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asdf32 posted:Umm you don't understand economics if you think taking money from one person and giving it to another person as part of a system which might plausibly decrease working hours will boost GDP in any real terms. Actually unless you're talking about Austrian economics or something then "economics" doesn't really have anything to say about what would happen in that situation until you add in a lot of context, such as each person's propensity to spend. It's entirely plausible, for instance, that raising income taxes and using that money to increase food stamps would increase GDP.
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Nov 3, 2014 00:02
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In our current economic climate an increase in aggregate demand would lead to more production. If you combined that with a a German style "work-sharing" scheme then you could easily have a situation where wealth is redistributed, hours worked goes down and production increases.
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Nov 3, 2014 00:16
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The mistake you're making is that you're assuming that the economy is already working at full capacity, which it isn't. There are already idle resources that could be put to use if the demand for them existed.
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Nov 3, 2014 00:33
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asdf32 posted:No I'm not. If it's already at full capacity then increased demand won't cause any growth. Case closed. As demand increases more idle workers are hired. Also people currently performing low productivity work may be attracted by better wages to move into higher productivity occupations. In addition to this you'll have people who can now afford to do things like hire a nanny (creating one job) and then enter the labour force (increasing hours worked). It also raises the price of labour, which puts pressure on companies to automoate, which in turn raises productivity (and thanks to the GMI job killing automation presumably won't carry the risk of sucking aggregate demand out of the middle class). So I see no reason to assume that productivity or hours worked are guaranteed to decline, and even if they do decline there's seemingly no reason to think they'd just happen to decline the exactly right amount to eliminate any gains from increasing aggregate demand. on the left posted:Production would increase, but why wouldn't it just increase in China, and decrease GDP? No doubt some of the money would end up going to places like China but roughly %70 of America's GDP is still domestic consumption, and in particular a lot of the goods and services consumed by lower income individuals are local based (i.e. lunch at the local deli, somebody to take care of your kids, etc).
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Nov 3, 2014 01:22
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asdf32 posted:Because all of the potential providers are now getting $15k and feel less need to work? If a bunch of elderly Wal Mart greeters and single moms waiting tables suddenly withdraw their labour from the economy while simultaneously a bunch of car dealerships, construction firms, marketers and factories get new customers then do you really think the final effect on the economy will be nil? on the left posted:If everyone walks each other's dogs and babysits, our GDP will spiral into infinity and the US will be known as the richest nation. If you want to argue that GDP isn't an ideal tool for measuring human welfare or even economic development I'm not going to disagree with you.
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Nov 3, 2014 01:34
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asdf32 posted:Increased aggregate demand will certainly create a pull in the labor market for more production which will show up as increased wages. But whether this leads to more production or inflation depends entirely on whether it succeeds at getting more people into the workforce and/or increasing productivity. In the world we actually live in, where deflation is a real risk and inflation is not, where lack of purchasing power is depressing demand, and where millions of people in supposedly first world countries are struggling to feed, cloth and house themselves and their families, I think it's pretty safe to say that a minimum income would be a good thing. In some alternative universe where the 1970s ended totally differently maybe a minimum income would be a bad policy. Maybe in that universe inequality has been decreasing steadily since World War II, and the big problem is rampant inflation and a massive labour shortage caused by overly generous government programs and confiscatory tax rates. It's a world where people whisper in hushed tones "who is John Galt?" Ultimately though, we're living on planet Earth. If you want to argue against a minimum income then rather than framing it in such an abstract way you should actually clarify whether you think a minimum income is likely to create problems and why. It's one thing to suggest that in some possible world the mincom could conceivably create issues but I think what people care about is the possibility / probability that such issues would arise if we actually implemented the mincom now or in the foreseeable future. quote:I think the economic effects are nil unless those car dealerships, construction firms and factories get more workers! Good thing there's a huge labour surplus then. on the left posted:Somehow I have a feeling that expanding welfare is a lot easier than getting the government to sign off on yearly checks to every citizen. The 14th amendment guarantees that any mincome would be quickly broken by birth tourism. 
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Nov 3, 2014 05:17
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With silent lips. "Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!" fwd: fwd: fwd: fwd: fwd: Hussein Obama is taking your guns and giving them to anchor babies!!!!1!!!1
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Nov 3, 2014 05:58
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Why don't you pick one of those trials that you think is a good representative example, tell us where you got your information, and then explain how it was merely subsidized by the rest of the economy?
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Nov 3, 2014 16:13
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It's unlikely that real estate prices would increase in exactly the proportion necessary to eliminate the gains enjoyed by working class people. Anyway the solution there is probably a mixture of greater public housing construction and rent control.
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Nov 4, 2014 23:07
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asdf32 posted:You literally can't construct better wealth transfer policy than taking money from the rich and giving it to the poor. Well, you could always change the relations of production.
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Nov 5, 2014 06:10
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Liberal organizations have their own versions of Frank Luntz, such as George Lakoff. But the problem isn't about messaging, the problem is that the oligarchs and elites who currently control the United States don't have much of an appetite for any form of wealth redistribution. Now in the past reforms have been pushed through against the objections of powerful vested interests, but that requires a populist movement pushing up from below. Right now no such movement really exists at the national level. And that is probably a much bigger hurdle than finding the right buzzwords or anecdotes or narrative for selling this thing to the public. There has to be some actual constituency demanding it, and building infrastructure to support that demand. That's the real missing link here as far as implementing something.
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Nov 5, 2014 06:32
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If you look at other major programs that have been implementd historically, such as social security, they didn't appear in isolation. They were part of broader reform packages which were implemented due to a mixture of populist pressure, elite advocacy and political mobilization. A world where the balance of forces in society is such that a minimum income is a conceivable policy goal would presumably be a world where the political will exists to tackle an issue like affordable housing. It is true on some level that making life easier for the poor would be disruptive to the functioning of American capitalism. Not to the degree that some posters in here are implying, but nevertheless there would be disruptions. Some business models that are predicated on paying low wages might suffer, even if demand increased, because hopefully people with higher incomes would expect better working conditions and would have the bargaining clout to demand them once they had a sour e of income to fall back on. Overall implementing policies that prevent poverty and then patching up the problems this creates, such as inflation or disruptions in the labour market, is a vastly better solution than having millions of food insecure households and individuals living in the midst of the worlds wealthiest society.
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Nov 5, 2014 21:25
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wateroverfire posted:If you could patch them up, sure, maybe. What leads you to believe that would be possible? Certainly modern experience seems to indicate it's either not possible to engineer the economy to that great a degree or that we don't know how. "Modern experience" here clearly just means your gut feeling. I would suggest modern experience suggests the opposite. If you look, for example, at the functioning of any industrial economy during a major war you can see how a high level of economic intervention and coordination proved to be incredibly effective at simultaneously increasing production, encouraging technological innovation, and maintaining or even raising living standards for workers. Those highly coordinated war economies also created the institutional, technological and social basis for a 30 year economic boom and a (by historical standards) broadly based middle class society.
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Nov 5, 2014 22:01
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archangelwar posted:Whether it is means tested or not comes out in a wash if you alter tax code to compensate, as those with means would simply pay back their UBI via increased tax. Paying everyone ensures there are no administrative errors that cause someone to slip through the cracks. Agreed. UBI.is best thought of as an intermediate step for mobilizing people, not a one shot technocratic fix to everything wrong with our thoroughly awful economy.
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Nov 5, 2014 22:03
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wateroverfire posted:Which war and which economies are you talking about? World War 2 and the U.S? I am thinking mostly of Canada and the US during World War II but I made my comment more open ended because I think that you can also draw lessons from the performances of other countries during the extended period from 1914 to 1945. Obviously, though, the situation is more complicated when your country is either being blockaded (as in the case of Britain or Germany) or physically destroyed (i.e. something that happened in varying degrees to most of Asia and Europe during this period).
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Nov 6, 2014 19:39
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Yeah, I think that a lot of the postwar welfare state, especially in the English speaking world, was made possible by the very visible and dramatic successes of government during the War. It totally demolished the liberal arguments of the 19th and early 20th century about how the state wasn't capable of coordinating economic activity with any degree of efficiency. For people who came of age during the era surrounding the Great Depression and the World Wars you had a very clear example of massive market failure followed by a very successful series of government initiatives (I'm thinking primarily of the war, not the New Deal). These formative experiences helped set the stage for a much more interventionist state. Now if you think about our current generation of policy makers, many of them came of age politically in the 1970s and 1980s. This was a time when governments everywhere were failing to deal with inflation, crime rates were rising, communities were falling apart, a lot of industry went bankrupt, the Cold War was dragging on and the USSR seemed to be catching up, while in the third world socialism seemed to be winning. It isn't altogether surprising that this generation would be so much more receptive to a grand narrative about the incapability of government to accomplish anything. After all, they took the achievements of the welfare state for granted since they hadn't lived through the depression, and therefore all they could really see were the government's various failures. Obviously there are some economic and political reasons for the rise of neoliberalism, but I think that this generational divide also played a role.
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Nov 6, 2014 19:54
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Labour is not on the verge of being made obsolete by machines. However, automation, outsourcing and the global mobility of capital have massively shifted the balance of power between labour and capital (and this is without even going into political developments that have reinforced this trend). As such the returns to labour are decreasing and the returns to capital are increasing. That leads to greater inequality of wealth and a nasty "winner-take-all" social ethos. To me that alone is more than enough reason to advocate for a basic income (well, that and the fact that it would make a lot of people better off at no significant cost of the majority of society). Also falling returns to labour have sapped away the purchasing power of workers which has reduced demand for goods and services which in turn reduces production and investment. Until recently we were able to ignore that trend by taking on more household debt and by pushing women into the workforce. Going forward, though, we'd be much better off redistributing that money directly. It will probably have the effect of raising aggregate demand and thereby putting idle resources in the economy to work. If we keep relying on a financialized economy to pump up demand, rather than high wages or direct wealth redistribution, then chances are we're going to be stuck with this horrible casino capitalism that we had prior to the 1930s and which has made a big come back since the 1970s. Its a system that produces massive wealth inequality, drains capital out of productive sectors of the economy (why invest long term in a potentially innovative company when you get a faster and better return by making quick trades in stocks and bonds?) and generates devastating asset bubbles.
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Dec 19, 2014 06:07
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on the left posted:Even if you made everyone in America rich, you wouldn't increase for example, iPhone sales as much as you would by making even a fraction of China or India a little bit better off. Yeah, because clearly what I was saying in that post is that we should redistribute income in whatever way will best maximize iPhone sales  asdf32 posted:You're essentially advocating wealth redistribution to push the savings rate down further to spur demand. The U.S. for example already has a very very low savings rate. So that's not what's needed. Actually the "essence" of why I'm advocating a basic income is because it will improve living standards and also because it will likely raise the bargaining power of labour relative to that of capital. The fact that it would probably also increase demand and reduce our dependence on credit to fund consumption is a nice side effect but it isn't the essence of my argument. And if you want to explain why putting money into the hands of folks with a high MPC is not going to increase demand, or why increasing demand is not going to boost overall economic activity then explain where you think is going to happen instead. And since we had a very similar argument in this very thread like a month ago please keep in mind that we're discussing current economic conditions where there do indeed appear to be idle resources and unemployed workers that could be put to use. We're not describing some hypothetical scenario where maybe the economy is already at full employment and therefore the only way to boost production will be through increasing productivity. Best Regards, Helsing
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Dec 19, 2014 19:44
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asdf32 posted:Well not much changes does it. Here is something you can probably understand: I don't like short term issues being intertwined with long term policy. Whether GMI is good or bad should have little to do with current economic conditions (either way). "We need stimulus now lets just enact this permanent policy!" sets off alarm bells that get my attention every time. Current events get used to justify bad policy all the time, and it's a problem. What you're saying is far as far as it goes - we shouldn't implement permanent solutions if the problems are short term - but it's highly questionable whether declining returns to labour or weak aggregate demand is a "short term" problem. We're talking about a phenomenon that's been going on for four decades. Until now households have been able to work more hours (partially by having men work more hours of the week, partially by pushing women into the workforce), take on more credit, or finance consumption through various forms of credits, in particular by relying on the increasing equity in their homes. But unless you think we're going to suddenly discover more hours in the day or unless you think it would be good to keep our domestic consumption reliant on inflating asset bubbles then something has got to give here. quote:So I'm not disagreeing with the argument, I'm disagreeing that our short term need for stimulus should should dictate permanent policy. Especially when we have a well established Keynesian toolkit including borrow and spend, print money and lower interest rates. In fact we're doing all of these things and could just do them more (my favorite would be infrastructure projects) to deal with short term issues. (Beyond the short term, demand, like all financial policy, can't create growth on its own). Keynesian policy is hard to sustain when you've got globally mobile capital, floating exchange rates and a government that has been captured by financial interests. Unfortunately it takes fairly extraordinary political situations for business as a class to tolerate Keynesian fiscal policy, and most financial institutions prefer tight money policies. Now I know that we strongly disagree on the extent to which business has actively captured government but even if you set that aside, as long as capital is fully mobile they don't need to lobby government to veto Keynesian policy: they can just threaten to relocate. Keynesian mostly worked because markets were embedded within a thick cluster of regulatory and social institutions. Now personally I would be strongly in favour of rolling back the changes of the last 40 years and returning to a situation where capital controls are strict and governments extensively regulate economic activity. Would you be? Because if you aren't, then the policy solutions you propose are only going to have limited effectiveness. I mean just look at how hysterical the reaction of Obama's very tame stimulus has been, or the way people are tearing their hair out over unorthodox monetary policy. That's how they're behaving in the midsts of some of the worst economic conditions since the Great Depression! The political dynamics of Keynesianism were predicated on a very particular postwar situation that hasn't really obtained since, at best, the late 1970s.
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Dec 20, 2014 02:47
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on the left posted:We have redistributed income, it's just been income that's been redistributed from the bottom half of the top 10% of incomes to the rich and to the bottom 90% of the world. This is why companies won't experience a demand-based squeeze for quite some time, provided that they are globally exposed. That exception you carved out - "provided they are globally exposed" - makes your point irrelevant to this discussion, because a significant part of the economy still provides goods and services to the domestic market. asdf32 posted:Here are some: Don't you think you should be disaggregating those statistics a lot more than you are? How are you distinguishing between the stock options paid to CEOs vs. the healthcare provided for workers, and why are you using average wages instead of median wages? You're chart is at such a high level of abstraction that it is impossible to verify whether the numbers are showing what you claim they are showing. Also maybe I'm just tired right now and missing something obvious Edit: Ok I was definitely too tired and didn't read that graph correctly, my bad for writing this when I haven't slept in way too long. I'll leave my error there for the sake of full disclosure. Anyway, the point I was trying to make but fumbled here was that the divergence you're showing doesn't make a lot of sense because production and none-supervisory workers often don't have benefits, whereas many of the benefits on that graphs are likely to be stock options or benefits. The decline in wages is somewhat overdetermined (meaning, there are seemingly multiple overlapping causes that could explain) but I'd suggest a much better explanation, if we're going to focus on one factor, is the decline of unions and, with them, the relaxing of social norms that kept managerial salaries from getting too many orders of magnitude higher than front line workers. That, and the move toward rewarding managers with stock options. asdf32 posted:Declining returns to labor and weak aggregate demand are entirely different subjects, we can have high local demand that still doesn't touch certain worker segments (for some of the reasons you acknowledge below). I'm not entirely sure what you're trying to say here but it certainly doesn't follow that stagnating wages and salaries are disconnected from weak aggregate demand. Households are underpaid and over leveraged and that is depressing the demand for goods and services in an economy where roughly 70% of GDP is composed of consumption. quote:This is why I think these discussions are important - [I think] you're missing all the primary reasons people are working harder for less: the societal cancers known as healthcare, housing and education and global competition. They don't relate primarily to narratives involving the elite (particularly the part where hospitals and academia are screwing society). They relate to people missing the primary problems directly in front of them. You cannot talk coherently about any of the sectors you just mentioned without discussing how the government has been captured by monied interests. I'm honestly a bit shocked that you could type that list of sectors out without somehow recognizing that. Healthcare costs in the US are massively inflated by the private sector and the overwhelming reason that these costs can't be curbed is the political power of private healthcare insurers and providers. Housing costs are rising for a variety of reasons but one of the biggest ones is deregulation and a financial system that loves profiting off of asset bubbles. Education costs are rising because of privatization and because we've decided to just make loans available to students rather than actually controlling costs. "Globalization" (really, it's just "managed trade") is being managed in a very particular way that insulates some sectors of the economy from international competition (i.e. nobody seriously pushes for greater medical tourism that might bring down the wages of US doctors). These are irrational policies but they are policies that happen to massively and disproportionately benefit a narrow set of interests who go out of their way to ensure that these policies remain in place. But most remarkably of all you're ignoring the massive financial meltdown we just had that was triggered by massive fraud and predatory lending and which revealed that financial oligarchs in this country are essentially above the law now. This is a former chief economist at the IMF, who not exactly a socialist firebrand: quote:But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out. quote:In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people. A lot of the health insurance and financial industry are basically a deadweight loss for the overall economy. We basically have a class of parasitic rentier capitalists adding very little value to the economy but sucking up money that could otherwise be distributed more evenly. quote:Everyone tolerates Keynesian fiscal policy because it's the dominant economic policy? We're engaged in large amounts of keynesian policy at this moment and have been particularly since the financial crisis. Starting with George Bush mailing out stimulus checks to everyone in the country and continuing with 0% interest rates, quantitative easing (printing money) and record deficits. Keynesianism tends to refer to a cluster of policies that goes beyond just deficit spending and includes controls on capital and an emphasis on fiscal policy rather than monetary policy, which generally means a larger role for government. But even restricting ourselves to the sort of vulgar Keynesianism you're referring to we haven't actually seen a huge return to Keynesian policy and insofar as we have adopted more Keynesian policies than in the past they have been strongly opposed. Most of Europe tried to double down hard on austerity and continues to do so. The EU only gave modest ground on the monetary policy front after a number of prominent commentators started seriously contemplating the breakup of the Euro area. And while the US Federal government did have a very mild stimulus (one that every prominent Keynesian I know of complained was much too small) this was mostly cancelled out by massive austerity at state level. The US has been more willing to try unorthodox monetary policy but that hasn't proven terribly effective and also relies on propping up asset prices. So you'll excuse me if I'm not terribly impressed by the supposed return of Keynesianism. And even if we do want to call this "Keynesianism" it has only been implemented under extraordinary circumstances and is already being withdrawn. It simply cannot fulfil the role that you were saying it could. quote:One thing that sometimes gets lost is that deficits are stimulus. It doesn't matter what the name of the bill is. The stimulus part comes from the government spending more than it takes in, regardless of what that spending is on. Will republicans fight a new "stimulus" bill? Yes, but that's basically a publicity stunt by both sides compared to the massive [keynesian] stimulus the current deficits represent. Simply running up deficits is a totally inadequate policy for addressing the problem's we're facing. Obviously if the economy is in recession then the government should run deficits but that doesn't mean that this policy on its own is going to accomplish much. There's a big difference between, say, cutting the capital gains tax vs. building a bunch of roads and bridges. quote:Well like I mentioned above there is a point here with the capital controls in that stimulus spending or higher demand can leak outside the borders and might miss some groups altogether. I don't think we know for sure. But that's one reason why my preferred policy would be local spending first on things like infrastructure which stay here. Infrastructure is good to build and can help the local (and national) economy but unless we're contemplating infrastructure projects on a totally unprecedented and politically infeasible scale then it's not going to be enough to roll back 40 years of stagnating wages, nor will it address the underlying problems. quote:Implement capital controls? Absolutely not. I'm not convinced it's needed and it would be a massive FYGM to the rest of the world. This is just silly. Most countries, including countries in the developing world, grew faster during the Bretton Woods era than they have in the Washington Consensus period. Countries like South Korea, Japan, and Finland very successfully built up their economies in that period and were able to create broadly based middle class societies. By contrast the deregulation of capital flows has created devastating financial crisis and heavily unbalanced growth. And the big success story of the deregulated period, China, mostly succeeds because it is large enough and independent enough from the US that it can essentially ignore the parts of the Washington Consensus that do not benefit it. But go ahead and explain why having a financial crisis every ten or so years that unnecessarily wipes out billions of dollars of wealth is actually a huge boon to the global south. Helsing fucked around with this message at 01:42 on Dec 21, 2014 |
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Dec 20, 2014 18:57
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