Thought Experiment-Biden as President
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My view is similar to TG's - what you'd see is that the President is a non-zero coefficient, but other things like tech progress, size and health of global markets, earnings of domestic firms, etc., etc. - would dwarf any direct actions from the President.
You're too much into quantifiable metrics. Economies are made up of businesses. Businesses are made up of people. Predicting people is somewhat akin to herding cats.
I'm not market smart like Jon or Horace, but very, very seldom have I had a negative quarter. I'm much more of a gut investor than they are.
I do believe that perception drives reality and large groups of people sometimes have common perceptions that defy logic. Therefore, I do believe sentiment can drive the market and the economy.
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@Horace said in Thought Experiment-Biden as President:
Trump’s tax cuts moved enormous amounts of money around. Amounts that are on the order of a significant coefficient on the whole economy. You are free to argue the vagaries of all the effects that movement of that money had, but you’re not free to seriously claim that it was not important to the economy.
Tax policy won't turn a shithole country into a good one. In the grand scheme, it's tweaks around the edges.
Tax is a redistribution - in general a government is less efficient at allocating money, but taxed money doesn't disappear. It ends up in the pocket of a beaurocrat and goes back into the economy. Not saying it doesn't encourage growth - but it's not a magic wand.
Don't misunderstand my point - a tax cut can lead to capital moving into more productive areas, but even that takes time. The immediate effect is just money goes from person A to person B. As you said, in the short term it "moves" money.
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@Jolly said in Thought Experiment-Biden as President:
My view is similar to TG's - what you'd see is that the President is a non-zero coefficient, but other things like tech progress, size and health of global markets, earnings of domestic firms, etc., etc. - would dwarf any direct actions from the President.
You're too much into quantifiable metrics. Economies are made up of businesses. Businesses are made up of people. Predicting people is somewhat akin to herding cats.
I'm not market smart like Jon or Horace, but very, very seldom have I had a negative quarter. I'm much more of a gut investor than they are.
I do believe that perception drives reality and large groups of people sometimes have common perceptions that defy logic. Therefore, I do believe sentiment can drive the market and the economy.
The stock market is fine now. How's the economy?
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@xenon said in Thought Experiment-Biden as President:
@Jolly said in Thought Experiment-Biden as President:
My view is similar to TG's - what you'd see is that the President is a non-zero coefficient, but other things like tech progress, size and health of global markets, earnings of domestic firms, etc., etc. - would dwarf any direct actions from the President.
You're too much into quantifiable metrics. Economies are made up of businesses. Businesses are made up of people. Predicting people is somewhat akin to herding cats.
I'm not market smart like Jon or Horace, but very, very seldom have I had a negative quarter. I'm much more of a gut investor than they are.
I do believe that perception drives reality and large groups of people sometimes have common perceptions that defy logic. Therefore, I do believe sentiment can drive the market and the economy.
The stock market is fine now. How's the economy?
Quit moving the goalposts.
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@Jolly I was reacting to your statement. Sentiment seems to drive the market to a greater degree than sentiment drives basic economic metrics.
But sure, sentiment is a driver. I think it's more of an outcome of a good economy though. Here's consumer sentiment. Obama years were steadily up after the financial crisis and Trump isn't that far off from Obama's figures in 2016
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@xenon said in Thought Experiment-Biden as President:
@Horace said in Thought Experiment-Biden as President:
Trump’s tax cuts moved enormous amounts of money around. Amounts that are on the order of a significant coefficient on the whole economy. You are free to argue the vagaries of all the effects that movement of that money had, but you’re not free to seriously claim that it was not important to the economy.
Tax policy won't turn a shithole country into a good one. In the grand scheme, it's tweaks around the edges.
Tax is a redistribution - in general a government is less efficient at allocating money, but taxed money doesn't disappear. It ends up in the pocket of a beaurocrat and goes back into the economy. Not saying it doesn't encourage growth - but it's not a magic wand.
Don't misunderstand my point - a tax cut can lead to capital moving into more productive areas, but even that takes time. The immediate effect is just money goes from person A to person B. As you said, in the short term it "moves" money.
Tax policy isn’t really important. Got it.
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@Horace That's one way to interpret what I said. If someone enacted some drastic marginal rate overhaul - sure, that'd be a big deal.
I'm talking about tax policy as I've seen it in my lifetime.
The economy over the last 20 years has been about a lot more than Obamacare and the Trump tax cuts. That's my point. Both those two were their respective biggest contributions to the state of the economy.
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@Horace said in Thought Experiment-Biden as President:
I struggle to see much tangible impact of presidents on my life, but I saw impact from those tax cuts.
And again, no one denies that. But if I look at my life, the amount of money I make has been driven by the growth of the tech economy, the rise of private equity, the change in real estate prices in urban markets. Among myriad others.
Has the Trump tax cut affected my life? Yes. Pretty small effect in the grand scheme of things.
I'm reacting to the sentiment that the President makes or breaks the economy. Affects it, sure.
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@Horace Exactly. This thing is designed to stand on the shoulder of giants and run itself without that much government (minimal if you're libertarian).
Presidents or seen as some sort of mythical shaper of destinies across the populace. It's kind of un-American.
If Trump (or Obama) took a 2 year vacation. Things would be just fine, the economy would be just fine.
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@xenon said in [Thought Experiment-Biden as President]
I'm reacting to the sentiment that the President makes or breaks the economy.
Except a claim that they can have a meaningful effect - say, meaningful enough to possibly sway one’s vote - gets straw manned into that sentiment.
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@Horace said in Thought Experiment-Biden as President:
@xenon said in [Thought Experiment-Biden as President]
I'm reacting to the sentiment that the President makes or breaks the economy.
Except a claim that they can have a meaningful effect - say, meaningful enough to possibly sway one’s vote - gets straw manned into that sentiment.
I never implied it’s not meaningful enough to care about.
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I’m sure you haven’t. I’m not sure we have any specific disagreement. TG doesn’t like it when people talk of the tangible effects of presidents on the economy and then others jump in to agree. Like it’s an important reminder that presidents don’t have magic wands.
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@xenon said in Thought Experiment-Biden as President:
If there was somehow a way to get data on all the drivers of the economy (or let's say the top 100) - you could run a regression on that data.
My view is similar to TG's - what you'd see is that the President is a non-zero coefficient, but other things like tech progress, size and health of global markets, earnings of domestic firms, etc., etc. - would dwarf any direct actions from the President.
Now you can see in the long arc of history the government sets the rules of the game (patent law, anti-trust law, regulations, etc., etc.) and the President has influence there - but those sort of changes have an effect on a scale of decades and even centuries.
In times of crises, the President's coefficient get's a lot bigger.
But if you were to make that equation, and look at the coefficient on Presidential actions - it wouldn't be accurate to say things like "Trump's economy" or "Obama's economy"
Maybe their coefficient is greater than any other single person - or maybe the Steve Jobs of the world beat them in some years.
Thank you Xenon. You said it better than I ever could.
