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Helecopter money seems like a hard genie to put back in the bottle.
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Aug 18, 2016 16:51
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Paradoxish posted:It's not like we're ever going to normalize monetary policy anyway. Every time the Fed even suggests that it might happen the markets throw a tantrum and Yellen dials back the rhetoric almost immediately. Last year's tiny rate hike nearly caused a panic all by itself. Helicopter money in some form or another is going to be the only option left if the economy dips into legitimate contraction while the Fed still have their foot to the floor. No  or anything, but I think if it comes down to printing money and handing out stacks of it, the whole system is just going to break down. Like...it will be the only option but taking that option will begin a slide into dollar devaluation that the Fed won't be able to rein in.
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Aug 18, 2016 20:13
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Electric Owl posted:Thx for bringing this to my attention. From the limited reading I've done on it so far Industrial policy seems to have met with limited success, but that's not necessarily a bad thing imo. Of course interventionist policy is less efficient and more costly than offshoring production to some country that has lower opp. costs, but that's beside the point. I guess I just fail to see how, for example, if the gov't protected the auto industry in the US, how that wouldn't lead to higher levels of gainful employment. Yes, it would be more expensive for Americans to buy a car and it would be costly for the gov't when compared to free market alternatives, but surely this would only be so in the short-run? It reminds me of when Ford paid his employees enough to buy a T-model for themselves; the wage/price differential eventually equalizes no? No not really. Cars would become more expensive for everyone, which would transfer welfare from all americans to americans connected to the car industry. Auto workers would be somewhat better off while most other americans would be somewhat worse off. Overall employment would probably not change much - some jobs created in the auto industry would be netted out by jobs lost elsewhere due to people having less purchasing power. That's a permanent structural effect of the policy. On top of that, the US enacting protectionist measures for its car industry would almost certainly result in our trading partners retaliating. That would probably result in lower car sales by american companies internationally, and higher prices for all sorts of imported goods for Americans. edit: Poor people get hosed the hardest by that dynamic. wateroverfire fucked around with this message at 14:02 on Apr 11, 2017 |
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Apr 11, 2017 13:59
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Electric Owl posted:I fail to see how you're coming to these conclusions. The long-run Philips Curve shows that price levels eventually meet wage levels again and equalize at the natural rate of employment. If anything it actually leads to an increase in real wage levels over the long term. Can you explain what you're doing here? For one, what you're describing is 0 real wage growth - wages rising to meet price levels means real wages are equal to what they were before the inflation. For another, the Phillips Curve doesn't apply to this problem. My logic is pretty simple. 1. Protectionism decreases competition in the car industry. 2. Decreased competition raises the real price of cars. At whatever price level, cars are going to consume a relatively larger share of peoples' income. 3. Profit margins (probably sales too, but maybe not, it depends) in the auto industry grow somewhat, but sales in unconnected industries decline somewhat. If you're employed in or around the auto industry it might be somewhat better for you (or not, it depends) but if you're not, it's going to be worse. 4. Net net it's a transfer of welfare from the rest of the economy to the auto industry, at the expense of american consumers and non-auto industries. Electric Owl posted:Also, saying that this type of policy would do anything to transfer wealth from all Americans to Americans connected to the car industry, is again, the point. The 1% pay for half of what the US gov't receives in income tax, so gently caress em. The point is that protectionist policy would do wonders in shrinking the wealth gap. LOL. It would make most people poorer in real terms, but the rich (who own the domestic means of production, and benefit from less competition and the ability to raise prices) would make out much better than the poor (who own very little, and get to pay higher real prices regardless of the nominal wage level). Overall everyone's standard of living would get somewhat worse. Electric Owl posted:I agree on the trade wars point tho, but trade wars aren't necessarily inevitable and more often than not they're lose-lose. That's all game theory and I suppose with the right diplomatic channels you could greatly reduce the chances of that sort of stuff happening. Yes, that's the point. =( Everyone's lives become shittier. If you think closing American markets would NOT result in retaliation then I have to say that seems pretty naive. The idea that all markets must be open except for America's seems like something that can only be achieved by gunboat diplomacy. Electric Owl posted:EDIT: Also for all of you making GBS threads on Economics academia, I feel your pain. But that's not to say that some portions of the economics community (albeit not the mainstream community) recognize its faults and are trying to develop a pluralistic economics more grounded in the real-world than abstract models. You'd be glad to hear that this field of economics calls itself "Post-Autistic Economics" TBH mainstream economics is mostly right and alternative research programs are pretty LOL. It's at the intersection of economics and politics that things go off the rails.
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Apr 12, 2017 15:26
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Electric Owl posted:How doesn't it? While what you're claiming what will happen will indeed happen (prices increase and real wages decrease) the Philips Curve goes to show that real-wages would only decrease in the short-run and not the long-run. Basically, because unemployment decreases (because that's the point of this type of policy in the first place) workers are given more leverage in negotiating their wages and in effect get paid higher wages. This isn't only done by people working in the car industry, but applies on the macro-level because other firms would have to start to compete for the same pool of workers. Add to that the fact that consumer spending necessarily increases and so while there are some growing pains, everybody ends up better off in the long run. Dude, this is not right. First and most basically, consumer spending does *not* necessarily increase. How do you get to that conclusion? People don't have more money in their pockets just because some prices have gone up. Instead, people shift consumption from some things to other things and otherwise economize, and that is the pinch that pushes them to seek higher wages. Increased demand for labor may give workers more bargaining power but only in the sectors that are seeing increased spending, and that is offset to some extent by rising prices. Businesses in sectors that are flat or contracting (because consumer spending is shifting) are not going to have an incentive to add labor and might shed jobs instead. On the macro level, protected industries are less productive at turning inputs into outputs (otherwise the protectionist measures were pointless because domestic producers would be dominating anyway) so consumers need to pay more to get back the same and items from those industries consume a larger share of real wages regardless of the price level. Real wage decreases would wash out if the economy were equally productive before and after the protectionist measures but if the economy is LESS productive, which it will be or else it didn't need protection, people in aggregate will have less buying power no matter what the wage level stabalizes at. Electric Owl posted:This is an absurd statement. Why do you think the elite pushed for Free Trade if they stood to make more money from protectionist policy??? The marginal costs associated with the protected firm are high (expensive labour / regulations you all of a sudden can't ignore like u could in the 3rd-world etc. etc.) and therefore drastically cut the firms profit margins. Anyways, the type of protectionist policy advocated under New Trade Theory are a lot less intrusive than the type of protectionist policy I think you think I mean. It tries to focus on industries up until points where they reach sufficient internal economies of scale to compete globally because those same up and coming firms face insurmountable barriers to entry under a globalist paradigm. Its the difference between kicking your kid out in street the moment he's born and raising him up until he's 18. If you're talking about nurturing nacient industries or companies until they're competitive enough to export then yeah, that can work or fail, depending. There are numerous examples of both. South Korea for instance did it successfully with its car industry while Chile by contrast failed hilariously with its own. It's sort of like any other investment - if you succeed it pays off and if it doesn't you fall behind. The USA, Chile, (that I know of) and many other countries do this through various programs already. It's more like state venture capitalism than protectionism, I think. When I hear "protectionism" it evokes for me tariffs and quotas designed to protect domestic industry. Electric Owl posted:This is an absurd statement. Why do you think the elite pushed for Free Trade if they stood to make more money from protectionist policy??? I wanted to talk about this specifically because it's NOT absurd. First...there are many elites with competing interests. Some want access to international markets to export (while being protected domestically). Some want to produce abroad and import into the states. Some are producing domestically to sell domestically. There are also elites in other countries who want essentially the same things. They're all participating in a political process. Those are the business elites. Government elites recognize that there are gains to trade - comparative advantage is a real thing. Second...companies are just pass-throughs converting inputs to outputs. They are going to exist (maybe not the exact same companies - some will come and go - but as a group) and make money no matter what. If you impose measures on them that increase their costs, then over the long term they will raise their prices and keep making money. Or some will, and others will go out of business. To the consumer it's about the same. If you impose measures that dampen competition, the companies that are left will increase their margins. Businesses adjust and the consumer pays. That's just how it is. It's not that businesses are all better off under free trade - some are, some aren't - it's that they will adjust to whatever and the owners of those businesses will still be richer and suffer less than the people who merely work, even if in real terms everyone is poorer. That, also, is just how it is. Electric Owl posted:Hahahahahaaaaa...no. Edward S. Herman wrote a great paper on Institutionalized Bias in Economics I recommend u read if u have access to journals. Basically, the "experts" who espouse particular types of views are legitimized by the institutions mostly controlled by pro-business elites. I went to school in economics (albeit only an undergraduate major) and can tell u that there's a very prevalent bias towards libertarian policy that just so happen to align beautifully with elite interests. I also went to school in Economics and took a Masters, though probably longer ago then you. =) I think you're being unfair in characterizing the whole profession. Academic economists are very well aware of externalities, the limits of models, the foibles of trade, and etc. Environmental econ is not really a new thing - it wasn't even when I was in school. Industrial Organization is basically the study of how markets depart from competitive models. The New Institutional school has been around awhile. If you talk to academics in an academic context they are much more humble and nuanced than like...Krugman and Mankiw in their blog posts. Also, it helps not to be an undergrad while you're doing that because professors are going to be condescending af and dumb things down no matter how smart or knowledgable you think you are (source: I was an undergrad and I was terrible) because you're neither of those things at that stage even if you're bright. Like I said last post, I think it's really at the intersection of economics and politics that things start to go off the rails because while there is some interest in theory, there is a lot more interest in pushing agendas and what gets done may only passingly resemble anything serious economists would recommend. Like...the neoliberal agenda is supposed to be free trade and pro-business measures paired with redistribution to compensate the losers but policy makers mostly don't get around to the second part. Also, prominent public economists are nurturing their personal brands so they're often going to make statements and take positions that are more about relating to their audiences than being perfectly correct and nuanced. Don't judge the whole profession by its loudest members. edit: Are you talking about the 1982 paper? http://journals.sagepub.com/doi/abs/10.1177/016344378200400307 ^That one? http://scholar.google.cl/scholar_ur...DloQgAMIHigAMAA Google scholar is pretty badass. Finished article. Agree with Edwards' general point. LOL if that article isn't "SA in 1982" AF, though. wateroverfire fucked around with this message at 19:17 on Apr 12, 2017 |
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Apr 12, 2017 18:34
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icantfindaname posted:no not really, the stuff about 'protecting the losers' was always a fig leaf wheeled out in panic when the public starts to complain too much, whether in the early 90s or today. there was not then and is not now actual political will to do anything like that, not least because it's basically impossible to predict who the losers will actually be, and the long-term loss of quality employment in general means many of the newly-unemployed will never find work of similar quality to that which they lost Yeah. There's a big difference between the academic project and the policy implementation.
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Apr 12, 2017 20:20
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call to action posted:How the gently caress is it "risk averse" to not want to take a risk that has a 70-90% (depending on who you ask) risk of failing in the first few years, likely causing you to lose your home (if you had one), retirement, and possibly healthcare (if you're in a non-expansion state). Good luck at staying married under these conditions too Goons obsess on stats like these but not every new business has a 90% chance of failure. There is luck involved - of course! But lack of skill, preparation, realistic plans, etc kills far more new businesses than luck. Basically don't be bad and be willing to work your rear end off for awhile (and know your business ofc) and you have a good shot at making it work.
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Apr 13, 2017 16:15
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dead comedy forums posted:For a libertarian, you have a tremendously bad understanding of business economics. "know your business" encompasses having a very well rounded set of personal and technical skills, access to financial capital in different forms to nurture your enterprise, living in a society that has proper regulatory means to ensure that you are not going to get your poo poo bashed in by a larger competitor or that your business has such high barriers of entry that gently caress all, etc Not a libertarian, and you are being tedious af. edit: To be slightly less dismissive...only slightly, because gently caress this is a tedious point... granting that what you're saying is true - so what? Having the knowledge, finding the money, navigating the conditions of the market you're in...those are the things a business owner does. "It's hard, also a lot of work, also a financial risk you have to manage" is why you get to take the profits. If you look at all that and conclude "welp, this must be impossible and I am left to the fickle winds of chance!" then you're probably not cut out for entrepreneurship even though lots of other people are. Just like a person who looked at the ocean and was like "welp, this sea is huge and fish are small I'll never find them to catch them! Impossible!" is probably not cut out for fishing even though fishing has been making people a living for thousands of years. gently caress, I wouldn't blame anyone for looking at the option of starting a business and concluding "You know, there are way easier ways to net 100k per year". That is absolutely the truth. AstheWorldWorlds posted:Isn't the rate something like only 30% make it to the ten year mark? Dunno, maybe. Running a small business is a lot of work and a lot of risk. It wouldn't surprise me that many people do it for awhile then decide it's not worth it. Or start later in their careers and retire and sell. Be interesting to see survey data. wateroverfire fucked around with this message at 17:30 on Apr 13, 2017 |
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Apr 13, 2017 17:01
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call to action posted:Ah yes the classic "ignore the stats, you're above average!" It's that business failure is (mostly) not a random event so focusing on 70% or 90% as a summary figure is self defeating and not appropriate.
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Apr 15, 2017 13:20
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tekz posted:That clip didn't really go through the exact circumstances of the debt though - was there anything similar to the financial crisis where relatively manageable debt was ballooned up into something massive using hosed up financial instruments? Naw. Puerto Rico's economy has been on life support for a long time. This issue has been building for at least 30 years. edit: http://www.investopedia.com/articles/investing/090915/origins-puerto-rican-debt-crisis.asp This article talks about the origins of the crisis. wateroverfire fucked around with this message at 14:40 on May 4, 2017 |
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May 4, 2017 14:37
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MiddleOne posted:Monetarism explicitly favors the interest of creditors over those of debtors by curbing inflation and therefore drives income inequality, by depressing wages as you mentioned, which leads to wealth inequality in the long-term. Since high earners spend less and save more then low-income earners an overabundance of capital is created within the economy. With nowhere productive for that capital to go (due to the aforementioned wage supression and its effects on demand) speculation bubbles pop up (either domestically as in the US or exported abroad as with Germany) that inflate asset values and when they pop we inevitably find ourselves in a recession. FWIW in a high or uncertain inflation environment, creditors raise their interest rates to cover inflation expectations or price transactions in inflation-adjusted units and put all the risk on the debtors. For instance, Chile uses the unidad de formento (UF) for real estate transactions, long-term contracts, etc, and the Unidad Tributaria Mensual for taxes and fines. In general inflation will only gently caress creditors in the short term - long term it fucks everyone but fucks creditors the least.
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Jun 28, 2017 15:00
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BrandorKP posted:Wowza, another good chart: As always, the actual paper is worth a read. A lot of nuance is lost in the retelling. For instance, post-tax real income for the bottom 50% of earners in the US grew from about $18,000 in 1982 to $25,000 in 2014 measured in constant 2014 dollars. That's an increase of about 39%. (source: Bottom chart of Figure 3 in the appendices of the linked paper) - the same period in which the income share going to the bottom 50% declined (source: Top chart of Figure 3 in the appendices). Standards of living went up substantially for just about everyone even though inequality rose. IMO just talking about inequality makes for a shocking article but not one that's super useful in talking about the world.
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Aug 11, 2017 21:02
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Willie Tomg posted:Cool, now reconcile this with an actual basket of goods and not inflation as a statistic in a bubble. Y'know, health care, housing, education, fuel, food, etc. If you think the results will be worth it, why don't you do the analysis and post? I'd be interested to read it.
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Aug 12, 2017 04:15
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BrandorKP posted:If you were an investor would you tolerate a 1% return per year over 34 years? It really depends? A 1% inflation-adjusted return isn't unreasonable depending on the risk of the portfolio and the goals of the investor. Though obviously you'd take a 6% inflation-adjusted return for the same risk if you got to choose.  BrandorKP posted:Those at 6% income growth per year are almost going to get three doublings of income over 34 years. Kind of makes that 39% increase over 34 years look like a real pile of poo poo doesn't it? What is the important point to you, I guess? The very rich won really big compared to the relatively poor over the period we're looking at. But that's a relative comparison. In absolute terms the relatively poor have won as well. A 39% real increase in purchasing power is nothing to sneeze at - that's a real improvement in standards of living. Why is the increase in inequality a more important point than the improvement of living standards for everyone?
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Aug 14, 2017 14:26
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call to action posted:The basket of goods used to calculate inflation isn't realistic and insufficiently accounts for the housing, healthcare, and education pressure on households by weighing stupid poo poo like cheaper iPads against it. That could be. I don't really have the knowledge to make more than an internet argument about it but I'd respond that the inflation calculations available seem to have been good enough for the study authors, and that they are used by academics, policy makers, the BLS and others who presumably know better than either of us how applicable they are. What makes you think you know something they don't?
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Aug 14, 2017 15:47
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BrandorKP posted:1. Power in our society. This change the relative power between groups. It's driving democracy into oligarchy. It's the authoritarianism hidden within freedom that can/might kill freedom. That's an interesting idea but I think it's too fuzzy to hold up under scrutiny. I mean, it would depend on which groups you're talking about, surely, at the very least? For instance, we could probably agree that LGBT people have more power (to the extent that makes sense as a grouping) in 2017 than in 1982. BrandorKP posted:2. People perceive relatively. If in relative terms they are falling behind, then that is perceived as no progress. If there is no perception of progress then people's outlooks become radical. Radicals will draw a clear line delineating where things should go no further. That line is often historically drawn between the head and shoulders, or in camps (eg Crowsbeak). One can see in here in these forums already. IDK, maybe. I think these kinds of comparisons and that kind of jealousy are more likely when people compare themselves to people much like themselves - their neighbors, coworkers, etc - then to far away rich people they can't identify with. Especially when in objective material terms, people (at least in the US) are mostly living too well (and better than they did back in the 80's, when inequality was lower) to risk themselves trying to overthrow the status quo even if they're the wokest wokes when posting on social media. edit: I think instability would be vastly more likely if living standards were generally decreasing even if they were decreasing fastest for the richest for some reason. wateroverfire fucked around with this message at 19:40 on Sep 21, 2017 |
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Sep 21, 2017 19:31
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