Bad advice from The Financial Times

Every time I think we are making progress on getting rid of Keynesian macro, I come across something like this from The Financial Times in the UK: Donald Trump’s trickle-down delusion on tax.

Today, debt is 77 per cent of GDP, productivity is flat and, not only have the major gains from female participation in the labour force been realised, but birth rates are lower, and the president is doing the best he can to limit immigration. Growth equals productivity plus demographics. Game over, unless something in that equation changes. . . .

But if you survey the economic landscape, it’s not like there isn’t plenty of money sloshing around. Dealmaking, asset values and corporate debt are at record highs. The money is there. The jobs are not.

I would argue that this is because there is not enough consumer demand. . . .

Sure, we can cut taxes. But it will not change the fact that we have a private sector market system that no longer serves the real economy. Business leaders who care about long-term growth and competitiveness need to think hard about how to fix that, and stop kidding themselves that a trickle-down tax plan is the answer.

They don’t want the US to cut business taxes but do want it to increase consumer demand! As dumb as FILL IN YOUR OWN and then some.

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7 Responses to Bad advice from The Financial Times

  1. Defender of the faith

    Kates: the quote you chose refers to competition policy. Certainly in Australia we have some serious issues not least being a compulsory savings policy that has created a giant Ponzi styled finance second

  2. RobK

    It doesn’t take a genius to realize that the return of some capital from overseas will spread some benefits around.

  3. RobK

    Trump has his work cut out for him. God speed.

  4. miltonf

    Rana Foroohar is Global Business Columnist and an Associate Editor at the Financial Times, based in New York. She is also CNN’s global economic analyst. Her book, “Makers and Takers: The Rise of Finance and the Fall of American Business” (Crown), about why the capital markets no longer support business, was shortlisted for the Financial Times McKinsey Book of the Year award in 2016.

    Prior to joining the FT and CNN, Foroohar spent 6 years at TIME, as an assistant managing editor and economic columnist. She previously spent 13 years at Newsweek, as an economic and foreign affairs editor and a foreign correspondent covering Europe and the Middle East. During that time, she was awarded the German Marshall Fund’s Peter Weitz Prize for transatlantic reporting. She has also received awards and fellowships from institutions such as the Johns Hopkins School of International Affairs and the East West Center. She is a life member of the Council on Foreign Relations.

  5. miltonf

    Another great reason not to buy newspapers

  6. Norman Church

    Of course, the ‘fallacy’ of trickle down economics only applies to money spent by the productive private sector. When appropriated and spent by the unproductive public sector, it is magically transformed into a powerful multiplier. Everything is fine as long the trickle comes down from the hands of politicians and public servants who are so much better at deciding how to ‘invest’ wisely.

  7. Andrew

    Remember that FT is the elite pro-business meeja. 100% of the meeja is way left of them. 98% of them believe that Bernie’s plan to increase tax receipts by 58% p.a. (to Scandinavian levels) can be done simply, painlessly, fund all “free shit” thought bubbles, increase aggregate employment, increase happiness for all, and be fully funded.

    Picture how “young and naive” Pauline6666 was 20 years ago when she was just a humble fishmonger. She believed in a 2% flat transaction tax. Today we have liberal academics believing Bernie’s 2% turnover tax on the stockmarket can raise 100’s of $billions. In fact, of course it will raise $0. Every other stockmarket on earth will provide dual listing, and 100% of US stocks turnover will transaction on them.

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