Filed under: Politics, Economy, Capitalism, The United States, Regulation, Unemployment, Progressives, Free Markets | Tags: A Troubled Economy, Federal Reserve, Leftist Economics
The Federal Reserve’s quantitative easing seemed like a good idea at the time. Cheap interest rates would let businesses borrow and grow and hire.The Wall Street Journal says household and nonprofit net worth climbed to $85.7 trillion
Economists had hoped that rising worth in U.S. households could induce — through what are known as wealth effects — enough spending and confidence to bring about a more robust economic recovery. That logic helped underpin the Fed’s decisions to hols interest rates near zero for nearly the past seven years, and to engage in repeated rounds of asset purchases, known as quantitative easing.
But while the value of U.S. assets has shot upward in recent years—stocks have reached new highs and home values have regained much of what was lost in the housing bubble’s collapse—economic growth has been sluggish, and many households have seen little of this wealth flow into their paychecks.
The American Interest says ‘Low Interest Rates Mask the Effects of Job-Killing Policies.’ “While the Fed’s quantitative easing has not led to the consumer price inflation that many feared, it has led to asset price inflation. Job growth, not asset price inflation, is the best way to promote economic growth.”
To grow the economy, cheap interest rates are not going to work as well as reforms that make business formation and job creation more attractive. Yet Democrats these days have ever-lengthening lists of job-killing policies they want to enact, from tighter environmental regulations to dramatic minimum wage increases (especially in cities where unemployment is high) to tax increases. Paradoxically, that leaves liberals cheerleading for Fed policies that increase inequality and concentrate wealth because only ultra low rates (or truly massive deficits, which can’t be rammed through a GOP Congress) can mask the effect of left-wing microeconomic policies on the economy as a whole.
The Pizza shop owners have been ordered to list all the ingredients in each pizza with the calorie count, because people are too fat. They have also been ordered to comply with the newly raised federal minimum wage, because no one can raise a family on the minimum wage. And just how do they pay for all that?
Hospitals have been ordered to computerize every examining room so they can be centrally programmed to store all the patient’s information so it can be shifted between hospitals and the government to reduce the cost of health care.¹ A tax has been levied on every piece of medical equipment from the examination table to the mammogram machine to the disposable gloves, and the sterile swabs. That is also expected to reduce the cost of health care.
That’s just two tiny examples of the wrongheadedness of Democrats and their economists. Noble intent + stupid idea does not equal an improving economy, and yet here we sit after 7 very long years.
They are so intent on control and more closely directing all economic activity in the interest of greater “fairness” that we have reached a point where the Federal Reserve seems to be terrified at the possibility of what might happen if they raised interest rates by a quarter of a percentage point.
¹ This has largely been done, at great expense. Hospitals and clinics cannot talk to each other nor to the federal government. Each was separately programmed and they cannot communicate. However, just as was warned, medical identities and records are being stolen, and recovering from such a theft can cost as much as $15,000.
Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy, Politics, Progressivism, Regulation, Taxes | Tags: A Troubled Economy, Seattle's Big Dig, The Boeing Contract
Exciting times in Seattle. Not only has Seattle’s U.S. Coast Guard Cutter Polar Star diverted to the rescue of the climate scientist publicity seekers, the crew of the Russian ship Akademic Shokalskiy, which may turn over in the ice, the Chinese icebreaker Xue Long (Snow Dragon) which is stuck, and then heads on over to McMurdo Sound to break a channel through to our researchers there.
Seattle has its own “big dig”, as it tries to dig a tunnel along the waterfront to replace an elevated roadway (The Alaskan Way Viaduct) along the waterfront that was an annoying eyesore for the expensive condominiums and high-priced office space that marred the view of Puget Sound and the Olympics. This has been a years-long battle between those who were concerned about cost and efficiency and those who owned the aforementioned property. The tunnel machine “Big Bertha” stopped working on December 3, when its cutting teeth hit an immovable object.
The object, subject of much speculation turned out to be a 119-foot steel pipe left buried in 2002 by one of Highway 99’s own research crews. So essentially the Department of Transportation neglected to tell the Department of Transportation that there was a long 8 foot diameter steel pipe there, meant to measure groundwater for the Alaskan Way Viaduct replacement project. Now they have to decide what to do and how much it’s going to cost.
In the meantime, the Machinists Union finally, on Friday accepted a contract proposal from Boeing management by a slim 51 percent. The local leadership was sure that Boeing was bluffing and would not pick up their airplane business and take it to a more friendly business climate, and did not want to allow their membership to vote. Politicians and officials were pretty sure that Boeing was really, really tired of negotiations with the International Association of Machinists. Boeing will build the 777x jetliner in Everett and its wings will be fabricated nearby by Boeing machinists. Boeing was founded in Seattle and remains a major employer in the region, though company headquarters picked up and moved to Chicago a few years ago.
In an economy that has not recovered with millions of unemployed, bureaucratic bumbling and unions demanding ever more money and ever more benefits, things are going to get a little more tense, if not a lot more. Businesses will pick up and move. Overly costly employees will be replaced by robots. Government’s excessive regulation and general ignorance of economics and free market principles will play out on local battlefields with national repercussions. It’s a time when we can ill-afford an ill-informed public.