PeterisP
The USA economy is flush with cash savings, and anything where it's plausible
to invest to (i.e buying capital goods) either has been invested or is being
invested. It's just that it's not the general population who are doing this;
the savings are held by corporations (as a proxy for the few ultra-rich
individuals) and accumulating because there's not much to invest in.

~~~
tabtab
Re: "not much to invest in." \- In the factory era, investing in new or better
factories or stores was the usual use of excess cash. But most new industries
are labor intensive, not asset-intensive. You can invest in start-ups, but
many argue there are already too many questionable startups floating around,
not unlike 1999.

~~~
bachbach
That is presently true but it doesn't have to be. A Silicon Valley business
could start paying millions of people to perform tasks for it - like
babysitting a semi-self driving car.

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jayd16
Not good times for wage growth.

~~~
jimbokun
Interesting that "wages" does not appear once in the article. I guess "wages"
are not a relevant metric is assessing economic "Good Times".

~~~
PeterisP
As the article states, "Not for everyone and not equitably"; however, the
intended meaning of "good times" in this isn't "wow, everyone's happy" but
"this is as good as it's going to get". The current wage level and (limited)
growth, even if not satisfactory, is still better compared to what was in the
previous economic downturn, and better compared to what's going to come.

For average wage earners, no matter how hard it is, _this_ really is the good
times, as good as they're ever going to be. It won't be better. It _will_ be
worse. Be prepared, winter is coming.

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skywhopper
The headline there is basically the entire content of this article. Just a
statement of the positive indicators and a question "how long can this last?"
No critical analysis or discussion of the contradicting indicators. Not really
worth a post. What are we supposed to be discussing?

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sailfast
Everyone knows this, but they also know that the market will remain irrational
longer than they will remain solvent.

Main question for me is how well do previous indicators of this kind of
activity predict the CURRENT state of things. Which fundamental cascade
effects have we missed? Most of the time the things that cause the crisis are
not the contagion problems you predict (obviously). If I could see it, I'd be
hedging :)

If I had to guess, I'd say more like the Savings and Loan crisis than 2008,
but I'm an optimist.

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draw_down
Well, that's the problem, isn't it. These are supposed to be the "good times"
but normal people can't afford to live on the wages all those new jobs afford
them (and god help you if you get sick or need healthcare for whatever
reason). They're going to be screwed even worse when it stops being the "good
times".

If this is what our economy has to offer in the "good times" then.............
maybe something is fundamentally wrong with it.

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squirrelicus
In comparison to history when people actually just died when they got the flu,
things are much better than you indicate. Health Care is scarce. There must be
a mechanism for rationing. Some must be left behind. There is no other option.

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fndrplayer13
Health care isn't scarce in most of the first world. Many first world
societies offer health care to all of their citizens, and those visiting their
country. Much as we view education as a fundamental human right in the United
States and no longer treat it as scarce, most other societies view healthcare
as a fundamental human right. As a society and political system the United
States has actively made the choice to pursue a profit-based, insurance-
centered care model that is purposefully scarce.

Which is to say, I completely disagree that there is no other option.

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zip1234
There are a limited number of health care practitioners, health care
facilities, etc. The demand for health care is unlimited as people get older.

~~~
dv_dt
And yet in nations like Japan, where there are proportionately a greater
number of elderly than in the US, their healthcare delivers at a much lower
cost (by half!) as well as a higher life expectancy. This despite a decades
long economic stagnation, as opposed to the curious economic "good times" in
the US which seems to decrease our life expectancy and increase our health
care costs.

