DU economists, please educate me

From what I understand, and what I believe, Clinton's economic policies of the 90s created an atmosphere where, coupled with a boom in technology, companies were able to prosper. First, is this true? Is it safe to say, without the tech boom, the economic growth of the 90s might not have been AS big?

Second, is it possible, with another boom like the techs, John Kerry's economic policies could result in the same level of economic growth. Do you think it's possible that Kerry's policies toward alternative energy could create jobs and stimulate the economy in a way similar to the techs.

My personal belief is that the next big economic boom will be in alternative energy. I believe it will be very similar to the "dot com" boom. Is there any logic to my beliefs? I just think we need a leader who believes in it. A leader who IS NOT beholden to the petroleum industry.

In fact, I think this should be the defining issue of this election.

Republicans = Oil = War = Dead End
Democrats = Alt/Renew Energy = Jobs = Future

Republicans set us on this road 25 years ago....we got "Morning in America" then. Dimson is bring us "Evening in America" now.

...that the economic boom of the technological values was helped by the fast development of new technologies. This is not the case for alternative energy, the research is more expensive and complicated.
Basically, during the same period the processors of any home computer evolved from 100 MHz to 3 ghz, the capacity to stock electricity in batteries did not evolve much.
If you want a boom in alternative energy you'll have to invest billions of dollars in research.

Billions you say? Will they take a check. :evilgrin: Just playing.

nt

However it will only happen when gasoline is about twice what it is, now, plus one has to assume the USA will still be high enough on the livability scale to allow for the R&D necessary to bring alternative energy sources online. The best shot at this technology was nearly thirty years ago.

"new" technology during Clinton-- what happened was more of finding ways to expand and use existing technology. The dotcom and telecom nonsense kind of overshadowed an atmosphere encouraging experimentation and new business incubation, but the technology wans't really all that new, just being used more widely. Nothing as extraordinary as the invention of the transistor, or laser, from which all of this stuff evolved.

Clinton had a very business-friendly administration overall, although a lot of people grated over the regulations that were enforced, and that colored their view of him.

You're right that the next boom will be in some new technology or business, but history shows that the new businesses will be things we can't really imagine yet. Alternative energy is a good bet, since the old ways won't be working all that well for long, but energy avoidance and conservation may be the way things go.

Who knows... someone may invent a teleporter or gravity drive that is energy efficient. A force field that holds heat in or out...

An interdimensional wormhole that would let you have a fifteen room house and a huge garden on a 10 foot lot would be nice. Kinda like Dr. Who's telephone booth.

We'll know it when it happens.

that the spike up in economy during the Clinton years was largely due to his putting Social Security funds into the big pot - general revenues?

Borrowing from the trust funds improves the appearance of the budget outlook, but there was certainly some genuine deficit reduction in those years.

Take a look at Ernest Hollings page for a rundown....

http://hollings.senate.gov/debt.html

The U.S. Treasury has not seen a true surplus since 1969. According to the Treasury Department's report, the government borrowed $143 billion last year. It is not mathematically possible to have a national debt that continually increases and a surplus simultaneously. Hollings has contended that if we had truly achieved a surplus, the debt would have decreased, not increased as it has for decades.
The federal government manages its accounting books differently than any other business or institution. By borrowing from trust funds such as Medicare, Social Security, Military Retirement and Civilian Retirement, the federal government taps into those funds as if they were for operating expenses. In a private business, if you use the pension fund to pay for operating expenses, you go to jail, but that is precisely what the government is doing.

The creation of the "Operating budget" let the various budgeting offices count the social security funds as assets twice (once for the actual money, once for the special IOUs we put into the trust fund when we raided it). But everybody that knew better avoided referencing the operating budget when making comments on the state of the federal budget, since it was a loaded figure, focusing instead on real numbers. Though it had a marginal effect at best on the overall economy.

Most economists attribute the amazing Clinton economy to the technology boom and Clinton's pretty hands-off approach to handling Wall Street. As an above poster noted, it wasn't necessarily the development of new technologies, so much as the enhancement of current technologies. Larger digital storage, faster processors, faster and more widespread internet connections...these things allowed business to really start using computing technologies as more than just word processors and small databases. There was a certain efficiency, capacity, and connectivity threshhold that was passed at some point around the later stages of the 486.

There was also a fairly substantial positive outlook towards the boundaries of the internet. The perceived possibilities were limitless, with instant worldwide communications. This created a public buzz that sort of artificially inflated the tech sector. Websites like theglobe.com, at the time nothing more than a glorified message board, with no revenues beyond advertising and VC funds, could go public at $17 a share and end the first day of trading at $87. The IPO of the week made a lucky few geeks multimillionaires overnight.

And the bubble burst sometime in 1999-2000.

I'm not really too clear on NAFTA's effect on the economy as a whole. You can anecdotally point to the shrinking domestic manufacturing sector, and say it was a bad thing, but I'd need to see numbers on whether the cheaper labor and imports had a positive effect. If someone has a convenient link, I'd appreciate it.

the booming economy.
And all govs use money practices that private businesses would go to jail for (well, except if your name begins with Ken and ends with Lay).

or...
it's all an illusion, a house of cards, a lie we all generally agree on. ouch.

Clinton certainly benefitted from being in the right place at the right time. I honestly think any president that didn't take decided steps to sabotaging the economy would have had the boom. But Clinton needs to be credited for much of the positive outlook. The budget surplus was definitely a good message for the future.

Again, not too clear on how NAFTA worked out as a whole, and I'm probably forgetting some of his other programs.

And what private corporations do to their accounting books would sicken you. Debts become assets all the time, and it's totally legal under the current rules.

...always approach economic statistics with a certain degree of skepticism -- not because our bureaucrats and politicians lie, but because the incentives to make favorable assumptions here and there encourage overly optimistic models. Much of what goes into many economic statistics is inherently subjective.

For example, much of the late 90's boom was due to statistical changes in the way inflation is calculated starting from the mid-90's.

http://moneycentral.msn.com/content/P72746.asp
http://www.euractiv.com/cgi-bin/cgint.exe?204&OIDN=250108

This really is in the best interests of society. It is better and more ethical than investing in a war for oil. I hope that if Kerry is elected president that this will happen. There is no way that it will happen under Bush, who has a personal interest in oil profits.

Real economic booms come about as a result of increases in productivity.

Confidence in an economy also helps. Lack of confidence can hurt. But real gains come about from increased productivity.

Since the dawn of the industrial revolution we've had advancements in productivity, and there have been some periods where productivity has stalled.

Prior to the New Deal, industrial economies went through a predictable 20-year boom/bust cycle. Roosevelt saw that govenment regulation and spending could soften the severity of these cycles and created controls. These controls drive the far right crazy. (Regulation is not the problem that far righties say it is; if it were they'd be all for murder for profit. In some ways, though they are for it.)

While regulation does stifle some growth, it also stifles abuses which lead to bubbles. The "Clinton Bubble," IMHO was the result of a decade of deregulation, and we are now paying for those excesses (Enron, Worldcom, Tyco, etc.) . Don't confuse a bubble with a productivity-driven boom.

We had a legitimate boom, but I believe it was due to increases in efficiencies from personal computing technologies, and internet communications technologies. Thanks to these advancements, the average office worker could produce a lot more in a day. However, there came a time for the average office worker that the advances in computer technologies outpaced their abilities to utilize the advances so the economy began to sputter a bit.

Don't think of this as selling Bill Clinton short, either. He's not a bad capitalist himself. Recall the growth of a couple of Arkansas companies when he was Governor there: Wal-Mart and Tyson Foods. Some people got really rich in Arkansas under Governor Bill Clinton, and they got rich under President Bill Clinton.

As for the dot-com boom, a lot of the excesses were driven by an excess in confidence, which created speculation. Many dot-coms that went bust received their financing from people who believed if they got in on the ground floor their start-up would dominate later due to market share gained by early entry. Unfortunately, the market for many didn't exist and there were no returns on investment.

As one dot-com guru once told me. If you want to make a killing from the dot-com boom, invest in FedEx and UPS. Dot coms made shopping easier. And a lot of them succeeded by offering a more complete knowledge of products and pricing.

Another thing the boom gave a lot of people was a lot of cash. When any one country collects a boat load of cash they have a tendency to spend it abroad. As one country becomes flush with cash, others go hungry for it; their wages will fall and attract buying. That's what it happening right now. When cash is spent abroad, instead of at home, folks lose their jobs at home, or become afraid of losing their jobs and quit spending (the later case is described by economists as "The paradox of thrift.") When Bush offered his tax cuts to the wealthy, in hopes of stimulating production and hiring, he lost sight of the fact that inventories were high and factories were only operating at 70% capacity. No incentive to invest is going to stimulate production when current investments aren't producing up to capacity.

Those who have gained from the tax cuts now are motivated to invest overseas. Eventually some of that money will come back, but it will hurt until it does.

Don't confuse market-driven economies, as defined by Adam Smith in "The Wealth of Nations" with the hokum that neoconservatives pedal. Two key deviations from a true market-driven economy, which neo-cons promote are their hatred of minimum wage, and their disdain for full product knowledge in the hands of the consumer.

Adam Smith stipulated that for market driven economies to work, the people on the lowest rung of the economic ladder must receive sufficient income to afford the basic minimums as defined by the society in which they live (food, housing, transportation, entertainment). Poverty statistics are bourne of that stipulation. If an individual works a full week and cannot pay for the basics, then the economy is doomed. We need people at the bottom rungs to be able to buy things and not go bankrupt for the economy to sing.

Full market knowledge. It can't ever be acheived, which makes the study of economics a bit of an inexact science. The neoconshowever, would like to shroud the market in secrecy, avoiding truth in labeling and concealing back-room sweetheart deals. It's a form of aristocracy, not economic democracy. And you and I suffer.

As for the next boom being in alternative energy. I doubt it. The advancements must be so substantial that it provides a noticable imprement in productivity over our current oil and coal based economy. A research breakthrough is not out of the question, but it is likely that energy companies (read Bush's buddies) are doing the bulk of the research into these areas and they are not likely to share increases in productivity with anybody who hasn't singned a loyalty oath to King George.

Harvey Briggs

You went into more detail than I had the typing patience for.

Given the current state of R&D, I'd guess the next big boom is going to come from research being conducted almost exclusively by academia. Artificial intelligence. I'm not sure whether the current platform of hardware and knowledge is going to be able to produce AI beyond game scripting...in fact, I'd doubt it...but in about thirty years, technologies like quantum computing and neural networking are going to begin making large strides. That's the foundation necessary to start making serious progress towards reproducing intelligence.

And by AI I mean the implementation of artificial intelligence into existing technologies and industries as enhancements, not as replacements. That fork is a long way down the road.

Imagine Microsoft Word 17.0 being able to recognize you're writing a paper, interpreting (accurately) the content and context of your paper (I'm not talking Clippy), and it performing and compiling research in the background via seriously broadband internet3 connections while you're still typing the introductory paragraph.

What you are really suggesting is the next "killer app."

Fortunately, I don't suffer Clippy. I worship in the church of the Mac Daddy.

As others have mentioned, the real advancements in productivity from computing technology have come from new uses of existing technology. The PC is one example -- and the resultant development of the spreadsheet.

Mini-hard drives were available for awhile, but it took vision to create an i-Pod.

Henry Ford didn't invent the automobile, he invented a way to make it accessable to the mass market.

If energy is a problem in the future, look for non-traditional ways of making do with less.

Currently, our industrial-political system is based on the cheapness and abundance of energy. A non-traditional thinker may introduce a different model to challenge the current one.

It's when expensive technologies of yesterday become available inexpensively to the general populace that we have real advances in productivity.

The real weakness in the corporate thinking that Bush and buddies promote, is the sameness of thought. People who find new ways of taking advantage of old techologies -- discarded by "same-think" are the ones who will discover the next boom.

Conservative thinking seeks to keep the status quo, and benefits those who benefit from the status quo. Liberal thinking benefits those who seek to be better off tomorrow than they were today.

Real market-driven economics is driven by those who seek to be better off tomorrow than they are today, and as such is liberal thought.

It's always been that way. It will always be that way.

HB

New technologies and opportunities must be aggressively sought, but thinking in terms of looking for the next tech wave as our savior is pure wishful thinking.

There are already established industries, like automobiles, aerospace, and electronics that must be strengthened. There are a lot of exciting innovations in these areas as well, but by shifting popular attention to the next big thing, U.S. industry in these areas is left to steadily weaken.

Could change everything.

... even under the most optimistic assessments it will not make a significant impact for quite a while. Again, a well-rounded industrial base is essential -- placing all of our hopes on lofty technologies isn't wise. That being said nano-tech is an exciting area, no doubt.

The internet was developed by the military and the american taxpayer,
and the "bubble" was a "privatization", a free giveaway of state
developed technology to a bunch of lucky oligarchs, just like in
russia.

Much of the mania was fueled by ignorant fools like mary meecher and
a bunch of corporate liars who are paid to lie by investment banks.
Facts are, that databases and computers are so powerful today, that
fewer sales are actually possible. (e.g. how many 500,000,000 user
mobile telephone networks can you sell in the world today) Much of
their fantasy analysis was based on sales projections straight from
disneyland. It should not happen again. It was unhealthy, and
cheated the legitimate economy of investment for a letdown.

Germany and nations that already depend more on alternate energy are
way ahead in the economic game of alternate fuels. As long as the
US subsidizes petroleum, there is no way to compete, and kerry will
unlikely have the authority to re-jig those long standing and stupid
subsidies.

When intellectual property laws are weakest!, the innovation works
strongest... people can borrow and innovate without being beholden
to amazon for "1 click". All the IP (intellectual property) laws do
is defend monopolistic practices, not foster innovation. Bottom
line, however, is that innovation is based on R&D... real research.
Sadly, that has been weak since the bush coup2000, and there is not
much in the pipeline to privatize to create another bubble.

Because the pukes are blocking stem cell research, i expect japan
and europe to lead the world in biotech. This leaves military
technology where the USA stands to shine... but this is really a
sick market, and not worthy of our democratic values.

I wish your alternate energy hypothesis were correct, really... just
until we're using alternate sustainable energy sources and dealing
with the real issues of using them, what is there to sell?

Rather kerry should break the wall street ham fist, by applying a
transaction speculation tax, so that simply shifting money in the
markets for a quick buck becomes unrealistic, and investors must take
the long haul approach like has worked for centuries in cultures that
have invested in their own hard work to achieve greatness.

6 billion people will not afford another lazy man's bubble for
americans to retire on by their day-trading revenues... we'll have
to work for this one.

Strong intellectual property laws do not stifle creativity, nor do they stifle advancement.

China has the weakest intellectual property laws in the world and in 3,000 years what have they given us? Firecrackers and Tianamen Square?

Meanwhile in the United States, tinkerers have given us the light bulb, alternating current, the phonograph, the airplane and most recently the personal computer and the iPod.

Even though he works for Satan, Bill Gates was a poor college dropout working out of Albuquerque; Steve Jobs and Wozniak were working out of their parents garages.

Mark Cuban, who made his fortune in the internet, was no pre-existing oligarchy.

People throwing good money after bad ideas in hopes of cornering the dot-com market earned their own demise. They hoped to gain market share when no market ever existed. So what?

I hold no ill-will against anybody working for next-to nothing in a laboratory. And should they discover something that will make my life better, then they deserve their fortune. It should not be taken from them with weak itellectual property law. I make my own living selling intellectual property on a freelance business. I would not like it if you stole it from me; because if you did, I would starve and so would my dog.

Corporate-funded research is odd stuff. In the United States the owner of an invention (corporations own intellectual property for hire) has seven years to make good on his or her idea. After that, the idea is up for grabs. Group think in many corporations is so stifling it is a miracle that many good ideas ever come to market. No wonder it took a couple of guys in a garage to invent the PC, after Sperry, Univac and IBM had owned the rights to computing technology for so long.

Don't ever confuse Bush's corporate version of coporate facism for a capitalist free-market economy. If you do, then they have succeeded in fooling you and making you ineffective.

Sincerely,

Harvey Briggs

IP laws have a reverse impact on economic growth, check your
economic history back further than sensationalism and china.
"The economist" came out with this gem a few months back. You
are calling their editors "wrong" more so than I, as i simply
repeat the mantra.

The time of greatest economic (ideas) development in industrial
history was during the 19th century switzerland when there was no
patent protection and massive copying and innovating.

Whilst i agree with the spirit of innovation wholeheartedly, the
patent laws that protect, for example US drugs companies, are not
innovation laws. Protectionism is not innovation.

I've got my details right, the more patent protection there is in
an economy, the less innovation... It seems the old "trade secret"
is a much preferable mechanism to achieve market dominance.

Neither does my minor in Econ from a very good school.

I also learned to think for myself.

As for Switzerland as a land of innovation, I'll leave you with this.

"In Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love - they had 500 years of democracy and peace, and what did that produce? The cuckoo clock ..."

C-ya later Mr. Lime.

Harvey Briggs

Here is the link to the economist article i refer to:

I think you'll find it supports a different POV than you say, closer
to what i originally said.

http://www.economist.com/displaystory.cfm?story_id=664495


Good night Mr human being. I also, a human being (and a yank).

namaste,
-s

My stock market dollars on and I'm no economist.