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What has Trump done right so far?

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Re: What has Trump done right so far?
Post by cthia   » Wed Mar 08, 2017 6:50 pm

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"U.S. Army Lt. Gen. H.R. McMaster is an excellent pick for national security adviser. It’s all the more surprising because Trump’s first choice, former Gen. Michael Flynn, was one of his worst appointments."

Son, your mother says I have to hang you. Personally I don't think this is a capital offense. But if I don't hang you, she's gonna hang me and frankly, I'm not the one in trouble. —cthia's father. Incident in ? Axiom of Common Sense
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Re: What has Trump done right so far?
Post by PeterZ   » Wed Mar 08, 2017 7:21 pm

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gcomeau wrote:
PeterZ wrote:If public sector employment and higher taxation leads to prosperity, the USSR would have spent the US into oblivion? That didn't happen. The USSR is part of the ash-heap of history.


*Employment* leads to prosperity. Who is writing the paycheck is irrelevant. Do you seriously think that the money that goes into a worker's bank account when he cashes his paycheck takes on different properties based on who issued said check?

The USSR collapsed for a whole host of reasons.


Value creation leads to prosperity. Employment distributes value that has been created. The employer is absolutely important because the employer is the source of value creation. Government can create value but is not very good at it due to different incentives structures between government and the private sector.

Someone who makes shovels can save ditch diggers time and so can charge for his shovels. Governments are not essential to this exchange between shovel maker and ditch digger. They only become essential when the participants in society are numerous enough and the rules complex enough to justify supporting government to facilitate the aggregate transactions of the society. An independent someone has to enforce the rules on behalf of all participants and spread the cost of certain necessary expenses like roads.

To summarize, government is overhead. It produces nothing directly but is more efficient than individuals trying to accomplish all government does by him or herself. We can also discuss the different incentive systems in government and how that makes government more or less at certain types of functions, if you want. I see no point to that. Private sector incentives produce better decision makers when it comes to producing value. Government's separation from the private sector allows it to act as referee and or broker rather than a competing participant.
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Re: What has Trump done right so far?
Post by gcomeau   » Wed Mar 08, 2017 7:36 pm

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PeterZ wrote:
gcomeau wrote:*Employment* leads to prosperity. Who is writing the paycheck is irrelevant. Do you seriously think that the money that goes into a worker's bank account when he cashes his paycheck takes on different properties based on who issued said check?

The USSR collapsed for a whole host of reasons.


Value creation leads to prosperity. Employment distributes value that has been created. The employer is absolutely important because the employer is the source of value creation. Government can create value but is not very good at it due to different incentives structures between government and the private sector.

Someone who makes shovels can save ditch diggers time and so can charge for his shovels. Governments are not essential to this exchange between shovel maker and ditch digger. They only become essential when the participants in society are numerous enough and the rules complex enough to justify supporting government to facilitate the aggregate transactions of the society. An independent someone has to enforce the rules on behalf of all participants and spread the cost of certain necessary expenses like roads.

To summarize, government is overhead. It produces nothing directly but is more efficient than individuals trying to accomplish all government does by him or herself. We can also discuss the different incentive systems in government and how that makes government more or less at certain types of functions, if you want. I see no point to that. Private sector incentives produce better decision makers when it comes to producing value. Government's separation from the private sector allows it to act as referee and or broker rather than a competing participant.



All of which can certainly be debated.

NONE of which has a single thing to do with the fact that performing massive public sector layoffs in the middle of a giant recession and driving up unemployment is *bad* for the economy. Which was the original point you were responding to with your USSR commentary.
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Re: What has Trump done right so far?
Post by Annachie   » Wed Mar 08, 2017 10:49 pm

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Or that historically the biggest adders of value has been government infrastructure projects


Actually in a way I expect infrastructure will improve under Pres. Trump.
Just that it will be enacted as a way to transfer public ammenities/utilities, and monies, into private hands with a permanant extranious cost to the public to use them.


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Re: What has Trump done right so far?
Post by PeterZ   » Wed Mar 08, 2017 11:21 pm

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Public sector employment that inhibits private sector employment is pure waste.....worse than waste an anchor dragging down the economy. Massive layoffs of public sector jobs that inhibit private sector hiring is a good thing. Considering the size of the public sector at the federal level, trimming back state level public sector may well spur private sector hiring in excess of the lost public sector jobs.

The proof is in the bottom line.
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Re: What has Trump done right so far?
Post by PeterZ   » Wed Mar 08, 2017 11:30 pm

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Annachie wrote:Or that historically the biggest adders of value has been government infrastructure projects


Actually in a way I expect infrastructure will improve under Pres. Trump.
Just that it will be enacted as a way to transfer public ammenities/utilities, and monies, into private hands with a permanant extranious cost to the public to use them.


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Only in developing nations. Public sector infrastructure projects for 3rd world nations will facilitate economic activity. Incremental investment will see diminishing returns as basic infrastructure become ubiquitous. The US spending a fortune to build roads and bridges to nowhere won't improve economic growth for squat.

It all depends on which projects Trump chooses.
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Re: What has Trump done right so far?
Post by Annachie   » Thu Mar 09, 2017 1:01 am

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True, but replacing those that need replacing, replacing dirty coal power plants (not sure how many US has actually) and backbone power lines etc.
Not to mention damns and hydro and stuff.

Some is private sector these days of course.
But a lot is still public sector.

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Re: What has Trump done right so far?
Post by PeterZ   » Thu Mar 09, 2017 1:36 am

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Annachie wrote:True, but replacing those that need replacing, replacing dirty coal power plants (not sure how many US has actually) and backbone power lines etc.
Not to mention damns and hydro and stuff.

Some is private sector these days of course.
But a lot is still public sector.

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Agreed. Some investment to modernize the power grid would be beneficial. The benefit comes from redundancy in case of catastrophes and not efficiencies. Even though the economic impact is temporary, the upgrade will reduce the severity of any dislocation stemming from catastrophes.
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Re: What has Trump done right so far?
Post by Fireflair   » Thu Mar 09, 2017 3:04 am

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Trumps plan claims that all the new investment and jobs will increase tax revenues, and some probably will, but not anywhere close to enough to deal with the federal deficit that increases the national debt – and the interest that must be paid on it – each year.

Based on a 2014 study by Standard & Poor’s, if Congress were to pass a $50 billion a year infrastructure bill, that legislation would create an additional 1.1 million jobs. Construction workers make an average of around $35,000 a year, and, under the best estimate of the Trump tax plan, those million workers would pay around $4,000 in federal income taxes each, thus adding up to an additional $4.5 billion. Economists like to point to the multiplier effect, i.e., how many additional jobs are created by one new job. According to the IMF, under present conditions, the multiplier effect is hovering around one, one additional job created somewhere in the economy for each new job created by investment. So… fifty billion dollars of infrastructure investment might create somewhere over two million jobs and possibly add $10 billion in tax revenues while costing $50 billion. Even if the multiplier effect is five times as much as the IMF says, the infrastructure proposal is at best a break-even proposition, and, as such, might be a good idea.

I agree the infrastructure needs work, we've got bridges (Not like the one in Alaska leading off to nowhere but real bridges that see heavy and constant use) which are falling apart, bad power distribution grid problems and power generation issues. However Trump’s proposed tax cut would reduce federal revenues by $500 billion, according to the Tax Foundation.

The numbers just don't add up.
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Re: What has Trump done right so far?
Post by PeterZ   » Thu Mar 09, 2017 9:12 am

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Not sure the Tax Foundation has accounted for the increased activity driven by deregulation. I also believe the reduction in corporate taxes for profits made abroad will also increase the tax base. Assuming $1 trillion in overseas profits and half of it repatriates, that's $500bn. Taxed at 10% and infrastructure projects are funded up to that $50bn.Those funds will repatriate if the investment potential in the US is sufficiently greater than that abroad taking into account the upfront tax.

GWP is $75tr and total world market capitalization is $69tr with an average P/E ration of 20.8 for corporate profits of about 3.3tr.

US GDP is 18.6tr and market cap of 28tr with a P/E of 21.8 for corporate profits of about 1.28tr.
If of the $47tr in non-US economic activity US companies participate in 10% of that total, then that represents another $4.7tr in revenue and approximately $47bn in profits annually. Which is $4.7bn in tax revenues.

Add in foreign direct investments from companies that want to tap the US markets but avoid Trump's protectionism and some portion of that $2tr in foreign owned profits flows into the US. This isn't taxed as it enters but does expand economic growth and with that growth the tax base also grows.

Now that annual influx of repatriated capital circulates in the US economy much like foreign direct investment to offset the trade deficit. Couple the increased capital base with deregulation and economic growth will increase quite nicely and at a faster pace than Obama's 2% annually. If President Trump further offers tax breaks for inner city development for jobs, he also reduces the social safety net costs.
Last edited by PeterZ on Thu Mar 09, 2017 10:18 am, edited 1 time in total.
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