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Feed the GDP and party affiliation into an agent learning ML instance and see who it decides to vote for.

You don't need machine learning for this. Regular old learning is plenty good, and the work's already been done. It's pretty clear that all things being equal (and they're not, of course), if you're looking for economic growth, you're better off with a Democratic president. If you want a recession (or depression), then you're best going with a Republican. it's been that way since the Civil War.

http://visualizingeconomics.co...

It's amusing that since I say I live in Boston you think I haven't been to the midwest. To be clear I have family in the midwest and do very much work in the midwest, (I frequently work in Arkansas, Kansas, Nebraska, Missouri, Illinois). I should have been more clear that when I referred to midwest I meant rural midwest, not urban midwest. The income levels in the rural midwest are lower than on the coastal urban areas, as shown in this map:

http://visualizingeconomics.co...

and the disparity is getting worse:

https://www.bea.gov/newsreleas...

I recognize that cost of living is significantly lower in the midwest as well, which offsets a lot of that difference. I was very explicit when I said it's easier to access high income folks in coastal urban areas, and I'm right. Find me a dozen millionaires in Portis, KS. If I throw a rock in Manhattan I'll probably hit a couple millionaires in one throw.

You're telling me about the Detroit/Ann Arbor Whole Foods experience, which is not rural in the same way that central Kansas is, nor is it in the lower income areas. I have been to plenty of places in midwest rural areas where the only game in town is a Walmart, even for groceries. If Amazon/Whole Foods wants to access those people, they'll have to build there. There are 4 Whole Foods in Kansas - 728,000 people per store. There are 30 Whole Foods in Massachusetts - 227,000 people per store.

What a lot of people don't seem to get is that if a substantial fraction of labor gets displaced, market forces will tend to devalue *all* labor.

Yes, maybe *my* job is safe, but my pay doesn't have to stay high.

To be fair, Jeff Immelt is simply speaking from one of the basic fallacies. He probably learned it at management school, and hasn't spent even a moment in critical thought about it.

Specifically, modern economics assumes infinite consumption which implies infinite need for work. "Infinite consumption" comes from either the Malthus'ian idea that human population will grow exponentially until resources run out, or the idea of "always wanting more", as in bigger house, more cars, more land, more toys, etc.

Personal consumption has limits, and industrialized nation population *doesn't* grow without bounds, and productivity keeps going up, and you start to realize that the job pool is finite, and any reduction in jobs puts stress on the people who need to find jobs to live.

The US is at about $50,000 per person in production, and that's a huge amount. Note that this is per person, and not per working person. We have enough wealth in this country to let everyone live comfortably with only half our workforce - and productivity keeps going up.

It's a fallacy of modern economics, it's unsustainable (labor versus shrinking job market) and something has to give eventually.

Whether we transition to a different system that lets people enjoy our production, or whether civilization crashes and burns, depends on people like Jeff Immelt.

Specifically, whether Jeff Immelt, and other like him, can unlearn modern economics and help transition us to a different model.

Cars: http://cta.ornl.gov/data/tedb3...

Yes, a list of "averages" that are likely heavily skewed by a few very expensive models at the time. On the other hand, there were plenty of options that were far less than that average. The Model T being one such car. So your original claim was highly misleading. People had options for cars that weren't nearly as skewed compared to their income as your original claim makes it seem.

Income: http://visualizingeconomics.co...

I'll give you this one. Different methodologies depending on who does the numbers give varying figures.

This isn't new. Henry Ford stumbled across the same thing when he paid his auto workers $5/day - an unheard of figure at the time when average pay was closer to $2/day. He didn't do it because he was feeling altruistic. His factories were suffering from huge turnover, and it was expensive having to constantly train new workers. So he figured what the hell and jacked the pay up to reduce turnover.

What he discovered quite by accident was that while the $2/day pay seemed to be favorable for the employer, it wasn't favorable for the economy overall. That is, too much of the company's income was going to the company's owners who wasted it on stupid things like gold toilet seats which don't really help the economy. A $5/day wage seemed like it would lower the company's profitability, but the boost it gave to the economy more than offset that decrease since the average worker spends a greater share of his income necessities which help the economy. Like being able to buy the cars that Ford was manufacturing. And the net effect was that his company made even more money than at $2/day.

You can see the same thing if you compare the GDP per capita of various countries. The ones with greater income inequality tend to have lower GDP per capita. This is why despite being a fiscal conservative, I've never had a problem with unions (except in government jobs where there's no fiscal counter). Their functional mechanics may not be optimal, but they serve a valuable role in the economy.

The U.S. is a stark outlier in the above graph. It has one of the highest GDP per capita, but it's been regressing in Gini coefficient for a few decades now. To me, that indicates our GDP per capita could be much higher if we could get our income distribution to be more equitable. Yes that'll mean CEOs and mutual fund managers won't be able to afford as big a superyacht. But that money in the hands of the middle class would be much more productive for the economy than cruising around enjoying the scenery while burning 10 gallons of fuel per mile. $70k as a minimum wage probably overshoots the optimal point, but we're far enough below the optimal point that I'm not surprised the dire predictions for the company didn't come true.

(And yes, I really am a fiscal conservative. What both liberals and conservatives have to realize is that they're both right. Under certain economic conditions, liberal philosophies are correct. Under other economic conditions, conservative philosophies are correct. The trick is to figure out where the transition points are and not to stick with one philosophy long after you've left the regime in the solution space where it's true. Like believing that since some regulations are good, therefore completely regulating everything to make a state-controlled economy is best. Or if that since sometimes deregulation is good, completely deregulating everything is best. Even the Henry Ford example I gave above works only up to the point where workers start to lose incentive to improve due to insufficient increase in salary from those improvements.)

Tax receipts in 1957, per capita: ... about $3900... Tax receipts in 2013, per capita: $8754. Or a bit more than double that 1957 per-capita after you adjust for inflation

Yeah, but you have to take into account the fact that the reason that people are paying more taxes is because people are earning more today than they did in 1950. If the average income of a person in 2014 is twice what it was in 1950, then that "double the taxes" thing simply disappears because it means people are still paying the same *percentage* of their income to the federal government. The way you state your argument, you make it sound like people are paying twice as much money (as a percentage of their income) in 2014 as they did in 1950, which is simply not true. Here's a graph of the average incomes in the US over the past 100 years. The dollar amounts have been adjusted to 2006-dollars, and you'll note that the average income has roughly doubled (from around $25,000/year in 1950 to $50,000/year in 2004): http://visualizingeconomics.co...

Given that being in Congress [rollcall.com] makes one quite wealthy [opensecrets.org], perhaps a lot of that redistribution is strictly for the benefit of those IN Government. It's still a Federal Government by the people and of the people, but increasingly FOR Government, not for the people.

That may be true that people in government can become quite wealthy, but to say that the redistribution is strictly for the benefit of those in government is missing a sense of scale. The amount of wealth gained by government officials is a drop in the bucket compared to tax revenue or the US economy in general. First of all, you're comparing the net worth of members of congress (i.e. most of them were millionaires *before* they gained office). In order for your argument to work, you need to track the amount of money gained by members of congress as a result of being in congress. Saying that (as the articles claim) the combined net worth of those members of congress is over a billion dollars is mostly irrelevant. Saying that members of congress earned a billion dollars a year as a result of being in congress is much more relevant (but that's not what the articles claim). Keep in mind that the US government is bringing in a tax revenue of 3.0 trillion dollars in 2014. Even if we (falsely) claimed that members of congress were pulling in an addition 1 billion dollars in income each year as a result of being in government (which they clearly are not, certainly not in a single year), it would still mean that their additional income would be 1 billion compared to 3,000 billion in taxes. That works out to 0.03% of the federal tax revenue. The argument that some large share of the tax revenue is simply going to enrich members of congress just doesn't make sense.

Federal money subsidises states to a very large degree. During the economic meltdown, my state (California) had its federal budget slashed, causing the state to clobber basic services (like education spending). This is called the federal allotment. Look here for more information.

Here is the breakdown of federal spending:
Defense - 19%
Medicare/Medicaid - 21%
Safety net programs - 12%
Interest on Debt - 6%
Benefits for federal retirees and veterans - 7%
Transportation and Infrastructure - 3%
Education - 2%
Science and Medical Research - 2%
Non security international: 1%
All other - 5%

This is based on 2012 estimates by the center on budget and policy priorities

Ok, I'll show you mine.

http://visualizingeconomics.com/blog/2010/02/17/federal-taxes-paidreceived-for-each-state

Your turn.

If you track inflation, and compare it to incomes, you will see that technology, and the obsolescence of human labor has actually been a loss for the individual. The generally accepted inflation gauge is the CPI:
http://inflationdata.com/inflation/Consumer_Price_Index/HistoricalCPI.aspx?reloaded=true
I think it's pretty safe to say the income chart is close enough to illustrate my point:
http://visualizingeconomics.com/blog/2006/08/15/average-income-in-the-united-states

The cost of basic necessities has risen by over 2000%, but average income has risen by only about 400%. Mind you, that's just the average income, and I only personally know about a dozen people who earn more than $40k.

It doesn't matter how cheaply things can be made if the consumer cost keeps rising while incomes don't. There are many things at work, so I won't single anything out as the root cause, but the intermingling of government and private businesses is an important factor.

Certainly, this conversation can get very complicated, but I don't think it would behoove us to delve further into it at this time, so take this post with a grain of salt.

So set a nanogram of gold to be $1 trillion. Is there enough supply now? The current price of gold is completely irrelevant - it currently isn't backing currencies, obviously if it was its value would skyrocket to match the money supply.

And yes a gold standard would give you deflation if gold production was lower than economic growth. However jumping to "no commerce, no jobs, and a massive recession" is ridiculous - the industrial revolution happened on the gold standard. Here's US GDP growth, I can't seem to seem se the amazing change in growth you seem to be claiming should have happened when the US transitioned from "no commerce, no jobs, and a massive recision" gold standard to the current system.

As Americans, we've had a good run. We were early into the Industrial Revolution, and blessed with abundant natural resources relative to our population. We had an optimisim and risk tollerance that was derived from our immigrant origin. This lead to both a capital and skills gap compared to the rest of the world, which gave us a phenomical standard of living. But today capital moves fluidly to where it is the most effective, and the skills gap is easier to narrow than it once was. This will continue into the future. It's a tough medicine to swallow, but it's true.

Yes, the world is catching up as more of it industrializes, but if you actually look a history of the total wealth of the United States, you will see that it has continued to rise steadily, despite this supposed flow of capital to other places you describe. The only change in the last 30 years has been the distribution of wealth.

So how do you increase income? US tried to. See what happened in the long run.

Actually, the U.S. income hasn't really increased for forty years now. That's the main reason for the high number of mortgages (which led to the ongoing crisis) - a phenomenon not observable in wide parts of Europe.

And as population increases, income goes lower to everyone as there are more services available.

AFAIK those two do not correlate. Do you have some source for that?

And yet, teachers are still massively underpaid. Often when this comes up, the junk you talk about like smartboards and laptops/iPads for every student is supposedly paid for by grants which cannot be used to pay for, well, anything useful.

I am not sure what past time you are talking about when public schools were doing fine or when taxes were lower. Current tax rates are the lowest they've been in decades.

You must be young then, because the two rates after Reagan were 28% and 15%

Here are the data in graph form.

Keeping the capital gains tax rate a little lower than income tax spurs investment.

That's what Reagan told us, but when the rates were slashed there was an orgy of leveraged takeovers and buyouts, and the working stiff got shafted, as well as investors who were holding their stock for long term investment. It gave rise to the "day trader," who is a gambler, not an investor.

He could have said, "yes" if he wanted to. But "yes" would have meant being subservient to authority, "no" would have meant disrespecting authority, and his answer challenged both the authorities and the people to respect authority as long as it did not conflict with the moral standards of God.

That is correct. He could simply have said "yes" but his answer gave the reason for the "yes". Whose pictures are on your coins and bills? All high government officials.

I agree that it isn't a political issue, but a moral issue. You can't have it both ways.

Actually, California gets less back from the federal government then we pay out. We would be in much better financial shape if we didn't have to subsidize other states.

This infographic says that California gets back 78 cents of every dollar paid to the federal government. Only 7 states have a lower ratio.

http://visualizingeconomics.com/2010/02/17/federal-taxes-paidreceived-for-each-state/

Take the OWIES, who committed acts of terrorism because they thought the 1% weren't paying their fair share...

http://visualizingeconomics.com/2010/02/12/how-much-taxes-are-paid-by-the-poor-middle-class-and-rich/

The top 1% may make 18% of the wealth, but they pay 27% of the taxes!!!

Well duh – that's because the point of taxes is to make sure that the poorest who can't afford to live actually get something out of society, and that the richest help to contribute to this. If the rich didn't pay the most, the system would be incredibly badly broken. What people argue is that they don't pay enough even though they pay the most. This argument is generally based on the fact that the richest, despite paying this amount of tax can afford an enormously better quality of life than even the moderately well off.

Government must first take wealth away from others attempting to create wealth, thereby decreasing their ability to do so and benefit others, pay for the administrative/governmental costs, then use a portion of what remains to hire and pay wages. It's the broken-window fallacy.

It's a tea-bagger! Neat, I didn't think anyone capable of both reading and writing actually bought into this nonsense.

Here's a clue: High taxes on corporate profits increase jobs and, by consequence, wealth. You can easily see this if you learn a bit of history.

This is the basic idea, since you seem to need a LOT of help here: When profits are heavily taxed, companies have a greater incentive to reinvest profits in building new factories, hiring more people, investing in R&D, etc. to reduce their tax burden. Lower taxes, and you lose that incentive. Fewer new jobs are created, fewer factories are built, and R&D is slashed to make the next quarter look a little better to investors.

Take a look for yourself: Top Marginal Tax Rates 1916-2010

Note the lead up to the great depression, America's greatest period of prosperity, and the recent recession.

People should get some facts before engaging in these black-and-white discussions.

Taxes on the top 0.01% have fallen dramatically to match those of the top 1%. Does that make sense? Probably not. Is it responsible for our economic problems or debt? Probably not.

http://taxprof.typepad.com/taxprof_blog/2011/06/ny-times-who.html

http://visualizingeconomics.com/2007/11/03/nytimes-historical-tax-rates-by-income-group/

Another little fact of interest to this group is where all those "rich people" come from: Silicon Valley and New York. Without those counties, income inequality in the US hasn't increased significantly over the last few decades. Yes, the gap between the rich and the poor that is supposedly condemning us to third world status soon is just the result of the IT revolution.

http://www.nytimes.com/2006/09/21/business/21scene.html

Frankly, most of the taxing or spending decisions currently debated in Congress are irrelevant and merely political posturing. Personally, I think they increase the taxes on the top 1% significantly, but it won't make any difference. But at least they can then move on to more important things.

If capitalism were a success, we'd all be working fewer hours and adults would be living significantly longer. We are not and they are not.

Go take a look at this graph and come back. Per-capita GDP isn't a perfect measure of wealth, but it's close enough for our purposes. You'll see that a time-travelling 1880s-man could choose, in this modern era, to:

1. Keep the same income he had before, but only work one-hour days, or
2. Kee the same hours he had before, but have more income

Having a choice between "free time" and "filthy lucre" isn't what I'd call a "failure" of capitalism. If you think your hours are too long, go work part-time, or quarter-time. You'll still have a standard of living that was nearly unfathomable throughout most of human history, and you'll still be richer than most of the rest of the world today.

The problem is choice </Neo>, which market systems tend to do a wonderful job preserving.

1913 isn't really a fair data point to use, considering that that was the year that federal income taxes were first explicitly allowed by the Constitution. Insight can be had by realizing that by the time that federal income tax was 4 years old, the top rate had grown to 67% (though most of this was to fund WW1).

However, any discussion of top marginal tax rates is incomplete and even disingenuous without considering how much you had to earn in order to qualify for that top bracket. A graph like the one at http://www.visualizingeconomics.com/2007/11/03/nytimes-historical-tax-rates-by-income-group/ is necessary to accurately convey the change in tax structure over time. The super-rich elite truly have had it easier in recent decades, but during the 90's most of the population was subject to more progressive taxation than during the 60's.

The US used to have hard currency, but it stopped that, opting for fiat money, ruaway inflation and massive debt, instead.

Gold backed currency caused bigger spikes in inflation and was also responsible for deflation, the effects of which are much worse. What do you expect to happen when the economy grows faster than the supply of gold? As for massive debt, it is clear the cause of this debt is unfunded/defunded spending and nothing more. The taxing/spending policies since Reagan took office are responsible for 90% of the debt. Most of this debt was incurred during the Reagan, Bush Sr. and Bush Jr presidencies.

Keep repeating that pithy little lie, and maybe someday in an alternate universe it will be true.

But not here.

Keep repeating that pithy little lie, and maybe someday in an alternate universe it will be true.

But not here.

Exactly, the economic growth in the USA over the past 30 years has almost exclusively benefited the top few percent.

Over the past 30 years CEOs went from making about 40 times to 500 times the average in their company.
In the mean time the average wage (for all workers including those with degrees), has not increased in the past 30 years, if you correct for inflation.

http://www.kyklosproductions.com/articles/wages.html
http://www.visualizingeconomics.com/2007/11/04/has-middle-americas-wages-stagnated/

The only way left to continue the desired cycle and free up credit would be to take resources from the rich, and give it to folks who would actually spend those resources in the process of just living day to day, which would open up the credit markets again, increase demand for products, and so on.

Interesting post Ryan. However, I disagree about the need to take resources from the rich or perhaps I look at it from a different perspective. The rich can keep what they have but the working class who are creating the wealth that flows predominantly into the pockets of a few need to have a more equitable portion of the wealth they help generate.

By just about any economic measure the majority of the citizens in the United States have experienced a gradual decline in their share of the wealth generated by this country. This has resulted in a decrease in disposable household income which I believe individuals have attempted to make up for by utilizing credit.

Sadly people have not been paying attention to their falling portion of the national wealth and were likely lulled into a false sense of security by the housing bubble. Unfortunately now that the bubble has burst the average citizen is getting two strikes for the outrageous household debt and the falling participation in the GDP of the nation. In some cases people get a third strike by losing their job.

You are describing a symptom, not a cause.

The rich provide the bulk of the federal tax dollars because they have the bulk of the country's money. You can argue about the percent of income taxed based on your bracket (forever) but posting numbers like yours only show where the money is, and do not illuminate any percent of income taxed disparities.

This will show you what you really wanted to describe, the disparity in income tax percent:
http://www.visualizingeconomics.com/2008/03/16/average-income-pretax-vs-aftertax-2005/

As you can see, the super rich get taxed fairly hard.

However, look at the differences in gross income pre and post tax. The inequality in after tax income is so massive between the top 1% and just about anyone else, that I have no problem taxing them 40% and redistributing their wealth.

Go google for income inequality chart/graph. The rich have been getting richer, so I'm not feeling too sorry for them.

I prefer charts

You are right, sir, and I was wrong. The income statistics got mixed together in my head with wealth statistics, and I still got that wrong. My apologies.

Here are better numbers, in graph form. The top 1% of wage earners gets about 53% of GDP.

For a more direct support to my argument, the top 5% earn 62% of GDP according to that chart. If the previous poster is correct that they pay 60% of taxes, that sounds about right to me -- pretty fair.

However, note that those charts are from 2004, and set the top 5% level at $131,000. The press keeps claiming it's at $250,000 now. So these numbers are probably out of date...which means the tax structure is, as well.

Source: Visualizing Economics and I admit that I eyeballed the percentages.

you are wrong because you are operating under false assumptions like THAT.

http://www.visualizingeconomics.com/2006/08/15/average-income-in-the-united-states/

as you can see the trend is up, not down as you keep claiming and america has been outsourcing for decades. If you can actually show me some credible evidence that outsourcing has lowered your wages i'll stand corrected.