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The Economy in 2016: On the Edge of Recession


#1

The Economy in 2016: On the Edge of Recession

Robert Reich

Economic forecasters exist to make astrologers look good, but I’ll hazard a guess. I expect the U.S. economy to sputter in 2016. That’s because the economy faces a deep structural problem: not enough demand for all the goods and services it’s capable of producing.

American consumers account for almost 70 percent of economic activity, but they won’t have enough purchasing power in 2016 to keep the economy going on more than two cylinders. Blame widening inequality.


#2

If this US economy demonstrably goes in the tank, I wonder how Dems will handle that. Will they be able to successfully put the "credit" where credit is due - on the repubs in Congress? Will they express the need for a bold revision in economic structure? Will they place the US economic struggles in the context of global issues? Will they make the case for the change in economic behavior necessary to 'do our part' to combat climate change, including a shift away from such damaging material consumption? Will they address issues of economic inequality and justice?

We know the repub plan - we've been living through the passed few years since the 2010 election debacle. But how will Dems react?


#3

You got it, Bob. No substantive changes in sight or politically feasible. The population seems to be high on Koch!

Does not bode well for our future prosperity.


#4

Recall the opportunity that presented itself when Obama took office with Democrats controlling both houses of Congress and the economy in the tank ?

Rather than breaking up the too-big-to-fail banks, Congress put US taxpayers on the hook for $26 trillion to bail them out and enable them (at least in part through Dodd-Frank) to now control 45% of banking assets compared to the 25% they controlled in 2008.

Obama's "stimulus program" was designed to get Congressional Republicans on board (LOL) even though he needed no GOP votes to pass it and no GOP Congresscritter actually voted for it. Reich has written several articles on this issue.

Instead of simply implementing a first step in health care reform (and a major boost to employment) by reducing the eligibility age for Medicare from 65 to 60, thereby enabling millions of 60 year olds to turn their family wage jobs over to young Americans, Obama's ACA was and is a huge corporate welfare program that most Americans see right through.

Any wonder so many of the Democrats base sat out the 2010 and 2014 election and let the GOP take control of Congress ?


#5

We are already need one and half Earths for all the resources we humans consume. How can we be worried about not buying enough. Does someone have a plan to start using up Mars? Can economic growth go on forever? If not, when do we start worrying about that?


#6

we have about 40 million people who would spent all of a minimum basic income if it were available. i think old school republicans considered this but that is counter to the slash and burn of public services the current republicans believe will magically make us all better off.


#7

How utterly bizarre it is that capitalism works so much better when it is liberalized. Fat cats steal and bob for loopholes, they bribe and cajole tax cuts and do everything they can to pinch pennies helping the lower classes and maximizing largesse to the wealthy. This is the glory of capitalism when you are rich. Grab all you can and give away nothing.

Except as Robby says. If little people can't buy a lot then big people get stuck with a little. How do you create demand? Well money honey! That's how.

Got milk? Said that ad. How about one that says >>> Got money?

Capitalism refuses to let people who will spend money ... have any money! Now there is an economic theory huh?

If the poor, lower and middle classes had more money ... they would spend more money which would stimulate demand and make more money for the upper classes BUT... we don'wanna!

'We don't wanna capitalism'... on toast.

We just don't want to.

You kind of wish that someone was making this stuff up don't you?

Nope.


#8

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#10

I studied economic models last year, in a course "Mathematics of economics and Finance". Without economic models, you have no basis for a prediction. We compared predictions given by some models with actual outcomes, with poor correlation between prediction and outcome. I can say that with economic models, you have a very shaky basis for making predictions. I personally think that fools rush in, and make predictions, where angels fear to tread.


#11

The Ultimate Model:

Procrustes (proh-KRUS-teez)

A host who adjusted his guests to their bed. Procrustes, whose name means "he who stretches", was arguably the most interesting of Theseus's challenges on the way to becoming a hero. He kept a house by the side of the road where he offered hospitality to passing strangers, who were invited in for a pleasant meal and a night's rest in his very special bed. Procrustes described it as having the unique property that its length exactly matched whomsoever lay down upon it. What Procrustes didn't volunteer was the method by which this "one-size-fits-all" was achieved, namely as soon as the guest lay down Procrustes went to work upon him, stretching him on the rack if he was too short for the bed and chopping off his legs if he was too long. Theseus turned the tables on Procrustes, fatally adjusting him to fit his own bed.

That' s economics.


#14

The sooner this faux consumer based economy falls on its face and is replaced by something more sustainable the better. The face plant will be painful but is a necessity.


#15

How about Cuba and Iran before we go to Mars? Those deals with those countries have nothing to do with peace but with business.


#16

Bernie is the only one that understands that investing in jobs turning around climate change is our number one priority. It will even help bring peace to more places that are in upheaval partly due to finite resources.


#17

True about Obama. Not so with Bernie, methinks. I'm at least going to hope he gets a chance to prove us wrong or right. And if I'm right, we won't be worrying about who was wrong, we'll be working to turn things around, especially the climate.


#18

Think it was it Jack Benny that said something like, "The only people that can get a loan are the people that don't need one."


#19

Ouch. Thanks for the humanities lesson. :O)


#21

Although not perfect, Bernie's track record is more progressive than Obama's was in 2008 and far more progressive than Obama's current track record.


#22

Don't worry, you are not bursting my bubble. I'm just asking some questions but have a pretty good idea of the answers.

Both parties are complicit but in different ways, and it is important to recognize the difference.


#23

First paragraph:

"not enough demand for all the goods and services it's capable of producing"

See Adam Smith, Wealth of Nations (1767, around the time of the French Revolution, and the formation of the American Constitution) Chapter 3:

"The Division of Labour is limited by the extent of the market"


#24

Henry Ford realized the same thing when he started producing automobiles. So he raised the wages of his workers and sold more cars. Such a radical concept today!