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Author Topic: Interesting talk - warning it's about economics and politics  (Read 9329 times)

BernardLanguillier

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Re: Interesting talk - warning it's about economics and politics
« Reply #20 on: August 29, 2014, 04:30:47 am »

This speech makes total sense to me.

I have always thought that the degree of civilization of a country is defined by the way it treats it "poorest" citizens.

Treating the lower class in such a way that it has a real opportunity to become a middle class translates into higher level of education for better employability and into a general raise of the level of the country, pushed up from the bottom instead of being, supposedly, pulled from the top.

We need a middle class just as badly as need roads and electricity and that has to be regulated. The infrastructure he is talking about is state intervention and it is required to enable the middle class to be back into existence first and then back into prosperity.

The tough part is of course to come out of the current situation and to move back to a virtuous circle. Raising the minimum wage is a reasonable approach to put things in motion, even though I do understand the reluctance of those company owners who see this as a short term threat to their profitability.

Of course, this is also a means for Washington state to attract reasonably qualified people unable to find jobs in neighboring states. ;)

Cheers,
Bernard

Robert Roaldi

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Re: Interesting talk - warning it's about economics and politics
« Reply #21 on: August 29, 2014, 06:55:36 am »

The minimum wage discussion is interesting. If raising it is bad for the economy, does it mean that lowering it is good for the economy? Because of inflation, frozen minimum wages are worth less over time, so some extent the USA might be experiencing the "lowering" scenario. We (US and Canada) have been certainly experiencing frozen levels of income for the middle class for years now. Is all of that good for economy? If so, shouldn't we all be way better off by now? Is that how we're trending?

What does the phrase "good for the economy" mean exactly? I'm sure that lowering the payroll obligations of companies that hire lots of minimum-wage employees is good for them, in the short term, but is the strategy good for the wider society? Sometime in the late 1970s, The then federal government of Trudeau raised the minimum wage (I forget to how much or which year) and in a media scrum a reporter asked, What if some companies cannot afford to pay the higher minimum wage? His answer was a blunt, Maybe those companies shouldn't be in business.

If lowering the minimum wage is good, is eliminating it a good thing? I've heard it proposed that salaries should be determined only by market forces (let's assume that we have a free labour market, economists always make lots of assumptions so why shouldn't we). Would it be ok to pay with room and board, no money? I'm sure we could find desperate people who would agree to work under those conditions, sort of a share-cropping economy. I'm also sure that would be great for someone, but is it a good idea for the country as a whole?

Maybe it's me but discussions about taxes always seem wrong-headed to me. Discussing the tax rate based on "I think I pay too much" is silly. Everyone always thinks they pay too much for everything and simultaneously think that they don't earn enough themselves. Judging how much tax to pay is nonsensical unless you first decide how much service you need. First decide that, all else follows.
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Alan Goldhammer

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Re: Interesting talk - warning it's about economics and politics
« Reply #22 on: August 29, 2014, 07:39:39 am »

I think you're missing something important. Federal taxes have to be used somewhere. Typically, to hire more highly paid federal workers in DC.
Actually not, Federal employment in the DC area has been going down in recent years.  Additionally, there is a pay ceiling for these workers and they generally can make more in the private sector.
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Alan Goldhammer

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Re: Interesting talk - warning it's about economics and politics
« Reply #23 on: August 29, 2014, 08:05:21 am »

Assuming you're right and low wage employment levels are down for other reasons, how would raising minimum wage raise employment levels for these people?    If businesses are not creating jobs at the current minimum rate, why would they create jobs at a higher rate?   In fact,  the amount of jobs available are always reduced when the minimum rate goes up.  
This is a tricky question to answer satisfactorily.  It's not that jobs are not being created but rather one needs to also consider jobs lost because of international competition.  I just finished reading "Factory Man" by Beth Macy which is an engrossing book about the furniture industry in North Carolina/Virginia and how it virtually disappeared over a 20 year time span to the Asian countries of China, Vietnam, Indonesia, and to a certain extent Taiwan.  Several hundred thousand jobs were lost in this region and they won't come back.  This parallels the disappearance of the textile industry which left this country a little earlier.  The furniture case is interesting since it was proven that some Chinese manufacturers were building at below true production costs and "dumping" furniture into the US.  Despite winning the International Trade Administration case, the damage was already done to the US manufacturers (who by and large were already importing from abroad and only doing some "final finishing" in the US).

This country has created lots of service industry jobs and some of these such as those in the financial services can be high paying.  Those in the fast food, big box retail, hotel maintenance, etc. tend to be minimum wage or slightly above.  There are lots of stories about individuals having to work two jobs just to keep afloat. 

Several years ago I posted a challenge to a well known political blog offering $10,000 to anyone who would spend a month or so to give up their creature comforts and work a minimum wage job.  there were no takers.  This was sort of like what Barbara Ehrenreich did in the research for her book, "Nickel and Dimed: On (Not) Getting by in America."

There are no easy answers.
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PeterAit

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Re: Interesting talk - warning it's about economics and politics
« Reply #24 on: August 29, 2014, 08:52:22 am »

"Trickledown theory" is a shibboleth. It can't have been disproved, because it was never implemented.

"Trickledown" may be a popular term without a clear definition, but it most certainly has been implemented to a greater or lesser degree in the US as a whole and also in individual states. Putting more money in the hands of business owners and the well-off has never - NEVER - been shown to result in an improvement in the lot of the less well-off.

No inflation? Really? Yes, one widely quoted federal inflation indicator has been relatively flat for a long time. That indicator specifically excludes food and energy costs, which are a huge portion of the budgets of low income folks. Meats are at record high dollar levels, for example, which can be traced back to the costs of feed, which have been hit hard by a number of other factors. Would you like to list the items that have gotten much less expensive that balance out those two?

Yes, really. According to the US Bureau of Labor Statistics report (August 19th) the CPI (excluding food and energy) rose 1.9% over the past 12 months and the all-items index (including food and energy) rose 2.0%.

No evidence that raising minimum wage reduces jobs? I don't need anyone's study to tell me that I won't be hiring any more minimum wage employees. Here's the problem with minimum wage for those of us who actually hire people - you can only raise the costs of employing low skilled people to the point where it becomes more cost effective to instead divert that money to others. I know what the total cost of employment is for all of my staff. I know what happens when I have to carry the ones that go on federally mandated family and medical leave. At this point, there's no way I'm hiring anyone to sweep up around the office, or file papers or something because it would cost me a lot more than just giving a couple of the others a few hours of overtime. This is why unemployment levels for young people are so high right now.

Surely you realize that your own business experience is irrelevant to the larger question? Actually, you do need studies to determine the effect of increasing the minimum wage on employment. There have been many such studies, and some have shown a negative effect, some have shown a positive effect, and many have shown no effect. Likewise, when a large number of economists across the political spectrum were asked if increasing the minimum wage hurts employment, about 1/3 said yes, 1/3 said no, and 1/3 said they didn't know. So, if you're against raising the minimum wage, fine, but don't use the "it hurts employment" argument because it just ain't so.

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Misirlou

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Re: Interesting talk - warning it's about economics and politics
« Reply #25 on: August 29, 2014, 11:01:18 am »

I think you need to reread his text he says that there will be (in the end, as a result of his suggestion) more money for people to buy things and at the same time his suggestion "reduces money available to buy things by raising the cost of everything due to inflation"... what one hand gives the other takes.



No, he's contrasting two different options. They aren't connected. What he said "reduces money available to buy things by raising the cost of everything due to inflation" is excessive government borrowing. He's saying "more money for people to buy things" part would come from lower taxes.
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Misirlou

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Re: Interesting talk - warning it's about economics and politics
« Reply #26 on: August 29, 2014, 11:07:06 am »

so do you pay 1.5 for overtime (overtime and this is non exempt job) for somebody to sweep around the office ?

Depends on the specific math, and obviously whether you pay by the hour or not. Remember, if I pay someone $20 an hour, that's not my total cost. After taxes, benefits, etc., it can be nearly double that, depending on where they fit on the scale. I don't actually pay for janitorial stuff out of my budget, but I do have a couple of clerks. I have two more who are retired, but work for me 1/4 time. Their hourly rate is more than twice the recent hires', but it's still cheaper for me to keep paying them than two hire another full-time entry level person.
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Alan Klein

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Re: Interesting talk - warning it's about economics and politics
« Reply #27 on: August 29, 2014, 11:10:13 am »

Minimum wage is really a side issue that effects the economy very little.  It's a way for the politicians to keep the public's eye off of the main issues they should be addressing such as high personal and corporate taxes, printing of money, deficit spending, and subsidies that distort normal market forces.  If these were lowered even a little, the economy would expand and provide more jobs at higher wages including those jobs at the bottom of the economic ladder.

Misirlou

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Re: Interesting talk - warning it's about economics and politics
« Reply #28 on: August 29, 2014, 11:17:20 am »

How so? There hasn't been any increase in minimum wage yet. On the contrary, real minimum wage (i.e., adjusted for inflation) has been steadily eroding over the last decade or so.

That's true only at the federal level (unchanged minimum wages I mean); states and localities can set their own minimums. But it's definitely the case that wages are declining in real terms overall.

About 10 years ago, I went to visit my brother-in-law in WY. At that time, the starting wage for fast food workers was $12. Not because of a law, but because of a tremendous labor shortage. I'd be interested in what they're paying now.
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Slobodan Blagojevic

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Re: Interesting talk - warning it's about economics and politics
« Reply #29 on: August 29, 2014, 11:30:31 am »

That's true only at the federal level (unchanged minimum wages I mean); states and localities can set their own minimums. But it's definitely the case that wages are declining in real terms overall.

About 10 years ago, I went to visit my brother-in-law in WY. At that time, the starting wage for fast food workers was $12. Not because of a law, but because of a tremendous labor shortage. I'd be interested in what they're paying now.

Yes, but those state and local minimums are only slightly above the federal, and even those have not changed in the last decade. Besides, those $12 in WY I suppose were not the official minimum, but a market-driven one?

Slobodan Blagojevic

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Re: Interesting talk - warning it's about economics and politics
« Reply #30 on: August 29, 2014, 11:44:20 am »

... If these were lowered even a little, the economy would expand and provide more jobs at higher wages including those jobs at the bottom of the economic ladder.

Once again, Alan, those were lowered under Bush, and guess what happened? No more jobs, no higher wages, not just for the bottom, but also not for the middle. The only benefit was to the top, and that means, very, very, top, the 1%, 0.1%, and especially the 0.01%. They increased their share in the national wealth by unprecedented percentage in the last decade, with nothing, absolutely nothing "trickled down." On the contrary, the rest of the nation, the insignificant minority of 99% ended up worse. For the first time in its history, the U.S. is not an optimistic nation: the majority now believe that the next generation, their children, will have it worse than they had.

Besides, Alan, regurgitating Econ 101 generalizations, good only for introducing clueless teenagers to the subject, is not going to help us here with this debate.

Alan Goldhammer

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Re: Interesting talk - warning it's about economics and politics
« Reply #31 on: August 29, 2014, 11:46:11 am »

"Trickledown" may be a popular term without a clear definition, but it most certainly has been implemented to a greater or lesser degree in the US as a whole and also in individual states. Putting more money in the hands of business owners and the well-off has never - NEVER - been shown to result in an improvement in the lot of the less well-off.
Actually it has in Kansas with horrible results.  Governor Brownback got an across the board tax cut passed using this argument.  State is now in horrible financial position and Brownback a Republican stands at this point to be defeated in the general election this November.  This is a state that is reliably Republican but the citizens are furious.  Do a Google search on 'Governor Brownback Tax Cuts' and you will get whole slew of interesting articles to read.
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Alan Klein

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Re: Interesting talk - warning it's about economics and politics
« Reply #32 on: August 29, 2014, 12:16:09 pm »

Once again, Alan, those were lowered under Bush, and guess what happened? No more jobs, no higher wages, not just for the bottom, but also not for the middle. The only benefit was to the top, and that means, very, very, top, the 1%, 0.1%, and especially the 0.01%. They increased their share in the national wealth by unprecedented percentage in the last decade, with nothing, absolutely nothing "trickled down." On the contrary, the rest of the nation, the insignificant minority of 99% ended up worse. For the first time in its history, the U.S. is not an optimistic nation: the majority now believe that the next generation, their children, will have it worse than they had.


Besides, Alan, regurgitating Econ 101 generalizations, good only for introducing clueless teenagers to the subject, is not going to help us here with this debate.



You are mistaken what Bush did.  He raised deficit spending due to the tax load of the wars in Iraq and Afghanistan, increased printing dollars and lowered the Fed rate creating the boom the ended in the recession and bust of 2008.  Obama and the current Congress has doubled down on what Bush did.  Deficits are even higher, there's more money printing, and interest rates are even lower.  These all are adding to another balloon whose bust will be even greater than the last.

You also are mistaken about what I said about the rich.  If you read my posts, it indicates that the above actions by the government helps the rich more than the middle class and poor.  So even Obama's policies to help the poor are really benefitting the rich. 

And I'm not regurgitating Eco 101 generalizations to clueless teenagers but stating well established economic theories of the ages pronounced by experts in the field.  I'm sorry that your best retort to my points is to insult my intelligence with ad hominem attacks.  I expected better from you. 

Slobodan Blagojevic

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Re: Interesting talk - warning it's about economics and politics
« Reply #33 on: August 29, 2014, 12:50:23 pm »

You are mistaken what Bush did...

Bush lowered taxes. Period. You keep repeating the mantra of "just lower taxes and all is good."

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And I'm not regurgitating Eco 101 generalizations to clueless teenagers but stating well established economic theories of the ages pronounced by experts in the field.  I'm sorry that your best retort to my points is to insult my intelligence with ad hominem attacks.  I expected better from you. 

I do not know where you find ad hominem. There was no intention to insult your intelligence. By the same token, there is no need to "insult our intelligence," to borrow your term, by repeating Econ 101 to a grown-up audience here. I said "Econ 101 generalizations" and you said "established economic theories" which I consider one and the same. Both are good as an introduction into economics, but not an almighty answer to more complex issues. There are numerous advances in economics since the "theories of the ages," just like there are advances in physics after Newton. Otherwise, we could just stick to Adam Smith and explain everything happening today.

Alan Klein

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Re: Interesting talk - warning it's about economics and politics
« Reply #34 on: August 29, 2014, 01:16:51 pm »

OK.  I accept you had no intention of insulting me.  I like you and this is only a discussion, after all.  I doubt if we'll change anything.  But I will say that this whole issue is not complex.  Most people understand that printing money is no good because inflation reduce the purchasing power of their dollars.  Most people know that raising taxes reduces the money available to them to buy stuff.  Most people know that deficit spending and debt has to be paid back at some point and this will hurt.  Most people know that subsidies and deals the government makes with certain industries is unfair to the average American as well as to the  industries not favored by the government.  You don't have to be an economic wizard or a teenager or Adam Smith to understand these things. 

Slobodan Blagojevic

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Re: Interesting talk - warning it's about economics and politics
« Reply #35 on: August 29, 2014, 01:53:10 pm »

... Most people understand that printing money is no good because inflation...

Correct... in general terms. And trust me, if anyone knows what inflation is, it would be me. I come from a country that holds a world record in inflation... a whopping 100%...per day!

But I asked already "What inflation?" There was no increase in inflation after the quantitative easing (QE) by Fed (which I assume you are referring as "printing money"). The inflation you cited, about 2% per year, is a normal, almost unavoidable inflation, just like about 5% unemployment is considered "natural."


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... Most people know that raising taxes reduces the money available to them to buy stuff...

Again, way oversimplified. Things in economics do not have such a linear, one-dimensional, cause-consequence effect. Take for example property taxes. Where I live (Midwest), they actually went down, after reassessing property values. But even if they didn't, I would be more than happy to pay that and more. My father used to say that he is very happy when he pays taxes. To my astonished look, he would explain that's because he has reached the income level that requires him to pay taxes. I am a happy man when I pay taxes and I would not mind paying more, IF I would know that would not end in the fat cats pockets (for instance, when they finance unnecessary wars, which is just a good business for the 1%-ers). In the case of my property taxes, 65% of that goes to the school district, which results in it being among the best in nation. So, what would I rather choose, to pay less than $7K or $8K in property taxes that I am paying now, or to pay $12K - $20K for a private school instead?

Paying more taxes also results in more people having jobs or getting paid better. First through domestic government spending, then through secondary demand when those new or better paid jobs start spending money. More consumer spending means more new jobs created in the non-government sector as well.

Paying more taxes also means more money for the underprivileged, thus less of them forced into crime, thus I'll have a safer life. Or more police and firefighters protection. Or more and better teachers.

deejjjaaaa

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Re: Interesting talk - warning it's about economics and politics
« Reply #36 on: August 29, 2014, 02:13:32 pm »

Or more and better teachers.
provided that unions are curbed a little - no life time tenures.
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deejjjaaaa

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Re: Interesting talk - warning it's about economics and politics
« Reply #37 on: August 29, 2014, 02:16:13 pm »

Depends on the specific math, and obviously whether you pay by the hour or not.

nope... making janitor a salaried janitor won't make him exempt... I do happen to work in a staffing business, so I'd assume (unless you work in the same business) I deal with that more in a week than you in several years.

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PeterAit

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Re: Interesting talk - warning it's about economics and politics
« Reply #38 on: August 29, 2014, 04:10:26 pm »

OK.  I accept you had no intention of insulting me.  I like you and this is only a discussion, after all.  I doubt if we'll change anything.  But I will say that this whole issue is not complex.  Most people understand that printing money is no good because inflation reduce the purchasing power of their dollars.  Most people know that raising taxes reduces the money available to them to buy stuff.  Most people know that deficit spending and debt has to be paid back at some point and this will hurt.  Most people know that subsidies and deals the government makes with certain industries is unfair to the average American as well as to the  industries not favored by the government.  You don't have to be an economic wizard or a teenager or Adam Smith to understand these things. 

The whole issue is, in fact, very complex. No one, not even Nobel-winning economists, understands it in detail. For any individual to claim an understanding of these issues is the worst kind of hubris. But, we can make an effort to base our opinions on facts. For example, in my previous post I presented pretty solid evidence that inflation, even including food and energy, is not an issue. Yet you keep bringing inflation up - can I ask why? It COULD be a problem if it actually happened, but it is not happening.

As for "printing money," that's another falsehood. According to the World Bank, the US money and quasi-money supply has gone up by only 5% from 2004-2008, perhaps keeping pace with population growth. Since then, the money supply has remained relatively stable - up or down a bit depending on the measure used (M1, M2, or M3). So, this "printing money" notion is a bunch of horse hockey. Sounds like "Rush talk" or Fox news BS to me, and we all know (or should) what a gasbag full of lies and distortions they are.
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BernardLanguillier

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Re: Interesting talk - warning it's about economics and politics
« Reply #39 on: August 29, 2014, 06:11:33 pm »

Should we not go back to the essential point of the original talk?

His point is that an economy needs a strong middle class to strive. He is also saying that the US is loosing this middle class quickly, partially because money is not distributed fairly. He is saying that we must find a way to have money distributed more fairly.

Do we all agree with that at least?

Cheers,
Bernard
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