This is some of the best commentary about the US economy that I've ever heard. I'm going to start following this guy's blog.

It's very simple. HR departments. A big problem is that no companies want to train any longer they want people with absurd qualifications for the most menial positions. this puts a big stalemate on real organic growth.

When way more than half of the budget goes to social entitlement programs, there can be no catch up.

Simplify the god damn tax code! I think every politician should have to listen to this AND THE AMERICAN PEOPLE - get something done!

How about when a Congressman votes for a new version of the tax code, he has to recite it from memory.

@godlesslibertarian3381

7 жыл бұрын

I hope President Trump passes tax reform. We need that before anything else.

How can the poor expect tax cuts when they don't pay taxes? In fact, they get money for taxes they never paid to begin with.

A lot is wrong with the economy. 1. Inflation 2. Shrinking middle class 3. sending our manufacturing jobs to mexico 4. Corporations sitting on hoards of cash and not wanting raise pay for workers or invest 5. 39% of workers age 21 - 60 don't have enough money saved for an emergency 6. Giving away our money to countries that hate us 7. Illegal immigrants 8. Unfair and uncompetitive trade agreements 9. Gross income disparity 10. Haven't invested in our infrastructure since the 60s. 11. Labor participation rate of only 40% 12. The highest rate of people in poverty and living off food stamps and the government aid since the 60s 13. A bulk of our economic is driven by debt and not the actual value of a dollar. 14. Affordable housing crisis 15. Healthcare crisis. 16. College costs are astronomical. 17. Antiquated tax code

If everyone had just one ounce of this guys intellect and economic demeanor we would be far better off

He fundamentally misunderstands the automation concern. What will happen when the cost of retraining a worker becomes higher than designing a new robot to replace him in his next job? The reason why people could get new jobs in the industrial revolution is because it was easier to retrain workers into new jobs that it was to design a new fancy machine to do the new job. But with exponential robotic advancement, this fundamental trendline completely changes.

The U.S. economy has been on a downward fall for one main reason: the systems of law and taxation reward speculation and rent-seeking over the production of goods or delivery of services. Rentier interests have been claiming a greater and greater proportion of the income created by producers. A clear indication of the problem is the continued climb in land prices, which have "recovered" in many parts of the country to levels reached in 2007. What our system of taxation does is permit a redistribution of wealth from producers to non-producing rentier interests. This is not a new problem. However, progressive taxation and social welfare programs tended to mitigate this redistribution until the late 1970s and the beginning of deregulation of the financial services sector and a significant reduction in marginal tax rates on individual incomes. Another factor has been the treatment of gains on the sale of land and financial assets as "capital gains" and deserving of lower rates of taxation than on wages and salaries. Actual capital goods (i.e., buildings, machinery, technologies) do not increase in exchange value over time; they depreciate. The tax code must distinguish between earned and unearned income. This could be partially accomplished by combining tax simplification with true progressivity, a progressivity that captures a higher and higher portion of income derived from passive investment, speculation and rent-seeking. How might this look? We could exempt all individual incomes up to the national median. All other exemptions and deductions would be eliminated. Above the exempt level, impose higher rates of taxation on higher ranges of income. The rates and ranges of income would be established during the budget process (whether at the federal or state level) to raise the amount of revenue required from the individual income tax to achieve a balanced budget. Edward J. Dodson, M.L.A. Director School of Cooperative Individualism www.cooperative-individualism.org

@christianlibertarian5488

6 жыл бұрын

Strongly agree with Mr. Dodson. No reason income earned by the sweat of one's brow should be taxed at a higher rate than passive income.

Would love to hear what John Cochrane thinks of The Fair Tax. In my mind, it doesn't get any more simple and fair; virtually gets rid of the IRS entirely; and there's no real way to avoid paying it.

I think I heard him explain part of H.R. 25, (The Fair Tax), that would replace the income tax as well as other taxes.

Awesome stuff.

Why was this delayed in publication?

Academics trained in neoclassical economics accept (or, rather, assert) that the price mechanism clears all markets. This is generally true for labor, since most people must continue to work in order to continue to live. This is generally true for capital goods, since capital goods begin to depreciate both in resale value and functional usefulness almost from the moment produced. This is NOT generally true for nature, for what political economists of earlier centuries realized was uniquely subject to hoarding in anticipation of rising prices. All that is necessary to recognize this distinction is to look at the extent to which speculation in land and natural resources dominates almost all societies. One of the best political economists on the subject was the Physiocrat Anne Robert Jacques Turgot, but Adam Smith's treatment of "rent" is also instructive. As Joseph Stiglitz has been writing in recent years, our economic system is dominated by rent-seeking activities, of which the speculation in land is a primary form. This occurs because of the low effective rate of taxation on rents (from all sources, e.g., the broadcast spectrum or take-off and landing slots at airports). It is worth noting that one of the people who supported this idea was none other than Milton Friedman. Our tax system in the United States fails to distinguish between earned and unearned sources of income. Rents are unearned to individuals; rents are directly associated with locational advantages and competition-limiting licenses. What are mislabeled "capital gains" are really capitalized rents. Actual capital goods never sell for more than the cost of production; they depreciate over time even when well-maintained.

How about the fact that household debt is increasing in the USA at 6% a year, while wages are only increasing at 3%. People who have chains of debt around their necks rarely do wonderful things.

Mr. Cochrane, I would just like to point out that (8:48) the resources needed to manufacture an iphone requires the use of rare-earth metals that are relatively scarce. Not necessarily a good example.

@xXJeReMiAhXx99

7 жыл бұрын

no it doesn't, if it did it would cost more

@Tenebrousable

7 жыл бұрын

But the amount in single phone is so tiny it indeed is very cheap, compared to the cost of the phone, mister "I knew one thing that professor undoutedly knew too and I tought it was significant and he didn't and he I right."

I really need to point out that he is right on that if I earn over a certain amount, it is deducted from the money I get from taxes. Over the years I have estimated I will need to earn about 12,000 more to actually see a net increase in my income. So realistically I need a pay raise of 15,000 to see an increase of income over what I get back in taxes. It literally does not pay me to work any more than I do unless I can get a huge boost (I make around 30k to 33k).

@xxcrysad3000xx

7 жыл бұрын

What you get back in taxes is money that was withheld by your employer in excess of what you actually owed the IRS. At $30k your tax rate should be only 15% for every additional dollar you earn up to $37,500--so you pay 15% to the federal government and keep the remaining 85%.

@sunbro6998

7 жыл бұрын

xxcrysad3000xx i have kids. So I get more money back. And some other stuff. And when I make more money, the money i get back is decreased. I wish our taxes were as simple as 15%.

@sunbro6998

7 жыл бұрын

***** yup.

great info even now in 2023

RE: Wasting money. In low inflation what does it matter.

what would you think of eliminating corporate tax to "0", eliminating income tax completely and increasing the sales tax to a flat rate of 15 to 20%?

@Tenebrousable

7 жыл бұрын

that's not even halfway there to collect the shortfall produced by either of those things. Milton Surmized in the 90's that 43% of national income goes to paying for government spending. It's only gotten much worse than that.

@christianlibertarian5488

6 жыл бұрын

Adam . You are looking at productivity in a cockeyed relation to wages. Increasing productivity has nothing to do with wages. Instead, increasing productivity makes the things you buy cheaper. The effect is that you live a better life on the same wage. For instance, the first Apple Macintosh cost about $1500 in absolute, non inflation adjusted dollars when it came out in the early 80's. It could do word processing, and not much else. For the same $1500 I now own a MacBookPro with all its attendant googaws. My computing life improved tremendously, for the same money. So my life improved even if my wages stayed flat since 1984.

Here is what's wrong with the u.s. economy. Record high debt. Growing deficits. High taxes. Inflation. Stagnant wages. Trade deficits. The high costs of raw materials and natural resources. Shrinking middle class. Out of date infrastructure. Shrinking tax base. Corporations hoarding profits and not paying employees the wage they deserve. Outsourcing of our manufacturing and high tech jobs overseas! Record number of people in poverty and living on food stamps, welfare and other gov benefits. A housing shortage. Income disparity. No creativity. Our economy is now driven by debt and spending. Wasting billions and billions and billions of $$ giving to illegal immigrants and third world countries that hate us. 32-million future tax paying Americans have been murdered in abortion clinics. We've destroyed our ability to earn money, combined with foolishly wasting and spending the precious $$ we have. That's the problem. I can go on but won't.

This guy is singing my song, or I'm singing his (whichever). He could be the Libertarian candidate for President, IMHO. I have had at least two small businesses which I tried to start foiled by ridiculous regulations, most of which just added cost and no function.

This guy is really smart.

It like the blind leading the blind.

Nothing's wrong with the economy if you are rich.

@Artur960426

6 жыл бұрын

Well said

@cravinbob

6 жыл бұрын

Or do not understand how the economy works, does not work and the trick to obtain and use OPM.

Gary Johnson? The same Gary Johnson who didn't know what Allepo was?!

@bruceruttan60

7 жыл бұрын

I am certain that you have never been confused for a moment by a question.

@godlesslibertarian3381

7 жыл бұрын

I am glad he did not know what Allepo was! I do not want anymore wars on some soil we have no place for our men and women in uniform being.

@bernlin2000

6 жыл бұрын

Lol...seriously, like you or I gave a fuck about Allepo. That's what military leadership is for: I don't expect (nor do I want) a president that has memorized the globe. They need an all-encompassing intelligence, and a recognition that a government that governs least, governs best. The media are amazing villains, and we give them too much power and authority (much like our politicians): that question would have tripped up almost every politician (except Hillary Clinton...she was Sec. of State, she better know her own specialty). It was dishonest and classic "ambush journalism" (a true "gotcha" question, unlike the one about what newspapers Sarah Palin reads)

@joshuabrown7815

6 жыл бұрын

I agree he’s personally kind of stupid. Rand Paul was waaayyyyyy better.

@gregarioussolitudinist5695

6 жыл бұрын

probably, and who the heck cares about that? the two people who watch CNN.

Government regulation isn't in most every case the problem...overall.

computers don't do anything on their own. one person programs a computer that controls a machine that does the work of 100 people that now have families with no visible means of support. That one person doesn't show up to program the computer and the economy stops. Sure everybody wants everything faster, but there are only so many hours in a day. Computers destroyed the growth model of the past 200 years.

I'm not an economist, but I pretty sure economic growth is not driven just by gains in productivity by also the increase in population/workforce. Back in the 1960 the US population was growing at 1.7% a year. In 2013 that had dropped to 0.7%. So it's fairly natural to have half the rate of economic growth. Indeed, from what I've read in economic articles growth in that historic 3-4% range is essentially impossible today barring the discovery of magic. And that 2-3% would be perfectly healthy given our current population growth rate. Which is actually the range we have been running at post recession. In short I think the central thesis is fatally flawed. Nobody is going to write history books saying in this period the US economy was broken when it is one of the best performers among the large industrial nations.

@spencerlivingstone1267

7 жыл бұрын

I agree, growth is not simply a factor of productivity per capita, but is also dependent hugely upon population--Piketty's book "Capital in the 20th Century" talks about this a great deal. American demographic growth is down compared to the past 50 years (during which we saw huge medical progress in life expectancy, not to mention the widening of the workforce beyond white men). Productivity growth is pretty much equal between wealthy countries. The difference in growth between wealthy countries is largely a result of demographic growth differences. As you say, 3-4% growth has not been the norm in capitalism, but was largely a "catch up" effect that occurred after the world wars, and by definition one cannot catch up past a certain point. That's why we see this kind of growth for countries that are not wealthy but are beginning to become wealthy (like China), but cannot be achieved by countries that have already reached the wealthy countries' technological/demographic frontier. Wealthy countries at the forefront of these areas cannot "catch up" again. The history of capitalism prior to the eve of WW1 saw reliable growth of about .5%-1%. Growth around 1.5% is actually huge when considered in the long run through accumulation of reliable returns. Steady growth of at this rate over the course of a generation is an astounding growth of national wealth and standard of living.

@xxcrysad3000xx

7 жыл бұрын

That's why GDP per capita is a superior metric for assessing increases in productivity in an economy over time.

@xxcrysad3000xx

7 жыл бұрын

"The history of capitalism prior to the eve of WW1 saw reliable growth of about .5-1%". Everything I've seen has suggested the rate to be closer to 2% on average historically. I don't see demographics as being an integral part of the growth puzzle--the driving force has always been investment in capital goods/technology that increases the productivity of labor.

@Atombender

7 жыл бұрын

Automation doesn't factor in a growing workforce, yet it still increases productivity.

@SnarkJacobs

7 жыл бұрын

Sphere723 per capita income is the only measure one should use in overall general comparison. Especially in public speaking as we have allowed our language and reasoning faculties be debased by the ones who have a hold of the very capital investment we need.

What's wrong with the economy? The economy!

@Tenebrousable

7 жыл бұрын

Nope. The governemnt.

well pomp decadence luxury entertainment have always destroyed every economy it has ever touched...

We need freedom

Look at the sophistry. When he mentions corporate tax rates, he says that only two things can happen: higher prices, or lower wages. He completely omits lower cash flows (lower profits), translating into lower stock prices. That is a HUGE omission from his calculations. And, look, studies have shown that when you lower corporate tax rates, it generally leads to lower prices of goods (deflation) and higher stock prices. When you increase corporate tax rates, it generally leads to lower stock prices and higher prices of goods (inflation). I like Cochrane on a lot of his speculative stuff, and he's a quality writer, especially on the dysfunction of the Federal Government. But he has a pretty bad predictive record.

@julianojae83

7 жыл бұрын

Legolas14 He is not omitting the possibility of lower profits, he is assuming corporations will do everything possible to maintain their profits, so if you tax them, these costs will impact something else, and profits will remain stable. It is so simple to understand it.

@arthurobrien7424

7 жыл бұрын

Arn't profits stable at 2% or something because otherwise the market attracts competitors? I am no economist, but I think most people overestimate the wiggle room with profits.

@Legolas14

7 жыл бұрын

The general rule is that in a true "free market" economy, profits over *long* time will normalize to the cost of money/opportunity cost (the short-term interest rate). But our economy, really no economy, is truly "free". Government interference/regulations, patents, copyrights, etc. cause interference. On the other side of it, corporate collusion, corporate propaganda, and businesses deceiving customers disrupt the true market forces. For example, the biotech industry has a lifelong profit % of 12% over the cost of money (that was in 2006, so may be even higher now). Telecommunications over 28%. Financial markets over 40%. While retail/food tend to have values below 2%. So yes, there is generally some wiggle room.

@Legolas14

7 жыл бұрын

If companies were able to say easily maintain their profits after increased costs (taxes), why wouldn't they do it to increase profits beforehand? Why wouldn't they have increased revenue (say higher pries) or decreased costs (say lower wages) prior to the tax hike? In general, since wage cuts are so hard to push through (workers hate them), companies will have to raise prices or deal with cut profits (cut equity/dividends/etc); consumers are much more elastic with higher prices and investors consider lower profits a risk of the game. It is a combination of both; businesses will be hesitant to increase prices, hoping that they will be able to capture more market share with lower prices, and they will try and get profits up in order to keep/attract investors. That's why when you get general tax increases (system-wide vs. industry-specific) you get mild inflation and mild drops in the stock market (as some investors move to other investments).

@Jmriccitelli

7 жыл бұрын

@Legolas 14...What's wrong with our economy, I'll tell you! I was reading an article from Forbes magazine. According to the IMF, in 2000, there were around 300 billionaires in the world. Today, only 17 years later, there are almost 2000 with a combine net worth of 7.1 trillion! That is maybe a trillion and half short of the nominal yearly GDP of Japan and Germany combined!!!! What changed? Bill Clinton, Greenspan, Larry Summers, and Rubin handed the economy over to Wall Street and the City of London with the removal of Glass Stegal and the passing of the 2000 Commodity Futures Modernization Act which unleashed the 640 trillion dollar derivative market according to USdebtclock.org. Then Obama sealed the deal by having the Fed back stop the balance sheets of these zombie banks with Dodd/Frank and the QE programs. According to Richard Duncan, there is now 390 trillion dollars in global debt and these paper bug scumbags are inflating our assets and capital and have destroyed our saving and purchasing power with fake wealth, just like when the 2008 crash came and 14 trillion in real estate wealth disappeared! It is 100% an economic coup d'état.

He is incorrect about productivity. It has gone up at a 45 degree angle, yet none of the gains have gone to labor. No one has money to spend, therefore no economic 'growth'.

im 24 and just started driving a truck

@godlesslibertarian3381

7 жыл бұрын

Might want to get a new job soon! Driver-less cars will end your job sadly in 5-10 years. Robots are going to be taking at least 70% of jobs in 30-40 years.

My impression is that Trump is about to follow Dr. Cochrane's recipe.

probably totally wrong and naive to say it's going to take 10-20 years to automate long haul trucking. that claim won't age well.

Zero corporate tax rate! Hear, Hear! More money to employees, investors, income tax of the employees AND dividend tax. And SOLVE corporation tax planning and evading! A million tax lawyer leeches cut off. So much GOOD!

two words to boost our economy Legalize Marijuana. Lets drop the propaganda we have been living with for the past 80 yrs. and start making America great again

More double talk. The problem is that manufacturing was sent over seas and when you take that big of chunk out of the economy you get what we got now. Then you teach young people to do nothing but save money that takes more money out of the economy. Buying and selling of goods is what creates an economy. When I was in the rat race the company I worked for, from 2012 to 2016, that the new year was going to be a brake out year. So at the first of the year they would go out and buy lots of parts. About this time of year they would figure that the economy was still flat, but they would have all of these parts doing nothing. All of these economist are paid to come up with this BS by the corperations so they don't have to pay employees a descent wage. Not only that but the tax base shrinks. The rich pay about 13% and if the money was in the working class they would pay about 25%. Then you take the money that young people put in their IRAs that non-taxable. So the economy will stay the same until people get past all this BS that is spouted by these economist.

economists are suspects.Put 5 of them in a room and you get 6 opinions.

There isn't anything wrong with the American economy. All 3 of the U.S. stock markets are higher than they have ever been in history. American home prices are also valued at a price that is higher than any prices ever recorded in history. Also, the unemployment numbers are at an all time low. These 3 entities are the most important gauges of the U.S. economy and they are all the best that have ever been recorded. You can't argue with perfection! Honestly, I think there is no need for Americans to work any longer, due to their stock portfolios and home equity providing enough income to survive daily, even without a job. I have a house and a stock portfolio and I make more off my home and stocks than I do from my business. Then again, all 3 combined equal more yearly than I used to make in a total of ten years in the 90's. At least over the last 5 years. The Obama/Trump combo is extravagant!

@z4nizzle

7 жыл бұрын

Did you even watch the interview

The whole idea of never ending growth needs the assumption of unlimited resources which is nothing but stupid. In a closed system as Earth is one capitalism means the sum of all wealth on the one side equals the sum of all debts on the other, such that it sums up to 0. And that is a systematic problem, not a symptom of some decades of wrong decisions or any one's faults. The whole idea of capitalism is: if one is getting more, the rest is getting less. This is a basic fact. And what does interest do in this system? Easy, it makes the ones having a lot even richer and likewise those who don't have a lot even poorer. It is like a catalyst on both sides. This is obviously not what rich people would call out or teach at schools. But this is the reason for the world banks printing money non-stop and nothing of it ever reaching the avg. worker or family. Or can anyone using scientific logic prove me wrong? The problem is easy to understand, its the system causing crises automatically due to speculations of people using way too much money which they don't own nor deserve. But why would rich people let you know this? Crises are good for rich people since the only ones suffering are not them and they make the most profit from military industries, oil, and gas. Withdrawn conversations about stuff they can call the problem are way better for them than talking about new financial systems which could work for everyone - without compound interest and without inheritance of wealth and debts.

@SnarkJacobs

7 жыл бұрын

it's not a zero-sum game. and capitalism is the OPPOSITE of "he has more, so I have less" grow a brain.

@Zultarify

7 жыл бұрын

Insulting and making claims you don't explain makes you way smarter... yeah...

I have a headache. I am a biologist. sclerotic growth is because old peoples control money supply. Release them from power. Thank you, I am a biologist.

No - the biggest problem is the federal reserve.

Karl Marx was right about capital's tendency to immiserate the workers.

That economist sounds as a bookkeeper. He has no theoretical explanation of the modern structural crisis. Shame on him! Let him reread Adam Smith!

@argarcia281

7 жыл бұрын

Prof. Cochrane has plenty of structural commentary, you just haven't seen it: www.econtalk.org/archives/_featuring/lee_ohanian_arn/

@margaritaorlova6697

7 жыл бұрын

Not enough to explain the ongoing crisis!

@TomKaren94

7 жыл бұрын

What is a "modern structural crisis?"