Hippo Birdie Two Meese

[From Rick Marken (01.02.28.0900)]

Yes, folks! Just 55 short years ago the world was blessed
(or cursed, depending on which side of the "I see you have
chosen" chasm you fall on) with the birth of me.

Best regards

Rick

···

---
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Kenny Kitzke (01.02.28.1400)]

<Rick Marken (01.02.28.0900)>

<Just 55 short years ago the world was blessed (or cursed, depending on which
side of the "I see you have chosen" chasm you fall on) with the birth of me.>

I perceive the world has been blessed by your birth. To what degree is
another question. Happy birthday!

Now that we know how pitifully wrong you were about the Florida election
chads, would you like to repeat your views on the demerits of tax cuts for
improving our economy? 8-))

Just goading. I don't really want to know how wrong all the economic experts
are except you. They just take their cues from S-R psychologists. Neither
understand how PCT impacts the economy or human nature.

Oh, I am being bad today. Got stung in the stock market. That darn DubU!
Get back the Slick guy quick. I'll pardon him myself!

It sure has been rather dead on this forum.

[From Bill Powers (2001.02.28.1301 MST)]

Rick Marken (01.02.28.0900)--

So, Hipy Papy Bththday, old friend (not having the reference immediately to
hand, I may have misquoted Owl, but the sentiment is sincere). You have at
least 20 good years left, so play it for the long haul.

Best,

Bill P.

[From Rick Marken (01.02.28.1230)]

Kenny Kitzke (01.02.28.1400)--

I perceive the world has been blessed by your birth.

Thank you. Very nice of you.

Now that we know how pitifully wrong you were about the
Florida election chads, would you like to repeat your views
on the demerits of tax cuts for improving our economy? 8-))

Actually, it was Bush who was wrong about the Florida election.
He was wrong to think that the only way he could win the
election was by Supreme Court coup. He would have won if he
had let democracy take it's course, at least by allowing the
vote count to be completed in the three districts Gore
originally wanted recounted. Of course, he still would
probably have lost if the whole state were properly counted;
but the data on that is not in yet.

My only complaint about the Florida election was that the
results were not democratically determined. I think the
Republicans should have been confident enough to give
democracy a chance. It's not like they had a tough political
message. How hard is it to win an election when your platform
is "I'll reduce your taxes"?

As far as tax cuts go, the prediction of the leakage model,
I believe, is simply that regressive tax cuts will increase
leakage, thus decreasing growth and increasing inflation. This
effect of the tax cuts will be most visible if the Fed doesn't
fiddle with the money supply (the Fed being the other source
of leakage) during the time that the tax cut is implemented.
I predict, therefore, that if the Bush tax cuts are passed
(which seems highly likely) and the Fed keeps interest rates
fairly constant (which also seems fairly likely) we should see
increased inflation and reduced growth shortly after the tax
cut takes effect, which I think could be as soon as a couple
months after the bill is passed.

I don't really want to know how wrong all the economic
experts are except you.

Actually, many "real" economic experts are making similar
predictions for similar reasons. I just heard an interview
with Rubin (Clinton's Treasury Secretary) in which he said
what I would have said: most of the tax cut is going to
people who _can't_ spend the money usefully (for consumption or
investment). He didn't use the term "leakage" of course but
he did seem to understand that the money returned to the wealthy
could not be used for consumption _or_ increased investment
(the composite producer has all the capital it can use for in-
vestment). So Rubin was predicting that the Tax Cut would be
recessionary; what he didn't predict was that it would also be
inflationary. That's a prediction that could only be made by
the "leakage" model.

Best regards

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Dick Robertson, 2000.02.28.1940CST]

"Richard S. Marken" wrote:

[From Rick Marken (01.02.28.0900)]

Yes, folks! Just 55 short years ago the world was blessed
(or cursed, depending on which side of the "I see you have
chosen" chasm you fall on) with the birth of me.

Well, congratulations, you seemed to have survived remarkably well, all
things considered.

Best, Dick R.

···

Happy Birthday! It was a blessing!

···

-----Original Message-----
From: Richard S. Marken <marken@MINDREADINGS.COM>
To: CSGNET@listserv.uiuc.edu <CSGNET@listserv.uiuc.edu>
Date: Wednesday, February 28, 2001 11:30 AM
Subject: Hippo Birdie Two Meese

[From Rick Marken (01.02.28.0900)]

Yes, folks! Just 55 short years ago the world was blessed
(or cursed, depending on which side of the "I see you have
chosen" chasm you fall on) with the birth of me.

Best regards

Rick
---
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Shannon Williams (01.02.28)]

Now that we know how pitifully wrong you were about the Florida election
chads, would you like to repeat your views on the demerits of tax cuts for
improving our economy? 8-))

What are you refering to? At last count, Gore is easily over 1,000 ahead.
Lieberman
is quoted as saying that he is "vice-president in exile". And at last
nights speech, many
of the Democrats booed. (I wish they would not do that.)

Also, the BBC reported that had Katherine Harris not illegally scrubbed
75,000 voters
from the voter's registration that there would never even have been a
recount. Gore
would have swept Florida easily.

Shannon Williams

[From Kenny Kitzke (01.03.01.1400)]

<Rick Marken (01.02.28.1230)>

<Actually, it was Bush who was wrong about the Florida election.>

My memory is probably faulty. I am much older than you and already getting
senile. It became noticeable just about when I hit your age. :sunglasses:

Perhaps it was Bill or Shannon who was crying "robbed" when the election law
was enforced by the Supreme Court of the USA and the recounts were not
included which Gore requested to show he was the actual winner?

I am sure if _you_ were actually wrong in anything you said in your posts,
you would admit it and apologize rather than accusing Bush of being wrong.
Right?

<My only complaint about the Florida election was that the results were not
democratically determined.>

Our country is not a pure democracy. Our elections are determined by
election law, including the Electoral College for selecting the president,
not by the popular vote or what you perceive constitutes a democratic
determination.

<Actually, many "real" economic experts are making similar predictions for
similar reasons.>

You mean they use a PCT-type model of the economy like you do? Or, they are
just guessing based on their own perceptions and economic models of reality?

<I just heard an interview with Rubin (Clinton's Treasury Secretary) in which
he said
what I would have said: most of the tax cut is going to people who _can't_
spend the money usefully (for consumption or investment).>

While absurd on its face, I am not going to argue it with you. You must
though think that the Congress _will_ spend that money usefully (for
consumption or investment), right? Any proof you could cite here?

<(the composite producer has all the capital it can use for in-vestment).>

I serve producers and work with their decision makers daily. Not one has as
much capital as they want. They always choose what they think they can
afford from a much bigger list of desired possibilities. Most are cutting
back right now on previously planned capital investment projects because of
the economic downturn. Of course, with a tax cut they could use the money
for the capital investment and R&D projects they are instead deferring or
canceling.

If the purpose of life was mostly about money, its flow and leakage, everyone
would be interested in your model, including me. It seems like about 6
billion other (human control systems) are interested in something else,
perhaps in controlling some higher level perceptions than how much money they
possess?

[From Kenny Kitzke (01.03.01)]

<Shannon Williams (01.02.28)>

<What are you refering to? At last count, Gore is easily over 1,000 ahead.
Lieberman is quoted as saying that he is "vice-president in exile". And at
last nights speech, many of the Democrats booed. (I wish they would not do
that.)

Also, the BBC reported that had Katherine Harris not illegally scrubbed
75,000 voters

from the voter's registration that there would never even have been a
recount. Gore

would have swept Florida easily.>

I was just twisting (or trying to twist) Rick's tail on his birthday
announcement while also acknowledging his contribution to our world. And,
since dialogue on CSGNet was pretty slow, I thought I would respond.

As far as the election, I'll send you a quarter hoping you find someone else
who cares. I don't. I didn't vote for either Bush or Gore. From you posts,
I take it that it was important to you for Gore to win?

[From Rick Marken (01.03.01.1340)]

Kenny Kitzke (01.03.01.1400)--

I am sure if _you_ were actually wrong in anything you
said in your posts, you would admit it and apologize
rather than accusing Bush of being wrong. Right?

Of course.

Our elections are determined by election law, including the
Electoral College for selecting the president, not by the
popular vote or what you perceive constitutes a democratic
determination.

The electors are supposed to be selected by popular vote;
that is what I was referring to as "democratically". The
Florida presidential electors were not selected democratically
in the 2000 election. Therefore, the president was not
elected democratically.

Me:

[Rubin] said what I would have said: most of the tax cut is
going to people who _can't_ spend the money usefully (for
consumption or investment).>

Kenny:

You must though think that the Congress _will_ spend that
money usefully (for consumption or investment), right?

Yes. All Congress does, ultimately, is transfer money from
taxpayers (or holders of government debt) to lower and
middle income consumers. It is redistributing wealth. I
consider that very useful, particularly when the transfer
is of progressively taxed income to lower and middle income
families.

Any proof you could cite here?

One proof is the economic boom of the mid to late eighties.
This boom followed a recession created, in part, by Reagan's
tax cut (the other part due to excessively high Fed interest
rates). But Reagan went on a huge government spending spree
(spending for Defense) that was paid for mainly by borrowing
rather than taxation. The government transferred this money
mainly to middle class engineers (like me;-) working in the
Defense industry. This allowed increased consumption and,
thus, the production boom of the eighties. When the cold
war was "won" and Defense (government) spending (re-
distribution) declined, we got the recession of the
early 1990s.

I serve producers and work with their decision makers daily.
Not one has as much capital as they want...Most are cutting
back right now on previously planned capital investment
projects because of the economic downturn.

I'm sure that some people could use more capital right now; but
others have more than they need (as indicated by the increasing
level of unspent corporate profits). But if you are right then
a tax cut will increase investment and get the economy going.
Historically there is no evidence that this happens as a result
of a tax cut. But maybe this time.

The current economic "downturn" is almost certainly a result
of the series of Fed interest rate hikes that occurred in the
second half of 2000. These hikes also produced the expected
increase in the inflation rate during the same period. The
hikes stopped at the end of 2000 and the inflation rate
stopped rising (indeed, has been decreasing) since then (as
predicted by leakage theory).

Since the Fed has actually cut interest rates through the
first quarter of 2001 I expect to see growth in GNP pick up
again this quarter (the slow growth measures come from the
end of 2000). In other words, the economy seems to be doing as
well as it was at the beginning of 2000. The main reason for
any recent "downturn" in the economy is the action of the
Fed itself. Taxes have not suddenly caused the economy to go
south; and reducing taxes will certainly not improve the
economy (according to leakage theory). But if the economy
booms after the tax cut (and there is no government borrowing
to support increased Federal spending) I will definitely
have to revise my model of how the economy works.

If the purpose of life was mostly about money, its flow and
leakage, everyone would be interested in your model, including
me. It seems like about 6 billion other (human control systems)
are interested in something else, perhaps in controlling some
higher level perceptions than how much money they possess?

Money is simply a symbol the represents a claim on goods and
services. Life is about money to the extent that it is about
the things money represents, which is everything, including
higher order perceptions (eg., clergymen have to eat too so
they have to be paid). People need money for the food and
shelter that they cannot produce themselves. A certain
minimum level of money is, therefore, needed just to be able
to get what is needed for proper nutrition, physical comfort
and safety.

One in five (1 in 5!!) children in the USA live in households
that do not have enough money to buy adequate food and shelter.
These children live in poverty. This, to me, is a crime against
humanity because it is completely unnecessary (the child poverty
level is no more than 5% in nearly all other civilized countries;
still too high but heck of a lot better than the US).

There is no question that the crime of child poverty cannot be
stopped by letting the rich keep more of "their money". When
people paid no income taxes at all the child poverty rate in the
US was just as bad -- indeed worse -- than it is now. So to
have leaders in the US -- a country with the lowest tax rates
of any Western industrialized nation and BY FAR the highest
child poverty rate -- fighting to reduce taxes while completely
ignoring what they might be able to do about child poverty
with the anticipated surplus, is, to me, criminal.

Best regards

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Bruce Gregory (2001.0301.1735)]

Rick Marken (01.03.01.1340)

Since the Fed has actually cut interest rates through the
first quarter of 2001 I expect to see growth in GNP pick up
again this quarter (the slow growth measures come from the
end of 2000).

Is the fact that the savings rate suffered a precipitous drop from 1998 to
2000 of no importance in your model? I suspect there is some limit to the
willingness of consumers to go into debt to maintain their standard of
living. But I, too, could be wrong.

BG

[From Rick Marken (01.03.01.1530)]

Bruce Gregory (2001.0301.1735)--

Is the fact that the savings rate suffered a precipitous drop
from 1998 to 2000 of no importance in your model?

Actually, it's central to the model. What is reported as "personal
savings rate" in the Statistical Index is actually part of _leakage_
(the other part of leakage is "unspent corporate profits", which have
actually been increasing since 1995 or so). The personal savings
rate is not really a measure of how much is going into personal
savings accounts. It's just the difference between what is paid
to the composite consumer as wages and capital income (GNP) and
what is spent to purchase GNP. TCP argues that spending should
be equal to income (at the aggregate level) so that the composite
consumer gets paid back what it spent to produce GNP. So "savings"
as reported in the Statistical Index is actually leakage (according
to TCP); the bigger these "savings", the worse the economy should do.

To determine the level of actual savings at any time, one would have
to sample the amount everyone actually had in their personal savings
accounts at at that time. That would be a tough one to measure.
I don't think there exists any actual measure of real "savings"; if
it does exist, it would definitely be worth looking at.

I suspect there is some limit to the willingness of consumers
to go into debt to maintain their standard of living. But I, too,
could be wrong.

I think the easy availability of consumer credit (via credit cards,
seconds, etc) since the early 90s has contributed to the success of
the economy -- more success than one might expect given the level
of leakage, which is not much lower than it was in the recessionary
period of the early 90s. Clinton's policies were not nearly
redistributive enough to account for much of the growth we've seen
through the 90s. Actually, much of that growth is just the result
of leakage reduction due to the Fed lowering interest rates.

I think the easy availability of credit for lower and middle
income people may have reduced "personal savings" leakage;
enough to keep the economy growing a a pretty good clip despite
the continuing growth in the disparity between rich and poor.
That's why I think this tax cut could be the straw that breaks
the back of the economy completely. That's because there is,
indeed, a limit to how much people can borrow. If the tax cut
really opens the floodgates of leakage, the bottom 40% simply
won't be able to borrow enough to make up for the loss of
purchasing power that will be returned to (and will go unspent
by) the top 1%. We could be looking at a depression rather
than a recession (in about 3 years) unless Bush can, at that
time, figure out some way to justify heavy borrowing for
government spending.

Best regards

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Bruce Gregory (2001.0302.0645)]

Rick Marken (01.03.01.1530)

To determine the level of actual savings at any time, one would have
to sample the amount everyone actually had in their personal savings
accounts at at that time. That would be a tough one to measure.
I don't think there exists any actual measure of real "savings"; if
it does exist, it would definitely be worth looking at.

Thanks. Your post was very helpful. I think I understand the model better now.

BG