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But the effect on the economy is the same. The money goes to buy goods and services.
I'm not saying it's not government spending; I'm just saying that social security is basically a mandatory pension plan (and medicare is a mandatory retirement health insurance plan). I see those programs as different from discretionary spending.
But the effect on the economy is the same. The money goes to buy goods and services.
Really? Do you know what the average pay check of Social Security is? It's roughly $1,300. It doesn't go far and most of it goes to rent and food.
You are quick to discard something that doesn't agree with what you already learned, then. Must be good to know that, at your young age, you are finished learning. :wink:
What's your point?
Weak demand. Which has been my point all along.
FICA tax holiday.
That sounds compelling! Except it's not true. For one thing, the minimum wage isn't even $15 yet, and doesn't reach $15 until 2021. For another, what you said isn't actually true.
$15 wage law has little impact on Seattle's thriving labor market, report suggests | The Seattle Times
Your very own graph shows that the minimum wage was not meant to be a living wage. The minimum wage did not become a living wage for individuals until about 1950 and it did not become a living wage for a 3 person family until about 1962. Therefore, the minimum wage was not meant to be a living wage when it first started and it wasn't anytime soon after. And, much of your graph was back in the days where spouses did not work so the sole bread winner had to provide enough income for everyone, not to mention the graph shows a 3 person family when many minimum wagers today have several kids, not one. Today, most families are two income families. I ask again, does a high school or college kid living at home need to earn a living wage? I just picked up pizza from a new place yesterday and they had a sign on the door that they were hiring as young as 14 years old. Does that 14 year old need a living wage? What is a living wage and who determines what it is and to which family size it applies? Can businesses pay a lower minimum wage to an individual or be forced to pay a higher "living wage" to a single mother with five kids?
A study on Seattle's recent large hike in the minimum wage did show that employers cut back hours and that take home pay wound up being similar to what it was before the increase:
The Bitter Lesson From Seattle's Minimum Wage Hike | Stock News & Stock Market Analysis - IBD
Minimum Wage Study: Effects of Seattle wage hike modest, may be overshadowed by strong economy | UW Today
And how do you propose to do that?
This is what drives me nuts about debating with you. Instead of making an effort to understand what I am saying, you go out of your way to find dinky little points of contention. It is widely accepted that investment is a pro-cyclical thing. That is the general trend. It is not absolute, but not much is (numbers are, and that's why I focus on numbers).
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And what demand do you think I was referring to? If a company anticipates demand FOR ITS PRODUCT OR SERVICE, then it will invest.
and companies don't always win their bets. Happens all the time.
What do you think all of my talk about demand leakages and injections is about, if not demand?
This doesn't happen much. It's not worth worrying about.
Again.. yes it does have a significant effect.Again, not a big problem in this country.
The produce in Walmart comes from the same places as the produce in my supermarket.
Are there a lot of these in the inner cities? The pittance these people receive is barely a blip in our economy, and the fraction that goes to imported goods is a fraction of a blip.
.No argument here. Stability is key. I'm in favor of long, sustained projects, like infrastructure. But good luck getting that through Congress. At any rate, bad deficit spending is better than none, because after that first round of spending, it's still money in the hands of consumers and companies. What you want to avoid is a drop in aggregate demand
You have to consider the passage of time. Things are broken up into years. If you can find statistics that are broken up into weeks or days, feel free to provide those numbers. Demand now = income now. It gets spent in the future, and where it goes affects future demand, but it's not instantaneous.
And how does this affect what I have been saying?
Yes, it's why we are having this $10.10 or whatever minimum wage movement. Minimum wage has never kept up with inflation. But there is a bigger issue of underemployment and unemployment in the low skill class because of minimum wage laws.
It depends on how you want to tackle it. If you wanna just "throw" money over and again that the problem and not actually solve it. You keep increasing minimum wage over and over. Or you come to understand that jobs that are minimum wage are for no to low skill persons and it should be viewed as apprenticeships (a gateway job to get better employment later)
and that the real issue is actually in the educational system of the US and our drive to push kids into Universities. In the US we have basically scrapped any sense of technical (trade) schools during the age of 16-18 year olds who when they graduated high school they had a skill set in a job that actually pays pretty damn well. For example.. back in the 1970s it was normal that you could while in High School be a fully certified firefighter and be certified as an EMT by graduation (working with the local Hospital and Fire Departments). Could go out and get a job within weeks or already have lined up.
Today that's just not true. Today, especially where I live, you have to go to Community College to get those certificates and then go to the two local fire academies (Columbus or State of Ohio). Same is true with Construction Trades, Carpentry, Electrical Work, Plumbing, and Welding.
So the real solution is to look towards Germany's education system and adopting it. Giving that option at high school of doing a trade school so you aren't producing generation after generation of no to low skill 16-24 year olds.
Not sure where you get that from. My point is that the argument I'm seeing from pro-MMT posters here is that taxes just drain society of its funds. Assuming the the DP MMTists are accurately representing MMT, there seems to be no discrimination between various types of revenue, or between various types of spending. I've seen one of you guys state something to the effect of "all govt spending is good" in the context of Reagan's star wars program.
- For spending, I disagree because many government expenditures are either unnecessary (i.e. subsidizing an industry that doesn't change its behavior based on the subsidies) or don't have the desired effect (i.e. Helicopter money from the US govt which people used to pay down debt instead of spend)
- For taxation, I disagree because not all taxes impact the economy equally.
My point is that household debt is increasing substantially, yet this "injection" doesn't seem to be having much effect on demand.
Of course. But what I was trying to get at was --- why is demand so weak?
I can explain it without using terms like "leakage" and "injection"
One factor:
People are reaching retirement age at a higher rate than in the 1990s, and as people come of retirement age they tend to spend less.
In 2008, 12.6% of the population was aged 65+. In 2015, it was 14.8%. This accounts for a dramatic decline in spending.
Another factor: real income has been declining since 2000. Median real income today is 7% less than it was in 2000, even though real GDP has increased by 31%. As median income declines, the average person has less spending power (assuming their debt load doesn't increase)
By allowing conservative economic policies to create these jobs. Liberal policies have chased the higher paying jobs out of the country
and the threat of huge minimum wage increases has led to this as well and to the reduction of hours for those who are working now and to the creation of part time jobs instead of full time jobs because of Obamacare and these huge wage increases,
not to mention the pace of automation has greatly increased due to these liberal policies. It's a stupid argument to say this would have all happened anyway. Liberal policies have forced businesses to make adjustments at an accelerated rate.
There are many conditions in which there are jobs that can be filled with people who do not need a living wage. I'm not against changes in society so that people who need a living wage have the opportunity to find a job that pays more than minimum wage but to force employers to pay a living wage to people who do not need a living wage hurts everyone.
Globalization has been ardently embraced by the right wing of US politics.
There have been no huge increases in the minimum wage in relation to prices today. Your alternative is something that has been dubbed the "gig economy", whereby regulation and social constraint has been bypassed in favour of raw market forces. In other words, the peons can scramble for pennies if they have no voice or power base. That is why Florida recently had restaurant workers making $2.60/hr (minus deductions), although I think that has marginally increased lately. That is why we are seeing phenomena like Uber taxi. Minimal or no standards or regulation, no job description, no job security. Make a few pennies, or not. Liability is downshifted to those with the least ability to shoulder it.
The less money and the less sense of security workers have, the less they are going to spend into the economy. This can become a downward spiral- less spending, less demand, less employment. We are seeing aspects of this today, with stagnant wages, sluggish growth, and increasing wealth disparity.
The pace of automation has increased. What would you like to do about it? Destroy the robots on the auto assembly lines, and bring back low skilled labour to make cars? That should leave the US in a competitive position internationally, shouldn't it? Tell Amazon to shut down because you don't like the way they use computers and the internet? I thought you uber-right folks want the market to decide, and the chips fall where they may?
Sure, there are plenty of unused cardboard boxes in back alleys that people can live in, so they wouldn't need as much money. One must think outside the box. Or maybe inside the box in this case.
Globalization has been ardently embraced by the right wing of US politics.
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Sure, there are plenty of unused cardboard boxes in back alleys that people can live in, so they wouldn't need as much money. One must think outside the box. Or maybe inside the box in this case.
So what is your solution? All I see here is class envy and never any solutions.
This country was built on equal opportunity
NOT equal outcome so what do you want to do, take from the rich and give to the poor? What does that do other than create more hatred and less incentive.
If you give someone a fish they eat for a day, if you teach them to fish you feed them for a lifetime.
Do you really believe you can take enough from the rich to satisfy the liberal spending appetite and desire for having a dependent class?
I have no envy. I'm an old gaffer with more than enough money. I do feel some concern about the 20 somethings now trying to make a start in life. They face a bleak future unless there is a seismic shift in political attitudes.
America was built largely on slavery and sweatshop labour, although life could be better for those farming and ranching (on land seized from aboriginals). Not everyone could be a robber baron, because if they were then the economy would collapse.
On the contrary, equality tends to increase a sense of community in society. Which do you think has more of the latter, Chicago or Stockholm?
I have entered you in the cliche of the year contest. Good luck. If you win you will receive an automated email message.
What I believe is that no society can endure ever increasing inequality, where the peons at the bottom hold open a door in the hopes of having a few coppers thrown at them, while those at the top contemplate wealth larger than most countries GDP. We are already seeing the stresses and strains produced by this outcome, and I think we have seen nothing yet.
The notion of a perfectly functioning market has been sold to the impressionable for so long now that it has attained quasi-religious status. In fact, we are seeing in our times the terrible destruction that can occur if this idea is accepted without question. You may think that because you have attained $100, your efforts are worth exactly $100, if $99 you would have been cheated, if $101 then you cheated someone else, but many economists would disagree with you.
Yes, it's why we are having this $10.10 or whatever minimum wage movement. Minimum wage has never kept up with inflation. But there is a bigger issue of underemployment and unemployment in the low skill class because of minimum wage laws.
It depends on how you want to tackle it. If you wanna just "throw" money over and again that the problem and not actually solve it. You keep increasing minimum wage over and over.
Or you come to understand that jobs that are minimum wage are for no to low skill persons and it should be viewed as apprenticeships (a gateway job to get better employment later) and that the real issue is actually in the educational system of the US and our drive to push kids into Universities.
In the US we have basically scrapped any sense of technical (trade) schools during the age of 16-18 year olds who when they graduated high school they had a skill set in a job that actually pays pretty damn well. For example.. back in the 1970s it was normal that you could while in High School be a fully certified firefighter and be certified as an EMT by graduation (working with the local Hospital and Fire Departments). Could go out and get a job within weeks or already have lined up.
Today that's just not true. Today, especially where I live, you have to go to Community College to get those certificates and then go to the two local fire academies (Columbus or State of Ohio). Same is true with Construction Trades, Carpentry, Electrical Work, Plumbing, and Welding.
So the real solution is to look towards Germany's education system and adopting it. Giving that option at high school of doing a trade school so you aren't producing generation after generation of no to low skill 16-24 year olds.
By allowing conservative economic policies to create these jobs. Liberal policies have chased the higher paying jobs out of the country and the threat of huge minimum wage increases has led to this as well and to the reduction of hours for those who are working now and to the creation of part time jobs instead of full time jobs because of Obamacare and these huge wage increases, not to mention the pace of automation has greatly increased due to these liberal policies. It's a stupid argument to say this would have all happened anyway. Liberal policies have forced businesses to make adjustments at an accelerated rate. There are many conditions in which there are jobs that can be filled with people who do not need a living wage. I'm not against changes in society so that people who need a living wage have the opportunity to find a job that pays more than minimum wage but to force employers to pay a living wage to people who do not need a living wage hurts everyone.
Well for starters you assume that production equals GDP. And it does not.
Just one of the many large erroneous assumptions that you have developed to make your premise "fit"
Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a period (quarterly or yearly).
Gross domestic product (GDP) is a monetary measure of the market value [/B]of all final goods and services produced in a period (quarterly or yearly).
Your very own graph shows that the minimum wage was not meant to be a living wage. The minimum wage did not become a living wage for individuals until about 1950 and it did not become a living wage for a 3 person family until about 1962.
Therefore, the minimum wage was not meant to be a living wage when it first started and it wasn't anytime soon after. And, much of your graph was back in the days where spouses did not work so the sole bread winner had to provide enough income for everyone, not to mention the graph shows a 3 person family when many minimum wagers today have several kids, not one.
Today, most families are two income families.
I ask again, does a high school or college kid living at home need to earn a living wage? I just picked up pizza from a new place yesterday and they had a sign on the door that they were hiring as young as 14 years old. Does that 14 year old need a living wage?
What is a living wage and who determines what it is and to which family size it applies? Can businesses pay a lower minimum wage to an individual or be forced to pay a higher "living wage" to a single mother with five kids?
A study on Seattle's recent large hike in the minimum wage did show that employers cut back hours and that take home pay wound up being similar to what it was before the increase:
The Bitter Lesson From Seattle's Minimum Wage Hike | Stock News & Stock Market Analysis - IBD
Minimum Wage Study: Effects of Seattle wage hike modest, may be overshadowed by strong economy | UW Today
So you would try to impede technological innovation, while allowing our wages to fall to the lowest competing wage around the world. Genius!
Not sure where you get that from. My point is that the argument I'm seeing from pro-MMT posters here is that taxes just drain society of its funds. Assuming the the DP MMTists are accurately representing MMT, there seems to be no discrimination between various types of revenue, or between various types of spending. I've seen one of you guys state something to the effect of "all govt spending is good" in the context of Reagan's star wars program.
- For spending, I disagree because many government expenditures are either unnecessary (i.e. subsidizing an industry that doesn't change its behavior based on the subsidies) or don't have the desired effect (i.e. Helicopter money from the US govt which people used to pay down debt instead of spend)
- For taxation, I disagree because not all taxes impact the economy equally.
My point is that household debt is increasing substantially, yet this "injection" doesn't seem to be having much effect on demand.
Of course. But what I was trying to get at was --- why is demand so weak?
I can explain it without using terms like "leakage" and "injection"
One factor:
People are reaching retirement age at a higher rate than in the 1990s, and as people come of retirement age they tend to spend less.
In 2008, 12.6% of the population was aged 65+. In 2015, it was 14.8%. This accounts for a dramatic decline in spending.
Another factor: real income has been declining since 2000. Median real income today is 7% less than it was in 2000, even though real GDP has increased by 31%. As median income declines, the average person has less spending power (assuming their debt load doesn't increase)
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