A View into the Future: Post Script to June-November 2012

Using the previous 4 years experience as guide we may expect:

The national economy will continue to languish with low growth and high unemployment. I do not believe we will enter another recession during the next four years but we will be becalmed. Some states – New Jersey under Christie/Sweeney among them – will continue to apply the brakes on the nations’s economic growth. Neither Obama nor Romney, and certainly not the U.S. Congress, will address the factors in the U.S. tax code which encourage capital export.  Accordingly, regardless of who wins, Wall Street will remain disconnected from Main Street.

Needless to say, the national debt will continue to grow with either one.

Even if president Obama wins in November 2012, we already know his capability for abdicating postulates made while campaigning. We should expect that there will be negative effects on Social Security and Medicare, two social programs which candidate Romney has on his hit list, even if Obama is victorious. Obama will adopt some of Romney’s proposals. Such effects would most likely be cuts in both programs, perhaps somewhat smaller under Obama than those which would be implemented by a hypothetical President Romney.

We should also expect a re-elected President Obama to slightly reduce other social programs that he is now, during the campaign, defending with vigor. Either Obama or Romney will sweeten draconian cuts by phasing them onto the younger generations.

I would also expect that a re-elected President Obama would abandon at least some of his tax positions in support of the lower and middle classes, all for the sake of compromise. Similarly, there will be retreats in issues such as the environment and Wall Street regulatory statutes.

As a rule of thumb, President Obama will cede ground wherever big money is involved. He will hold out better in social issues such as birth control and same sex marriage.

President Romney would be very negative on the social issues mentioned above and similarly or even more accommodating toward big money.

Income gap would grow more under Romney than under Obama although the difference between the two will not be large.

We should expect that either President Obama or Romney will continue making inroads into our civil liberties using terrorism as excuse, even after Al Qaeda is wiped out.

A President Romney would be more likely to get the United States involved in another major foreign war.

With either president, New Jersey should expect very little help from Washington and that is why our own gubernatorial election of 2013 is so important: We will be basically on our own. We can hardly afford irresponsibility, demagoguery, and incompetence any longer.

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The Shrinking New Jersey

Real gross domestic product (GDP) increased in 43 states and the District of Columbia in 2011, according to new statistics released yesterday by the U.S. Bureau of Economic Analysis (BEA). New Jersey moved in the opposite direction.

New Jersey was among the few states which actually experienced a GDP contraction: -0.5% and that explains why government revenue is also down. New Jersey’s unemployment rate was 9.1 percent in April, a full percentage point above the national rate.

New Jersey is now the 47th state out of 50, measuring from best to worst, in economic performance. Only Wyoming, Mississippi, and Alabama are worse off. We are the brakes on the national economic recovery.

http://www.bea.gov/newsreleases/regional/gdp_state/2012/pdf/gsp0612.pdf

Governor Christie will go on pushing his fiscally unsustainable tax cut which will have no economic effect because a single such measure does not stimulate aggregate demand – the missing link in our economy.

But blaming the policies of Governor Christie alone for the economic decline is a gross simplification of the facts. Unfortunately, almost everyone, including the media, prefer simplifications. Candidate A vs Candidate B; or Raise Taxes vs Cut Taxes. That is why single issues become so disproportionally influential in elections: Abortion, Guns, Gay Marriage, etc .

The reality is that in New Jersey, regardless of what candidate we elect, the roots of the problems are in the political system. And attacking the system is not safe. I have already been harassed for what I am doing and this is just the beginning. We are not even in our election year yet.

A candidate fails New Jersey the moment he/she shuns to even attempt to revamp that system. I mean really doing change; not just propaganda and token tinkering.

What is the political system? The two dominant political bureaucracies, Home Rule, political patronage, political money, the tax code, the laws that skew the political contest in favor of the two parasitic parties, and more.

But it is much easier to focus on one face than on a myriad of political and economic reforms.

As I have said many times: It is not so much what Governor Christie has done. It is what he has not done. His sin is for the most part in omission.

If elected governor, my administration will be made up of technocrats. The mission will be to put New Jersey on a path of economic growth and social balance. Nothing will be untouchable.

In a presidential election year, a gubernatorial candidate for the year after is a lone wolf. However if we look at the two presidential candidates, Obama and Romney, there are differences in positions but when we come to the actual actions, they do not look as distinct. Obama appears as the lesser of two evils. Telling of our political drought is the fact that many people vote for one candidate just to keep the other one out of office.

New Jersey shall have a more diverse menu in November 2013.

U.S. Economy Grows 2.8%, Less Than Forecast

U.S. Economy Grows 2.8%, Less Than Forecast – Bloomberg.

The data is telling the same story that I have saying for months: The basic element for growth is demand. Demand is for the economy what an amino-acid is for a protein: the Building Block. Very few economists recognized this and that is why the federal government embarked in the stimulus programs without taking the necessary steps for spurring demand – other that cheap credit. They also failed to recognize that cheap credit does not help when most consumers are maxed-out and have lost the sense of security in their jobs.

The data is also saying that most of the growth was in rebuilding inventories rather than consumption. Less than 1/3 of the growth was brought about by consumer spending. In an economy where consumer spending represents 70% of the total, the figures for 2011 are alarming indeed.

The pressure will be now to sell that inventory and businesses may have to offer extraordinary discounts to do so. This could lead to deflation – lower prices – which is a good thing for the consumer but also leads to reduction in supply and consequently more layoffs.

Even the president mentioned the other day the idea of taxing more those who outsource overseas and giving tax breaks to those who invest at home. The President did not offer any details and we do not know if there is any concrete plan in Washington. Rewarding those who invest in New Jersey is at the core of my reform plan with abundant specificity. I have introduced that proposal for one simple reason: It is indispensable. But to apply it, it must be defined.

New Jersey is a reflection of the national economic picture, perhaps a bit worse with respect to unemployment figures. The democrats in Trenton have proposed an increase in the minimum  wage and the governor has proposed a 10% tax cut which only has relevant impact on a minuscule portion of the population. Both measures are insufficient with regard to their intended purpose, and the state is hardly in the position to be able to afford them – without some other additional steps. But because the steps involve the dismantling of part of the political bureaucracy, neither party will hear of it in New Jersey.

Economists often use the term aggregate demand which simply means the sum of all demands. I have called it just demand although meaning the same. The economists term is perhaps clearer. Conditions must be created so that demand growth is universal. We can not expect  1% or 10 %, or even 25% of the population carrying the economy on their shoulders. It is not sustainable. For growth to rise, aggregate demand must behave like many Euclidean vectors – there must be a genuine general uplift of the standards of living.

Moderate Americans Elect Group Hopes to Add Third Presidential Candidate in 2012

Moderate Americans Elect group hoping to add third candidate to 2012 election ballot – The Washington Post.

I support the idea and we must wait to see who the candidates are. This may be interesting and beneficial. The political landscape; Obama vs. one of the republicans, is simply dismal and the two-party- monopoly system is bankrupt.

On Chris Christie running for president in 2012

Chris Christie seriously considering run for president in 2012 | NJ.com.

There is nobody among the contenders for the White House, from both parties and including Christie, up to the task of getting this nation out of trouble.

In the case of Christie, he has no economic policy per-se (other that cutting taxes for the upper class which is not an economic policy but an ideological stand) and he does not seem to have a grasp of foreign affairs which creates the danger that the neo-conservatives will control foreign policy in his administration, with wars everywhere: Guns instead of butter.

Talk and speeches are insufficient to solve problems. As I believe president Lincoln said once: “You can fool all the people for some time, some people all the time, but you can not fool all people all the time ” or something like that.

I am really hoping that someone else comes up.