Explaining Why Federal Deficits Are Needed[W:5330]

[JohnfrmClevelan]

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.

 

[austrianecon]

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.

 

[JohnfrmClevelan]

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.

How does that disagree with what I said?

 

[Gaea]

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:

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.

What's your point?

My point is that household debt is increasing substantially, yet this "injection" doesn't seem to be having much effect on demand.

Weak demand. Which has been my point all along.

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)

 

[Conservative]

FICA tax holiday.

FICA funds SS and Medicare. Just as I thought you have no idea what taxes you pay and their purpose. FIT is Federal Income taxes to fund the operating expenses of the Federal Govt. About half the country pay zero in FIT and therein lies the problem. Every income earner should pay SOMETHING in Income Tax to fund things like national security.

 

[Moderate Right]

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

 

[Conservative]

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

I think what bothers me the most about the left is their belief that they know what is a livable wage for everyone else. Their social engineering applies their standards to everyone else totally ignoring the business person who invested their money into the business, has to meet federal, state, and local laws as well as tax requirements and regulations, is the last person paid, plus dealing with competition in the area.

I have actually run a business and although I never paid minimum wage those at the low end of the pay structure who were worth it never stayed their long always getting a pay raise or promotion. Those who did were overpaid at that low end wage scale.

The left loves to talk about livable wage without thinking it through and the factors that determine a livable wage. Not knowing the expenses of others how can anyone discuss livable wage? it really is a shame that those promoting minimum wage don't really do anything about it like getting a job that employs people then having the meet a payroll to see what govt. interference does to their business and bottom line.

 

[Moderate Right]

And how do you propose to do that?

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.

 

[jaeger19]

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).
.

The irony. You are always running your mouth off about everyone elses use of definitions. I let a lot of things with you slide John. But this is an important point. Its important because investment is not "just about numbers".. its about predictions of the future.

And what demand do you think I was referring to? If a company anticipates demand FOR ITS PRODUCT OR SERVICE, then it will invest.

You were referring to aggregate demand. And using income as aggregate demand. Well.. I am pointing out that aggregate demand as you define it can end up going to imports and not benefit the domestic economy.

and companies don't always win their bets. Happens all the time.

Yes it does.

What do you think all of my talk about demand leakages and injections is about, if not demand?

All your talk of demand leakages and injections.. fails to include the why there are demand leakages. They do not explain the WHY of demand.

This doesn't happen much. It's not worth worrying about.

too funny. It happens a lot.

Again, not a big problem in this country.

Again.. yes it does have a significant effect.

The produce in Walmart comes from the same places as the produce in my supermarket.

Walmart has a lot of other products other than produce. But I doubt you know where the produce in your supermarket comes from.

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.

Too funny. so you go from "government money goes to the lower classes".. to now "what they receive is barely a blip on the economy".

Who do you think John.. has to buy foreign products the most? Rich people? Or poor people.?

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

.

And that's wrong.. because "bad" deficit spending has negative effects on the economy. And as shown.. aggregate demand is not a good metric for the health and future health of the economy nor who benefits.

 

[jaeger19]

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.

that's the problem John .. you don't consider time. The economy is NOT "broken up into years". The economy and economics is not just a mathematical identity.

 

[jaeger19]

And how does this affect what I have been saying?

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"

 

[Ganesh]

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)

That's not really an accurate way to look at things today. Yes, some will start off low, and work up to more responsible positions. But not all. If a McDonald's has 40 low pay employees, one might become the manager, but if all do then that presumes a 40x increase in the number of McDonald's outlets. In fact many today in low wage positions are going nowhere- the single mom trying to survive, the Starbucks barista with the Masters degree four years into his job search program.

To move up, there must be a place to move up to. In the meantime, it is a fact of life that the largest employers in the US today, such as WalMart and McDonalds, have vast numbers of very low paid employees, and this affects the economy.

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.

What you are talking about is credential creep, another aspect of the shrinking job market. As good, career type jobs become more scarce, excess labour is pushed towards remaining jobs in larger numbers. How to choose out of all those applicants? Raise the standards. Increase education requirements.

Vocational training is great, and if there is a local shortage, then steps should be taken. But this is no panacea. In the longer run, a great many jobs are facing automation or transfer offshore. Shifting vast numbers of employees to low wage jobs, while having societies wealth spiral up to ever smaller numbers at the top is not a good plan for increasing demand in the economy, no matter the skills of the workforce.

 

[jaeger19]

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)

Good points. Hey. maybe you can get through to him. Lord knows I haven't been able to.

Also on demand:

Another factor: We just went through a boom/bust cycle. Largely fueled by government and household debt. The recession bit into people hard and the shenanigans of the government has made people more pessimistic about the future and eroded confidence in the economy.

 

[Ganesh]

By allowing conservative economic policies to create these jobs. Liberal policies have chased the higher paying jobs out of the country

Globalization has been ardently embraced by the right wing of US politics.

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,

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.

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.

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?

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.

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.

 

[Conservative]

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.

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?

 

[jaeger19]

Globalization has been ardently embraced by the right wing of US politics.

.

And by the left as well.

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.

I lived on minimum wage for a time.. and so do many other individuals. Its not honest to state that a minimum wage should be based on a living wage of one person supporting two adults and a child.

 

[Ganesh]

So what is your solution? All I see here is class envy and never any solutions.

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.

This country was built on equal opportunity

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.

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.

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?

If you give someone a fish they eat for a day, if you teach them to fish you feed them for a lifetime.

I have entered you in the cliche of the year contest. Good luck. If you win you will receive an automated email message.

Do you really believe you can take enough from the rich to satisfy the liberal spending appetite and desire for having a dependent class?

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.

 

[Conservative]

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.

Then solve the problem by changing behavior not by taking from someone else through higher taxes. Until you show some tough love like you probably did if you had kids no amount of funding is ever going to change some people's attitude. I see no solutions other than higher taxes and taking from someone else and that solves absolutely nothing.

Those peons at the bottom have to take some personal responsibility, stop dropping out of school, stop taking and selling drugs, and certainly stop blaming someone else for THEIR poor choices

 

[Gaea]

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.

I looked at the article. "Thought experiments" are not evidence that minimum wages have been harmful for the people its intended to help.

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.

How is this throwing money at the problem? Minimum wage increases don't cost the government money. They actually increase federal government revenues.

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.

This isn't true. Minimum wage jobs are not apprenticeships - they don't lead anywhere. You don't go from "apprentice cashier" to "journeyman cashier". The learning curve for low-wage jobs is so low that no apprenticeship is necessary. Nor does working at the job for 5 years make you better than if you had worked at the job for 1 year.
Examples of minimum-wage type jobs: front end employees at walmart, sandwich artists at Subway, etc. These aren't complicated jobs to learn.

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.

I agree. They should put more emphasis on trade schooling for people who are in high school. Push people towards that career path if they are not book-smart enough to excel in college.

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.

Sure. That won't eliminate demand for low-wage workers though. At best, you could hope that it might reduce labor supply for low wage workers, and force employees to raise wages because the market forces them to, rather than because the government forces them to. I'm not sure why you think that is a better way to raise the minimum wage, when the end result is the same.

I don't see minimum wage laws and trade school training as mutually exclusive. In fact, when you grew up, they coexisted.

 

[JohnfrmClevelan]

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.

So you would try to impede technological innovation, while allowing our wages to fall to the lowest competing wage around the world. Genius!

 

[JohnfrmClevelan]

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).

wiki

i.e., GDP = production = income

 

[jaeger19]

wiki

i.e., GDP = production = income

nope:

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).

Sorry dude.. but when you get basic things wrong..... and then double down on them....

well.. that's whoosh sound is your credibility.

 

[Gaea]

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.

So your complaint is that the government didn't force businesses to instantly adjust to massive cost increases? Really?

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.

That's simply untrue. Birth rates have fallen by 50% since 1960.

Today, most families are two income families.

Are you saying that employees deserve to be paid less because their spouse also might be working?

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?

No, but if the 14-year-old is doing a job that an 18-year-old also does, they should be paid the same as the 18-year-old (who does require a living wage), because discrimination based on age, race, & religion is unconstitutional.

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?

You're welcome to google that if you'd like to find out.

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

The takeaway from all this is that one year of data is simply not enough to find out.
The IBD article sourced its data from a Washington Post article which also said
- "Workers' hours increased even more in other parts of the state, however, leading the researchers to conclude that the minimum wage reduced the number of hours worked quarterly by 3.2, roughly 15 minutes each week."
- "They attributed a wage increase of about $0.73 an hour for low-income workers to the minimum wage"

So for somebody working 40 hours a week (who lost 15 minutes as a consequence), their total weekly pay increased by $29 (or $116 monthly).

The IBD spins this as a bad thing simply because Seattle's unemployment rate declined by less than the state, on average.

 

[Moderate Right]

So you would try to impede technological innovation, while allowing our wages to fall to the lowest competing wage around the world. Genius!

Where on Earth did I say that? You are a typical liberal, putting words in opposing view's mouths. Please quote where I said that.

 

[JohnfrmClevelan]

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.

The way that money is spent and distributed matters to MMTers as much (or more) than anybody else. But we recognize these as political choices. We focus on understanding the mechanics of federal financing, banking, and reserve banking so that we can make better policy choices. Instead of politicians worrying too much about the national debt and inflation, which most people misunderstand, we think it is better to deficit spend for the benefit of the people and employ as many people as possible. Since the private sector is not going to do this (because they don't need to), a federal job guarantee is one of our main policy goals.

- 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.

Nobody is suggesting subsidies, at least that I have seen. And we are all for changing taxation to keep the income cycle flowing (taxing the rich, who would otherwise save that money, and not taxing the lower end, who would spend it). I don't think your goals are any different, from what I have read.

My point is that household debt is increasing substantially, yet this "injection" doesn't seem to be having much effect on demand.

You put "injection" in quotes as if you don't believe that consumer debt adds to demand. It does, obviously. It's not the best way to boost demand, though, as it's not sustainable.

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.

And yet, even with all of those people retiring, there still aren't enough jobs for everybody. And overall, there is still PLENTY of money being made. It's the distribution that stinks. As a country, we should have no problem meeting everybody's needs, if the income was better distributed. And it's that topheavy distribution that hurts aggregate demand.

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)

Again, it's the topheavy distribution. It's a tough fix when your society (and just about everybody else's) is based upon distributing the fruits of the economy through the labor market. When demand for labor is high, and labor can demand a larger share of the pie, it works OK, but when labor has little leverage, you get large income disparities. A job guarantee and a larger public sector would help, but what do you do when, say, 50% of the labor force can produce enough to meet all demand?