Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.

Jonah Whanau

2019-07-05 09:32:00 Fri ET

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes. The U.S. government pension and Medicare liabilities are $47 trillion in total. As Farmer suggests, national treasuries should establish social care funds, and these public funds borrow money at low interest rates and invest the proceeds in many international stock markets. A recent study analyzes data from OECD economies over a century and empirically shows that the average stock return is about 7% above the return on government bonds. Also, the average equity risk premium ranges from 3.8% in Denmark to 9.9% in Japan. Stock market idiosyncratic volatility may not fully accord with economic fundamental factors such as size, value, momentum, asset growth, operating profitability, and market risk etc. This volatility instead shows the animal spirits and sentiments of investors who often buy and sell shares on the basis of self-fulfilling prophecies of greed and fear.

When the government institutes social care funds, these public funds can smooth out short-term stock price gyrations to invest in the long-term fundamental health of the global economy. The key Farmer proposal may work well in practice as most public funds can then earn an average 4%-7% equity premium per annum.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More
Former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment productivity growth in the next decade.
James Campbell

2018-04-23 07:43:00 Monday ET

Former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment productivity growth in the next decade.

Harvard professor and former IMF chief economist Kenneth Rogoff advocates that artificial intelligence helps augment human productivity growth in the next d

+See More
The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan.
Chanel Holden

2018-12-21 11:39:00 Friday ET

The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan.

The Internet and telecom conglomerate SoftBank Group raises $23 billion in the biggest IPO in Japan. Going public is part of the major corporate move away f

+See More
Many U.S. large public corporations spend their tax cuts on new dividend payout and share buyback.
Jacob Miramar

2018-05-23 09:41:00 Wednesday ET

Many U.S. large public corporations spend their tax cuts on new dividend payout and share buyback.

Many U.S. large public corporations spend their tax cuts on new dividend payout and share buyback but not on new job creation and R&D innovation. These

+See More
PayPal earns great fintech reputation from its massive worldwide network of 250+ million users.
Peter Prince

2018-10-19 13:37:00 Friday ET

PayPal earns great fintech reputation from its massive worldwide network of 250+ million users.

PayPal earns great fintech reputation from its massive worldwide network of 250+ million active users. As PayPal beats the revenue and profit expectations o

+See More
Most major economies grow with great synchronicity several years after the global financial crisis.
John Fourier

2018-01-19 11:32:00 Friday ET

Most major economies grow with great synchronicity several years after the global financial crisis.

Most major economies grow with great synchronicity several years after the global financial crisis. These economies experience high stock market valuation,

+See More
McKinsey Global Institute analyzes 315 U.S. cities in terms of how tech automation affects their workers in the next 10 years.
Dan Rochefort

2019-08-10 21:44:00 Saturday ET

McKinsey Global Institute analyzes 315 U.S. cities in terms of how tech automation affects their workers in the next 10 years.

McKinsey Global Institute analyzes 315 U.S. cities and 3,000 counties in terms of how tech automation affects their workers in the next 5 to 10 years. This

+See More