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30 Issues: How to Grow the Economy

Friday, September 14, 2012

30 Issues in 30 Days is our election year series on the important issues facing the country this election year. Today: How government measures can boost the economy and move Americans towards an end of the Great Recession. Visit the 30 Issue home page for all the conversations.

Open Prep: Questions, Articles, and Links to Get You Started

Key Questions

  • Is austerity today necessary for growth tomorrow?
  • Which sectors are economically strong, and what can we learn from them?
  • What can the government actually do to create new jobs?

What are your key questions on this topic? Post them below and get the conversation going!

Guests:

30 Issues From WNYC Data News Team | More NYC-Specific Data

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Comments [44]

"Trickle Down" only works if the trickle goes through "public employee", "construction worker" payrolls and/or "homeowner budgets"?

Sep. 14 2012 01:46 PM
Joe Treimel from Pequannock, NJ

1. Why is Job Creation and economic growth suddenly the Presidents responsibility?
2. This is a world-wide problem, not just one in the USA.
3. If Mitt Romney says "Cutting taxes for the rich will lead to job creation," why has he put so much of his money in overseas banks instead of investing it in the United States?

Sep. 14 2012 01:02 PM
John A from not far off

Our next business-day is Monday 17-Sep. OWS day, I believe.

Sep. 14 2012 12:30 PM
Edward from NJ

@Amy from Manhattan, the difference between the Gingrich Congress and this one is that, when Clinton picked up a Republican agenda item like Welfare reform, Gingrich went along. When Obama promoted a style of healthcare reform that was previously advocated by Republicans (Mitt Romney, Heritage Foundation) the current group of Republicans opposed it at every turn. It's not a question of compromise. It's a question of blind opposition.

Sep. 14 2012 12:09 PM
al from New Jersey

The crucial issue in this Presidential campaign and the world today is whether sustainable long term per capital economic growth is possible in the United States and the world at large. Neither candidate is addressing the issue and media are virtually ignoring the issue. If we cannot work together to solve this issue, we are basically deciding that some folks have to die.
Here are some relevant points.
1. We do not measure economic output on a per capita basis and would have to derive a new economic series to track the issue.
2. This is not a government or private issue. It is an issue that requires cooperation (like when we built the railroad, the airline industry, the defense industry) with both government and private business working together. Government may be able to clearly identify common goals to the extent they exist (e.g., compete with Russia in space, promote public health)for us to rally around.
3. You cannot solve the problem in terms of commodities - commodities are by definition finite. You can only solve the problem by releasing human creativity to address new issues and create new economic wealth.
4. In regard to history, post World War II is a successful example of going into debt to get out of debt. Basically we invested in ourselves and set up a Marshall plan to aid Europe. It is time to invest in Americans again and set up a Marshall plan for the world.
So I was dissatisfied with your efforts on this issue because I thought your guests and you completely missed it.

Sep. 14 2012 12:05 PM
mejimenez from manhattan

Funny how the Planet Money guys barely mention the Government's main contribution to economic growth, the building and maintenance of the infrastructure. Also interesting is the complete glossing over of the replacement of Industrial Capitalism by Finance Capitalism. It is in Finance Capitalism that the relevance of the earlier guest's comment about the limits of growth through compound interest hit home.

As to the consensus among economists, the arguments made on Planet Money are regularly dismantled by Dean Baker on his blog, http://www.cepr.net/index.php/beat-the-press. And for a truly comprehensive analysis of the capture of the economy by the non-productive 1%, the rentiers who create bubbles and not real growth, there is no one better than Michael Hudson, http://michael-hudson.com.

Sep. 14 2012 12:04 PM
jgarbuz from Queens

To Edward

I agree. That is why I have no choice but to reluctantly support Romney at this point in history. I don't like the guy, but at this point we need to drill and produce energy for ourselves and our allies. As we used to do back before we shifted energy production to the Middle East because it was cheaper. That luxury of very cheap energy is gone.

Sep. 14 2012 12:03 PM
jgarbuz from Queens

To Sheldon

The warrior class does not create wealth.It steals it from weaker neighbors. The merchant class organizes workers, inventors, capital, etc., to produce and market profitable products to those neighbors and that creates wealth. Profits = wealth. But how that wealth is distributed is a different question.

Sep. 14 2012 12:00 PM
Edward from Washington Heights AKA pretentious Hudson Heights

First the US must become energy self sufficient.
Second, the US must become an energy exporter.

Both can be done.

Obama opposes US energy self sufficiency.

Romney supports US energy self sufficiency.

Sep. 14 2012 11:58 AM
Sheldon from Brooklyn

Jg - but there is a difference between the elites. That "warrior" class of entrepreneurs - who create wealth and a rentier class who simply live off of theirs and try to hold on to their wealth by avoiding paying taxes and surpressing the creation of "new money" throught their govt connections.

The republican party has been in the pockets of rentiers, the last 15 years.

Sep. 14 2012 11:54 AM
Amy from Manhattan

The "no compromise" contingent of Republicans is "new"? Yeah...20 years new! Don't you remember the Congress that rejected everything that came from Pres. Clinton--even before Newt Gingrich became Speaker of the House & actually *said* they'd refuse to compromise?

Sep. 14 2012 11:53 AM

The 2 Planet Money "reporters" should change their job titles. They're PR flacks for Wall ST.

They still refuse to recognize the 3+ year asset bubble (many different assets) that has killed the economy since Reagan stopped regulation dead in its tracks.

Companies aren't hiring because there is not enough consumer demand for goods & services. An unequal supply/demand equation = a non-equation.

Our states & cities have depleted tax bases & revenues because the high-paying jobs that spurred local growth have been shipped overseas. The real debt crisis is the long-term trade deficit that the Government hasn't taxed by trade tariff in the name of GOP/Wall ST "Free Trade."

Sep. 14 2012 11:51 AM
KGK from NJ

A recurring problem is the incentive in an unregulated market for both producers and consumers to create "externalities" which are costs blocked from distribution to the consumers and blocked from causing producers to act to adjust the methods of production of goods and services. Since the beginning of the industrial revolution, the costs have been accumulating and degrading the bio and terresphere systems. These are real limits to economic growth rates, but the rates can be impacted by technology and regulatory policy

Sep. 14 2012 11:46 AM
gary0 from clark, nj

i'm not buying Alex Bloomberg one bit. he's makes a very compelling case for infinite economic growth. this was dispelled in the '70s. think about it, nobody's talking about a 3 minute miler. i believe we need to shrink the economy by as many people as possible leaving the economy and making a living for themselves, including cooperative subsistence farming, homespun cloth, and reduction of consumption of anything corporate to the bone. let the 1% eat that. so until people stop shopping at walmart and cancel their cable nothing can, nor will change for the 99%.

Sep. 14 2012 11:45 AM
Smokey from LES

Is there any truth that Affordable Care Act is keeping businesses from expanding from 49 to 50?

Sep. 14 2012 11:44 AM
Edward from NJ

I don't really get the ad hominem attacks on Adam Davidson. If you listen to Planet Money, it's quite apparent that Ally Bank is their major underwriter. It's not a secret!

Writers make money by doing speaking engagements. Is Adam Davidson saying something different when he does speaking gigs for bankers? Or is he saying the same stuff he says on his show and in his writing? Can you show a pattern where he's changed his reporting because of those speaking engagements?

Sep. 14 2012 11:43 AM
Chris from Richmond, VA

Perhaps a highly regulated financial industry leads to slow and steady growth, while an unregulated financial industry leads to booms and busts. In the end, do they get to the same place, but in different ways?

Sep. 14 2012 11:43 AM
John A

Simple Imperialism. I am not proud of such a system.

Sep. 14 2012 11:40 AM
Daniel from UWS

Please do not invite Alex Blumberg back. He cannot express himself coherently. He can't even get out more than a few words without stammering and stumbling and interrupting himself. Please put your audience first. Do not inflict on us people who can't make themselves understood -- because they can't talk.

Sep. 14 2012 11:40 AM
steve from Queens

Can you ask about bio-tech in NYC?

Sep. 14 2012 11:39 AM
jgarbuz from Queens

The mercantile (merchants, "entrepreneurs," moneylenders, et al.) have always been at the top of the food chain, except when the warrior class ruled. Since the dawn of civilization, there have only been two ways for a civilization to get wealthy: (a) to conquer its neighbors, loot and/ or enslave them, or (b) conduct trade and sell them more than they sell you, i.e., a positive balance of trade.

Either the warrior class steals the wealth of weaker neighbors, or your merchant class finds products to profitably sell. So either the warrior class in the top elite, or the entrepreneurs are the top elite. Sometimes the priestly class representing the mystical nonsense sold to the people can be the intermediaries between the poor hard working people and the ruling classes.

Sep. 14 2012 11:38 AM
Matthew from Hicksville

So-called economic growth on a planet of finite resources is not possible. As Alex Blumberg says its come at catastrophic environmental degradation, of which Earth is now telling us it can no longer take any more abuse. So its either the economy or the planet. Choose wisely.

Sep. 14 2012 11:34 AM
Mike CC from Manhattan

Amen Alex he guest is correct ..... in so many ways .. I will just simply agree
there are no limits that's what science and technology is all about.. working it thru problems and all naysayers are uneducated ...

Sep. 14 2012 11:32 AM
John A

Why should people always get more stuff? Guest is not making the point very weel. Yeah, and start by insulting the clear speaking man in the clip.

Sep. 14 2012 11:30 AM
tim from Haarlem

The rich profit from the recession b/c of the surging stock market... those with investments win BIG TIME.. and now 50% of Americans are ready to elect for one of the rich guys.. political leight-weight, former a one-time governor and so-called "job creator."

Sep. 14 2012 11:27 AM
Reality

I like how Brian mentions "Contributor to the NY Times Magazine" but not featured speaker at Goldman Sachs, Barclays Capital, VISA funded events and host of Ally Bank sponsored planet money.

Sep. 14 2012 11:27 AM
Sheldon from Brooklyn

Good points JG but Marx was referring to guilded age, mostly unskilled labor. Adam Smith would slighty disagree.

Sep. 14 2012 11:24 AM
Jessie Henshaw from Way Uptown

Brian, you hit on one of the major implications of the market doing great, as the employees doing poorly. It's a completely natural phenomenon, with a crystal clear 40 year developing history.

Who's really stealing our jobs, so that only investors profit???
http://www.synapse9.com/signals/2012/09/07/computers-taking-over-our-jobs/

Sep. 14 2012 11:24 AM
Reality

This Ally Bank guy really is something else. Romney threatening to not reappoint Bernanke is why Bernanke is trying to help out Obama.

Secondly, all this money flowing from the Fed to the banks is deflating money. Since salaries are not rising, and each dollar people make has less value, they are effectively getting poorer. The real issue is that housing prices need to be allowed to fall to a level where people will be willing to buy them again. This money pump will effectively do that by cheapening money, so your precious home will still be worth $500,000 but those $500,000 will be the equivalent of $100,000.

Get this bankster off my public station.

Hey WNYC, are you still going to be asking me for money when you are amply funded by the banking class?

Sep. 14 2012 11:23 AM

Why would anyone think someone from a show called "Planet Money" would be so pro-free market? Repugnant name, btw.

Sep. 14 2012 11:22 AM
jgarbuz from Queens

The Iron Law of Rents and Wages essentially dictates that the price of labor will will always fall to just slightly above subsistance. IOW, with all other things being equal, most workers will always be living hand to mouth at best. There are times when life improves, but those are unusual times, as after winning a war, like WWII.

If the minimum wage laws were removed, as well as most welfare benefits, certainly employment would rise dramatically, but at the cost of people just essentially working themselves to death. "Wage slavery" as Marx once called it. There is always a job to be created if the cost of labor is allowed to be low enough. That's the cruel Iron Law of life.

Sep. 14 2012 11:19 AM
Jessie Henshaw from way uptown

There actually IS hard science for economics. It's just that it puts constraints on economists... who want theory to work as they like. That's the sad truth, that it's their belief that "they need to get it their way" that makes them think there's no science to tell them.

Growing economies use growing quantities of energy. We'er increasingly short on affordable supplies. Improving efficiency just increases the demand for (in fact, inherent in the physics of energy using systems and clear as a bell in the hard data).
http://www.synapse9.com/pub/EffMultiplies.htm

Those hard facts imply a "change in plans" that all the vested political interests find hard to take, so don't explore or explain why we need a new plan.

Sep. 14 2012 11:18 AM
Smokey from LES

Why not spend all this money on infrastructure?

Sep. 14 2012 11:18 AM
Edward from NJ

Please address the notion that "commodity prices are rising".

Is this caused by QE or by energy prices rising due to growing demand in rapidly industrializing countries?

Sep. 14 2012 11:16 AM
Sheldon from Brooklyn

I'm not a fan of QE's back door way of freeing capital but this has more to do with politics. Republicans want America to burn before the election, that is why they are so upset, Obama will take a "stimulus" anyway he can get it.

Sep. 14 2012 11:15 AM
halloran

As expected the Planet Money guys -- sponsored by Ally Bank, by the way -- are presenting conservative talking points as factual claims.

According to this view, Greenspan's easy money policy -- not mortgage fraud -- was the source of the housing bubble.

This is nonsense -- Canada has similarly low rates, and no bubble, thanks to regulation -- but very convenient for the interests which promote Adam Davidson and Planet Money.

Sep. 14 2012 11:14 AM
Jessie Henshaw from way uptown

Ask if the very concept of economic growth is sustainable. Here’s way to ask it that may not get you tied in knots and hung out to dry.

The denial of natural limits relies entirely on assuming the world behaves according to concepts defined by rules, and concepts defined by rules have no limits. So you need to ask the question is a way the separates the physical world from the conceptual world, EVEN for people who define “physical world” as being their abstract basket of concepts and rules.

One way (think of your own) is to ask
“When our theories break down, isn’t it always something we find missing from them that’s the problem? Why wouldn’t it be natural for economies to change growth plans in midstream, in response to finding things left out of the original plan to expand to infinity??

Sep. 14 2012 11:10 AM
Question from nyc

I'm wondering:
Is all this QE actions growing the national debt?
Is it that the USA is printing money and buuying its own money back?

Sep. 14 2012 11:10 AM
hally

Kindly ask Adam Davidson to reveal his conflicts of interests -- the money he receives from the financial institutions he's supposed to cover impartially. You might also ask why it is he doesn't reveal these conflicts on the air.

For further information,

http://shameproject.com/profile/adam-davidson/

Sep. 14 2012 11:06 AM
Lori from Manhattan

After yesterday's Federal Reserve decision, I guess we now know the plan. Print money to oblivion. Unfortunately, we have global history to show us this ends in disaster 100% of the time. Already basic commodities we need to survive are rising - doesn't take long does it?! But our wonderful Fed Chairman says there is no effect. It's quite laughable.

Sep. 14 2012 09:57 AM
MartinChuzzlewit from Manhattan

THE 1.5% OBAMA PRESIDENCY

Economics professor Barry Obama never commented on the August report of declining GDP growth in the second quarter, and the Obama Media was careful to let it slip quietly by. This is the third straight year of sputtering recovery. Growth declined to 2% in the first quarter and now 1.5% in the second.

Sep. 14 2012 09:02 AM
David

To whoever posted "BOTTOM UP RECOVERY PLAN from Why the Stimulus failed," this quote is for you:

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Sep. 14 2012 08:28 AM
Ed from Larchmont

If the deficit could eventually cause the economy to collapse, as in Greece.

Sep. 14 2012 07:59 AM
BOTTOM UP RECOVERY PLAN (2)

The problem with the previous stimulus program was it
was TOP DOWN (dare I even say trickle down ?). For this
reason it was inefficient. An efficient way to grow
the economy is bottom up - here ARE some approaches.

1) Bailout homeowners and the banks will also be saved.
Preventing the negative externalities of foreclosure
on communities would have not only been kinder, but
speeded recovery. Govt *REQUIRING* banks to alter terms
and GOVT DIRECTLY SUPPORTING refinancings and/or forced
markdowns would have saved major job losses and contraction.

2) Increase INFLATION. A 7 - 8 % inflation rate over 3
years will make most homes be no longer underwater. It will
ease the real debt load of people with heavy student loan
and credit card debt. It will HEAVILY incentivize companies
to actively USE their funds rather than sit on them (or they
will LOSE money to inflation).

3) EMPLOY PEOPLE DIRECTLY - a new WPA/CCC would cost less
than the bailouts and would restore growth from the bottom up.
Incentives to businesses are inefficient, tax cuts are even more
inefficient. 10 million unemployed could be hired for $20K/year
for two years for 400 billion + administrative costs.

4) Learn from others' best practice - GERMANY pays half of
wages lost when companies KEEP PEOPLE IN THEIR JOBS BUT
REDUCE THEIR HOURS WORKED. This is FAR more efficient in
maintaining human capital and growth than firing people
and having them be unemployed. It's kinder and more efficient
and cheaper. (Also TAX companies who fire people - this will
incentivize them not to offshore).

5) Correct trade imbalances - the Fed estimated this accounted
(in the early 2000's) for a decrease in jobs of about 2 % of
the workforce. Tariffs should AUTOMATICALLY KICK IN &
RACHET UP when bilateral trade imbalances persist.

6) MORE VACATION TIME - an additional week of vacation means
approximately 2 % less work done - even if half of this
results in new employment this would reduce the unemployment
rate by 1 %. 3 weeks is what workers in CHINA get. Europe
gets more. Shorter work week, hours and more vacation spreads
work around and stimulates recreation demand. It worked in
past depressions.

6) Half day work week reduction for retraining - ex : Wednesday
afternoons. (see 5 above)

ECONOMIC GROWTH COMES FROM THE BOTTOM UP - FROM PEOPLE TO COMPANIES -
NOT THE OTHER WAY AROUND.

Sep. 13 2012 02:29 PM

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