In the simple Keynesian model of Aggregate Demand (AD) in an economy:
AD = C + I + G + X – M
C is consumption which is a function of the Marginal Propensity to Consume (MPC) and taxes (T); obviously if the MPC is higher then C is higher (ceterus paribus or all other things being equal) and if T is higher then C is lower (ditto)
I is business investment, should probably be expressed as I-sub-g for gross investment but I wanted to keep the terms simple
G is government spending
X is exports
M is imports
This model was the rationale for Keynes advocating government spending, without raising taxes, as the best way to get out of the Great Depression.
Implicit in the policy views of virtually all current Democrats is that unless the stimulus is direct government spending, then the MPC is basically zero as is the Marginal Propensity to Invest (MPI). This is provably false.
Implicit in the policy views of virtually all current Republicans is that cutting taxes is always a better stimulus than raising government spending (a debatable proposition) and that the MPC and MPI approach one, which is false. No deficit-financed tax cut has ever completely paid for itself, but tax cuts always boost GDP although the magnitude and duration of the boost can vary greatly.
The only political axiom to which I subscribe is that no matter where one thinks they stand on the political spectrum, much of the truth is usually somewhere else.
From this very recent CNBC article comes this headline:
“Capital expenditures surge to 25-year high, R&D jumps 14% as companies spend tax cut riches freely“
The MPI is not zero. Of course companies have also increased buybacks, but buybacks are not the only thing on which companies are spending their newly increased profits. The MPI is not zero. By the way, the information used in the headline comes from Goldman Sachs.
People may have equal rights under the law, but people are not created equally. That fact may be an inconvenient truth, but it is still a fact.
From Car and Driver a picture of a 1959 Ferrari 250GT California Spyder. Why am I showing this picture? If I had written that the car was a 1989 model, would you have doubted it? This picture is part of a Car and Driver “Flipbook,” a slide show of related photos. This Flipbook was about the quickest cars C&D has ever tested. Compared to the other (mostly American) cars from the same period the Ferrari looks like something from far into the future. Look for yourself:
This is a picture of a 1958 Chevrolet 315 Delray from the same Car and Driver Flipbook. I originally wrote that the car was a 1959 model because that’s how Car and Driver labeled the car. 56packardman pointed out that this is really a 1958 model, which I guess I should have known from the rear deck, but who am I to doubt Car and Driver?
This Chevrolet, regardless of year, is very dated in exterior design while the Ferrari is timeless. One may be a fan of the Delray’s looks, but it is impossible in my opinion to avoid the previous conclusion.
I don’t follow sports anywhere near as closely as I have in the past. Baseball “divorced” me after 20+ years; the NFL is awash in protests, boorish owners and too many penalties. I have not been interested in the NBA since the early 1980s and lost interest in the NHL not much later.
All that being said I wanted to mention the amazing start of Patrick Mahomes, who is in his first year as a starting quarterback in the NFL for the Kansas City Chiefs. He has set a record by throwing 10 TD passes in the first two games of the season. That accomplishment is impressive, but he has also not thrown an interception.
Despite what fantasy football geeks think (fantasy football is well-named because it bears little or no resemblance to the real thing), the only two individual stats that really matter for a quarterback are Yards Per Pass Attempt (YPA) and Interceptions. What is Mahomes’ YPA through two games? It is 10.58 compared to a league average that always finishes very close to 7.00.
Of course it’s just two games. The real reason I wanted to mention Mahomes is to show that many ways exist to succeed. Peyton Manning once said (I wish I could find the reference, but you’ll just have to trust me) that an NFL QB needed to make 300 pass attempts in regular season competition to adjust to the speed of the game. Mahomes had made just 35 such attempts before this season started, but did basically spend a “redshirt” season sitting on the bench behind Alex Smith. Mahomes was a first-round draft pick in 2017.
Most first-round quarterbacks end up with meaningful playing time in their rookie season. That might not always be the best thing.