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Re: Anybody going to be watching the State of the Union Address?

Posted: Sat Feb 10, 2018 4:51 pm
by John Q. Public
You seem to be confusing Economics and Finance. Two separate studies.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 9:55 am
by Bick
Looks like Costner and I should be seeking refunds on our degrees. Thanks for setting us straight.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 12:04 pm
by John Q. Public
May be. Because that sure isn't a definition of economics. Capitalism maybe, but not the broader field. It ignores the 70% or 80% of the population that just works and spends its pay checks.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 12:18 pm
by Wabash
Economics encompasses more than just capitalism. Marxism, monetarism, and laissez-faire are all economic theories.

As was stated earlier. It is the study of resource scarcity and allocation.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 12:29 pm
by Bick
Probably was presumptuous to assume scarcity of resources was a given, and just focus on the incentives aspect that causes activity. Too simple a definition, or is there something else you believe drives economic activity?

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 12:46 pm
by MDDad
I think you guys need to decide whether you're trying to define "economics" as an academic discipline of study, or as a real-world activity. The two are decidedly different.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 1:49 pm
by Bick
Good point MDD. As it pertains to this thread centering around the debate of tax cuts, I'd say the real-world activity checks the box.

I believe incentives drive economic activity.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 2:13 pm
by John Q. Public
In a consumer economy, demand drives activity. You can't sell something to people who have no money to spend.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 2:50 pm
by MDDad
Economics doesn't have to involve money. At its most basic, economics is the exchange of goods and services for benefit, advantage or consideration.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 2:55 pm
by Bick
John Q. Public wrote: In a consumer economy, demand drives activity. You can't sell something to people who have no money to spend.
Or if there's little to spend, price might have to be lowered to meet the demand at that price?
MDDad wrote: Economics doesn't have to involve money. At its most basic, economics is the exchange of goods and services for benefit, advantage or consideration.
You mean like...barter?

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 3:45 pm
by John Q. Public
Or if there's little to spend, price might have to be lowered to meet the demand at that price?
Exactly. Unless you're a credit card company, mortgage lender, utility or HOA. In those cases you raise the price. Never did figure that one out. :bonk:

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 5:54 pm
by Bick
John Q. Public wrote: Exactly. Unless you're a credit card company, mortgage lender, utility or HOA. In those cases you raise the price. Never did figure that one out.
Or unless you're Ben Bernanke, you might think it's a good idea to employ quantitative easing (print more money) to "stimulate" the economy by buying more gov't bonds.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 6:23 pm
by John Q. Public
Possibly. Some say it helped, some say it didn't. --:--

If your Donald Trump (Wharton School, 1968 or whenever it was he bought his diploma) you think spending $1.5 trillion on infrastructure and creating Jobs! Jobs! Jobs! when unemployment is at 4% is a good idea.

Re: Anybody going to be watching the State of the Union Address?

Posted: Sun Feb 11, 2018 7:37 pm
by Bick
If you artificially create demand by printing money, business will ramp up to meet that demand instead of adjusting to the real marketplace. What happens when the music stops?

Re: Anybody going to be watching the State of the Union Address?

Posted: Mon Feb 12, 2018 5:57 am
by not4u13
OK ... so I didn't really like economics in college so perhaps I have a few things wrong academically. I view the corporate tax cuts as a good thing, but it's just one of the levers that helps drive economic improvement. If that's the only lever you pull, no, it won't work. Corporations will simply take the profits and wait for other indicators to improve.

Consumers drive demand. Nobody makes money unless what you are trying to sell is consumed. Improvements in tax rates don't help much if nobody is buying because you don't pay taxes on losses. Dropping the tax rate isn't likely to drop the price of goods either. However, if the corporation believes that increased investment will boost profits, a lower tax rate puts more money in their pocket to make those investments. This gets the ball rolling, for them at least. Trump's approach is to remove governmental restrictions and lower the corporate tax rate both as incentives to increase corporate investments. He has also threatened to increase barriers to foreign investments in hopes of causing that new investment to happen here in the US.

Re: Anybody going to be watching the State of the Union Address?

Posted: Mon Feb 12, 2018 6:24 am
by Wabash
not4u13 wrote: If that's the only lever you pull, no, it won't work. Corporations will simply take the profits and wait for other indicators to improve.
Which blows up the premise of "trickle down" economics.

While some corporations are giving profits to employees most are doing something other than improving compensation.

Re: Anybody going to be watching the State of the Union Address?

Posted: Mon Feb 12, 2018 7:55 am
by Bick
not4u13 wrote: Consumers drive demand. Nobody makes money unless what you are trying to sell is consumed. Improvements in tax rates don't help much if nobody is buying because you don't pay taxes on losses. Dropping the tax rate isn't likely to drop the price of goods either. However, if the corporation believes that increased investment will boost profits, a lower tax rate puts more money in their pocket to make those investments. This gets the ball rolling, for them at least. Trump's approach is to remove governmental restrictions and lower the corporate tax rate both as incentives to increase corporate investments. He has also threatened to increase barriers to foreign investments in hopes of causing that new investment to happen here in the US.
You're thinking here is correctly apolitical. Making business (or success in general) the boogeyman has been a popular mantra for some political types. It gets them into power, but I believe that direction is not sustainable or beneficial in the long run.

You are correct, dropping the corp tax rate will not drop the price of goods. Lower demand or competing suppliers of the goods force prices one way or another. The mission SHOULD be to make it easier for more competitors to enter the marketplace. Look at what happened with the price of Epipens when there was no competition. MDD is better versed on the medical supply front when it comes to FDA regs, and its impact on the cost of those items.