Dow 14000 on Tap
Zubenalgenubi
By BRIAN S. WESBURY
January 4, 2007; Page A15
You. In 1982, Time magazine's person of the year was a machine -- the
personal computer. Twenty-four years later, after being empowered by
the computer, the 2006 person of the year is -- "you." Time's cover
sports a small mirror so we can contemplate ourselves -- the controller
of the information age -- and think about all our blogs, pages on
MySpace or Facebook and videos on YouTube.
The most interesting thing about this progression is that it did not
result from consumer demand. Demand does not create wealth. Consumers
were not marching in the streets 30 years ago complaining about the
fact that there was no way to share their daily activities and
innermost thoughts with thousands of their closest friends. People were
not begging for personal computers, email, broadband, the Web or blogs.
Entrepreneurs, futurists, scientists and the very early adopters
birthed this technology: Today's average consumer was either clueless
or still in diapers.
Even though some of this technology existed in the 1970s, the economic
environment of those times was not conducive to its rapid development
or deployment. Tax rates were high and regulation was stifling. This
held back innovation, creativity and productivity. To offset this
malaise, many macroeconomists counted on the Fed to hold interest rates
low by printing more money, which only stoked inflation. The resulting
stagflation created a lousy environment for new inventions.
In the early 1980s, tax rates were cut, government interference in the
economy was reduced, and the Fed followed a tight money policy. As
stagflation was cured, entrepreneurs got to work. In garages, basements
and cinderblock buildings, today's technology promptly came to life
even before its full usefulness was understood. It took more than a
decade for the Internet and email to become real consumer products. It
was the supply of this technology that fueled its growth, not the
demand for it.
Despite evidence from the past 30 years, a majority of the analysis and
press coverage of our economy still focuses on demand as the driver of
wealth creation. As a result, we hear that rising oil prices are like a
tax on the consumer that will slow the economy or possibly lead to
recession. But this discounts productivity growth that allows higher
costs to be absorbed. Moreover, one person's spending is another's
revenue. So while Midwesterners pay more to heat their homes, energy
producers in Louisiana, Wyoming, Texas or Oklahoma are shopping online
with all that newfound income.
Money doesn't just evaporate. For every debit, there must be a credit.
The world is a closed system as far as the dollar is concerned. Even if
we send more dollars to OPEC, those dollars come back. Currency that
leaves the country must return to purchase goods and services, or make
an investment.
This explains why our trade deficit with China is not a significant
problem. The dollars sent across the Pacific rebound as investment or
spending on goods and services, such as the recent $3- to $4-billion
contract with Westinghouse Electric Co. to build nuclear-power plants
in China. While many fear that China might stop investing in the U.S.,
or sell its current investment holdings, this is misplaced worry. If
China traded its dollars for euros, then whoever stood on the other
side of that transaction would hold those dollars -- facing the same
choices of buying from, or investing in, America. Foreign investment
reflects the strength of the U.S. as a safe and sound economy.
Yes, the earth is flat, but American technology made it that way. The
argument that the U.S. cannot compete, now that technology has leveled
the playing field, sounds like a Michael Crichton novel. You know the
story: We invent something and it turns on us -- Jurassic Park, the
Andromeda Strain or even Frankenstein's monster. This makes great
fiction, and who knows, it may happen some day, but the only way U.S.
competitiveness will fall off the edge of the flat earth is if we place
too many burdens on the entrepreneur.
Unfortunately, there are many who want to do just that. Based on a
belief that the middle class is being squeezed, or too much of the
profits of enterprise are going to the owners of capital, there is a
push to raise taxes and redistribute more of our income.
But these beliefs are more political fodder than reality. In the first
five years of the current recovery, inflation-adjusted average hourly
earnings have climbed a total of 1.7% -- not great, yet still much
better than in the first five years of the last recovery (starting in
March 1991), when earnings declined by 0.5%.
Even so, average hourly earnings are a terrible measure of income
because they do not include tips, bonuses, commissions or employer-paid
benefits. Nonetheless, the data show that low- and middle-income
workers' wages have performed better in the current cycle than they did
in the same time period of the previous cycle. And to top it off,
everyone who pays taxes faces a lower tax rate.
The process may be mysterious and magical at its core, but it is
completely understandable. Lower tax rates encourage innovation and
risk-taking. The impact of this raises productivity. And productivity
raises living standards by boosting incomes or lowering prices.
It is true that corporate profits have climbed to a record share of
GDP. And it is also true that income gaps have widened. But these can
be positive signs, not negative ones. An economy without profits is a
stagnant economy. And income gaps have widened in every period of rapid
technological advancement going back to the invention of the wheel --
the first to use a new technology, and the entrepreneurs who push it to
fruition, benefit the most, even as the new technology lifts living
standards for all.
Fighting these trends diminishes technology's ability to raise living
standards. If France had chosen to cut tax rates, regulation and the
size of its government in the early 1980s while the U.S. continued on
its path towards a social welfare state, it would be the French who
would be complaining about excess corporate profits and the income gap.
Americans, on the other hand, would fret about a 10% unemployment rate
and march in the streets demanding job guarantees and shorter
workweeks.
In an ironic twist, because the personal computer has decentralized
business activity and altered the structure of many industries, the
statistical machinery designed to measure economic activity has become
increasingly inaccurate. The newspaper help-wanted advertising index
has become useless. The Internet has spawned the growth of many
companies with "no" employees. These microbusinesses, and an increase
in self-employment, make it even harder to measure the total number of
jobs or incomes. Legal documents and accounting programs are
inexpensive and widely available on the Web, which means it's easier
than ever to start a new business.
But measuring everything perfectly is not all that important. As long
as policy is pointed in the right direction, technology and
productivity will continue to advance just like they have over the past
25 years. Today, tax rates are still low enough to boost investment and
entrepreneurial activity. At the same time, the Fed has not lifted
rates to excess. As a result, both the demand-side and the supply-side
of the economy in 2007 look solid. Another year of above-3% real growth
and a 14000 Dow are on tap.
Other than some further increases in inflation, the only thing we
should worry about is the "Magazine Cover Jinx." If the 1970 University
of Texas football team can have its 30-game winning streak ruined
immediately after making the cover of Sports Illustrated, then 2007
could be a tough year for "us."
Mr. Wesbury is the chief economist at First Trust Advisors L.P. in
Lisle, Ill.
Hilary/Obama 08
self serving bullshit from another millionaire who has someone else
fighting for his freedom to be a piece of shit
"Zubenalgenubi" <zubene...@hotmail.fr> wrote in message
news:1167907192.4...@s34g2000cwa.googlegroups.com...
> WSJ COMMENTARY
>
> By BRIAN S. WESBURY
> January 4, 2007; Page A15
> Unfortunately, there are many who want to do just that. Based on a
> belief that the middle class is being squeezed, or too much of the
> profits of enterprise are going to the owners of capital, there is a
> push to raise taxes and redistribute more of our income.
Horrors, we cant do that, how would these rats pay for their golf
memeberships, and
personal jets
> But these beliefs are more political fodder than reality. In the first
> five years of the current recovery, inflation-adjusted average hourly
> earnings have climbed a total of 1.7% -- not great, yet still much
> better than in the first five years of the last recovery (starting in
> March 1991), when earnings declined by 0.5%.
typical republicon, conservative bullshit, : It's not good but
better than it was 15 years ago, willanyone but a stupid inbred redneck
fall for this
> Even so, average hourly earnings are a terrible measure of income
> because they do not include tips, bonuses, commissions or employer-paid
> benefits. Nonetheless, the data show that low- and middle-income
> workers' wages have performed better in the current cycle than they did
> in the same time period of the previous cycle. And to top it off,
> everyone who pays taxes faces a lower tax rate.
taxt cuts of 50% for millionaires, 1.5 % for the rest of us,
the data they refere to was created yesterday by the loser in the mail room
who wants to move up the corrupted corporate ladder
> It is true that corporate profits have climbed to a record share of
> GDP. And it is also true that income gaps have widened. But these can
> be positive signs, not negative ones. An economy without profits is a
> stagnant economy. And income gaps have widened in every period of rapid
> technological advancement going back to the invention of the wheel --
> the first to use a new technology, and the entrepreneurs who push it to
> fruition, benefit the most, even as the new technology lifts living
> standards for all.
IOW, the people at the top deserve 14,000 times what the average person
makes
because they know better than we do, exactly what we need,
we're nothing without them,
ifn it weren't fer them lying, steling, corrupt,criminal,cowards, why by
golly, we'd all be on welfare,
so stop whining and give us your money,
you owe your soul to the company store
> Fighting these trends diminishes technology's ability to raise living
> standards. If France had chosen to cut tax rates, regulation and the
> size of its government in the early 1980s while the U.S. continued on
> its path towards a social welfare state, it would be the French who
> would be complaining about excess corporate profits and the income gap.
> Americans, on the other hand, would fret about a 10% unemployment rate
> and march in the streets demanding job guarantees and shorter
> workweeks.
we would have a 0 % unemployment rate and wages for average workers
would be doubled if the corporations hadn't bought our politicians and
imported 25 million
low wage workers from mexico,
the french have not thrown 1 Trillion dollars into the sewer of Iraq, 30,000
caualties, explosive trade deficits,and,
they do not have an inept, incompetent, nazi government led by stupid
criminal hillbilliesm and financed by greedy, selfishm bnon human corporate
rats
> But measuring everything perfectly is not all that important. As long
> as policy is pointed in the right direction, technology and
> productivity will continue to advance just like they have over the past
> 25 years. Today, tax rates are still low enough to boost investment and
> entrepreneurial activity. At the same time, the Fed has not lifted
> rates to excess. As a result, both the demand-side and the supply-side
> of the economy in 2007 look solid. Another year of above-3% real growth
> and a 14000 Dow are on tap.
3 % real growth, they mean 14% growth for the wealthy, and -11% growth
for the rest of us,
> Other than some further increases in inflation, the only thing we
> should worry about is
how long before they own us and demand our first born for their military, so
they can
spread their culture of greed,selfishness, corruption,hatred,murder,and
other crime,
our only hope appears to be the illegal immigrants who will vote
the republicons out of existence,
it will be hilarious to watch their typical FAILING attempts come back to
bite their huge overfed asses
js
Hilary/Obama 08 wrote:
> more justification for the ugly conservative greed and selfishness,
> self serving bullshit from another millionaire who has someone else
> fighting for his freedom to be a piece of shit
> taxt cuts of 50% for millionaires, 1.5 % for the rest of us,
Care to share the source of this?