[verdverm]

I don't understand...

1. How a few people translate to the entire SV... (well, I do because hyperbole is what media does now, they stopped being journalists)

2. What the GOP platform is for prices & inflation. Tax cuts, 10% tariffs, forcing interest rate cuts, and mass deportation would all seem to lead to more money in the economy or direct price increases

[techostritch]

> 2. What the GOP platform is for prices & inflation. Tax cuts, 10% tariffs, forcing interest rate cuts, and mass deportation would all seem to lead to more money in the economy or direct price increases

I hate to be this cynical because I think policymakers and economists who lean in different ideological differences all have contributions to make, and in some way probably value right wing economic ideas slightly more than left wing ones

But It seems pretty clear to me that the goal of the Republican platform is just to be as self serving as possible and there is no actual plan for a healthy economy, and at best they might engineer temporary economic outcomes that benefit certain groups, I wouldn’t be surprised it there’s some kind of big economic crash aka 2008 in the next 10 years.

I would be genuinely interested to hear how I’m wrong.

[hakfoo]

The way they've completely given up on education is the key evidence they have no economic vision.

No matter what stimulus hack you do for the next quarter, you need to be educating the next generation in a way that leaves us competitive with other industrial powers. They don't even talk about outcomes and scores anymore-- they just stoke social warfare. You know, if the kids are reading because there's an "OMG OBSCENE" book in the library, AT LEAST THEY'RE MOTIVATED TO READ.

America is not doing a good job of presenting a voice for the future. China has "we're cheap and we've moved fast on greentech." Many Western European countries have gone the boutique/artisan/high quality route. Where does American manufacturing fit into the story?

[pfannkuchen]

American manufacturing won’t have to compete on a level playing field with foreign competition if there are significant tariffs though, which is part of the platform AFAIK. So I guess it would fit as “making things Americans buy”?

[hakfoo]

I can't imagine that being a compelling sales pitch even to domestic investors.

If Americans are trapped by tarrifs and have to buy whatever domestic-made rubbish is available, and you're not getting a high-quality workforce, why bother investing anything in new designs and manufacturing; hell, break out the old tooling and start cranking out Chrysler LeBarons again!

It's like we're determined to emulate the rapid economic miracles of Japan, South Korea, and the PRC but in reverse. And it's not even out of some principled stand like "we need degrowth to save the environment", but because rich people don't want to pay taxes for schools and infrastructure.

[pfannkuchen]

It’s not a compelling sales pitch to investors anywhere, I don’t think that’s the point. It’s a compelling sales pitch to workers in regions where economic prospects have dropped off a cliff in the past few decades. If you have no personal ties to those areas it may be hard to relate.

I don’t see why this would equate to low quality. Domestic companies are free to compete. Many countries have historically boot strapped industry through heavy use of tariffs. Japan is a great example, their auto industry likely wouldn’t exist without heavy tariffs in the beginning and China has extremely protectionist economic policy to this day.

[hakfoo]

The part of "bootstrap through tarrifs" that's missing here is the "bootstrap" phase.

You can get away with selling domestic rubbish to local consumers when you're a poor country with few options. For an established industrial power:

1. Consumers will not change their behaviour unless you apply punitive levels of tarrifs. A 10% tax probably won't make the customers who have bought a Lexus for their last five cars switch to Lincoln. That's probably why Washington felt they could get away with the huge levies on Chinese EVs (a new market with no established consumer behaviour being disrupted), but didn't breathe a word about Made-in-China Buicks (an established market full of old people who vote).

2. It doesn't grow the total pie very much. When you're Outer Slobavia and just getting your first industrial plants off the ground, there's a lot of growth to be had just reclaiming the domestic market from foreign competitors. But the US is a mature player in most of these markets already. Removing foreign competitors will only buy a few percent market share.

Admittedly, tarriffs don't cause low quality by themselves. It's more that the package deal being presented is "we won't bother making American industry more competitive, since we can just go insular and high-tarriff to create a captive market to keep American factories alive." Even if you win at that captive market, that's a far smaller upside than if they had instead said "we're going to get back on the leading edge of manufacturing and make American products globally aspirational."

[taylodl]

That's great except the US economy has been fueled by debt for the past 50 years - and a lot of that money fueling the debt comes from overseas. You drop your compelling sales pitch to investors and their money leaves. I don't think you understand the ramifications of that. We're not talking about boot strapping industries - our industries are mature. They will lose access to world markets if the US decides to double-down on isolationism. That means negative growth for the largest industries in the US.

[taylodl]

In other words, isolationism and pandering to an ever-shrinking market. There's no growth and no future in such a scenario. The hilarious thing is that these SV CEOs believe the US can adopt these policies and it won't affect their business abroad. It just shows they're not half as smart as people make them out to be.

[downrightmike]

Tariffs never work to reduce inflation, they do the opposite, its been done over and again by the dumbest minds in the world because it sounds like it should work, but it doesn't actually hold up.

[taylodl]

The GOP can't force interest rate cuts unless they eliminate the Federal Reserve, and if they do that we're straight back to the boom/bust cycles of the late 19th century - which doesn't help the economy. Since we know tax cuts for millionaires and billionaires does not lead to economic growth and only serves to increase federal deficits, the policies the GOP favors lead to interest rates increases. Like I said, we just got their last round shenanigans under the previous Trump administration under control.

[temporarely]

We have definitely experienced "boom bust cycles" since the creation of the Federal Reserve. The very first such bust was called the Great Depression.

[taylodl]

We have not. Look at the economic history of the latter half of the 19th century in the US. We haven't experienced those levels and frequency of market swings since the creation of the Federal Reserve. Also, the Great Depression was a world-wide event. That was our first clue that isolationist policy was misguided.

[techostritch]

I have a question maybe you know, are boom and bust cycles good for the economy long term? Or is it too extreme to be useful,

Like my understanding of risk in financial markets is that (though of course a security could go bust) a high risk security is one that has bigger swings, but that those bigger swings lead to bigger long term gains.

I guess even if things go bust if you’re let’s call it morally flexible, boom cycles give you a better chance of making your millions.

[verdverm]

1929 is an example where the boom-bust was extreme, leading to a lot of pain for a lot of people. The 2008-9 was less extreme and Covid (economically) may have been more extreme, but also short lived and we never had the recession that was widely predicted. It may be that we overreacted on the handouts and put too much money into the economy and now we are dealing with elevated inflation, though that is mostly gone now and we are slightly above historical averages.

I would not use the stocks as an analogy, most people don't have them, which in itself say something about our economy. There will always be an amount of turnover in the economy, going out of business / layoffs, new companies and hiring. Having a steady rate, within some margin of error, is an aspirational goal for economists / fed, but there will always be shocks...

The current issue to me is big changes or swings in policy. Presidents come in and reverse everything, Congress is incapable of passing incremental change, with the current session seemingly unable to pass just about anything...