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Wednesday, June 14, 2017

NeoLiberal Democrats on the Economy

NeoLiberal Democrats on the Economy

Overview

Kevin Drum hates the term neoliberal.  Yet I find that it matches his brand of thinking very well, and is emblematic of the status quo (e.g. Hillary) wing of the Democratic Party.  This is where I come from, although I moved to the Bernie camp last year (progressive), and the two groups are having major arguments these days.
Drum has a large following at Mother Jones, and I am a regular reader of his blog, although I frequently disagree with the folks there and am something of an outsider now.  Anyway, in the last couple of days, he has made a couple of comments regarding the economy which are representative of my disagreement with Drum and his wing of the Democrats.

Financial Sector is Healthy

Drum:
On a variety of measures, financial sector performance is cranking along this year at the very-healthy-but-non-bubble values of 2003.  
Sources: Employment via Bureau of Labor Statistics; stock performance via Financial Select Sector SPDR Fund via Google Finance; earnings via Yardini Research.
My instinctive reaction, based upon long standing disagreements with Drum and the consensus, is that something is wrong in an economy where stock prices grow much faster than the economy.  Drum uses "employees" as a proxy for the economy, which is probably not the best choice.  To show that stock prices are reasonable, he shows that they are in line with earnings.  I also disagree with this logic.
I hope to revisit this later, but for now I still disagree vehemently with Drum’s assertion that the financial sector is healthy.

Death of Malls

Drum:
For some reason, the death of malls is suddenly an obsession of newspapers everywhere. I’m not sure why
He goes on to point out that electronic commerce growth is accelerating.  I find it odd that he questions the newsworthiness of the death of malls.  Surely this is a big deal in terms of employment, use and value of real estate, and has many societal implications.


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