Ontario raising minimum wage to $15

[DBT]

There is an underlying assumption of worth related to how much money and property someone may or may not have. It isn't openly stated, but those on the bottom of the heap are treated far differently to those at the top....the very people at the top, who are in positions of power and influence and could change the lives of those on the bottom, yet tend to work toward lowering incomes for ordinary workers and getting tax breaks for themselves.

 

[ksen]

economics is a morality play for some. just goes to show you that even some atheists believe the protestant work ethic.

 

[dismal]

economics is a morality play for some. just goes to show you that even some atheists believe the protestant work ethic.

Economics is the discipline that studies how resources (like labor) are allocated to productive uses. Shockingly, some find that discipline relevant to a discussion about how prices affect the demand for a resource.

Others, like yourself, seem to take great pride in declaring your commitment to ignorance and wishful thinking.

 

[coloradoatheist]

economics is a morality play for some. just goes to show you that even some atheists believe the protestant work ethic.

For minimum wage, the changes help one group and hurts another group. One group focuses on the help, another group focuses on the hurt. Not sure how morality isn't considered when you are trying to protect some people from harm.

 

[Crazy Eddie]

Your terrible grasp of math continues to impress me.

You have sex with a woman 2 times in a week; she gets pregnant and, 9 months later she has a baby.

How many children will you have if you have sex with that woman 52 times in a week?

How many children will you have if you have sex with 52 women in that year? I'm talking about the savings over many offices

No, you're talking about the savings of ONE office repeated 26 times and assuming that, somehow, one of those 26 file clerks is going to be fired because, somehow, each of those machines is worth 1/26th of the clerk's job.

Which is a bit like saying two people are doing 1/26th of the amount of procreation they potentially could, or saying that a copyeditor does 1/8th of the work of a word-processor's spell check. You could derive those numbers in various ways, but they have no practical application in the real world.

And it's routinely used as a justification for turning a blind eye to evil.

No, "the ends justify the means" is the justification for that.

"Try your best to do a the right thing" is used as a moral imperative to, you know, try your best to do the right thing. This assumes that a normal person doesn't have perfect foresight to the consequences of any particular decision and can only make the most educated guess about what the outcome will be. This also assumes that any decision or policy can be modified to make it better if problems come up and gradual improvement is part of the process.

That's why The Ends Do Not Justify The Means. Because a process that ACCIDENTALLY arrives at a benevolent outcome is less reliable than a process that seeks a benevolent outcome from the outset. The former will only arrive at a positive conclusion if you're lucky; the latter will arrive at one IF you keep working on it and refining your approach.

The government is setting a minimum wage. It should be setting it with regard to the welfare of the population as a whole, not deciding to sacrifice a segment of the population to make the others better off.

It it is. AS A WHOLE, rising wages in the labor market benefits everyone in the long run, even those workers you assume are "the least valuable" because they're too black or too ghetto to ever get hired unless they're cheap. Reducing corporate reliance on depressed wages and forcing companies to reinvest in their workers would have a positive effect on them as well.

You are, of course, going to try to make the case that those workers are too black and too ghetto to benefit from such an investment and that they are better off flipping burgers for the rest of their lives at $7/hour. That is not a benefit to them, however, nor is it sustainable for future generations as those wages continue to fall behind the inflation rate. If the goal is to eliminate poverty, then adding stimulus to the labor market is a good way to reduce poverty.

A saying is not responsible for it's origins.

Its origins are responsible for its MEANING. If you're going to quote the communist manifesto, at least have some idea of what the quote MEANS.

But it DOES sell more, according to the article, to the research, and according to McDonalds' own profit reports. The author explicitly lists this very action as one of the things that is helping McDonalds boost its sales nationwide.

In the short run. When you take steps to bump productivity you tend to bump productivity whether or not the change you made matters. The change itself helps--for a while.

... and then it's time to make more changes to boost productivity further. This is smart business: you don't rest on your laurels and wait for the world to deliver you profits, you find a way to boost business and make it happen on your own.

Or you go out of business eventually. Both of those things happen.

You are distinguishing the group of people from the group of bosses.

Yes. Because not all people are bosses. "Bosses" are responsible for the conduct of their business and their employees. "People" are not, unless they are also bosses.

 

[Loren Pechtel]

How many children will you have if you have sex with 52 women in that year? I'm talking about the savings over many offices

No, you're talking about the savings of ONE office repeated 26 times and assuming that, somehow, one of those 26 file clerks is going to be fired because, somehow, each of those machines is worth 1/26th of the clerk's job.

Odds are 1 of those 26 offices now has 1 more employee than it needs to do it's job.

And it's routinely used as a justification for turning a blind eye to evil.

No, "the ends justify the means" is the justification for that.

Both can be the source of evil but I see the refusal to do anything "wrong" as behind more evil because so often it ends up making perfect the enemy of good and scuttling things that would have improved the situation.

That's why The Ends Do Not Justify The Means. Because a process that ACCIDENTALLY arrives at a benevolent outcome is less reliable than a process that seeks a benevolent outcome from the outset. The former will only arrive at a positive conclusion if you're lucky; the latter will arrive at one IF you keep working on it and refining your approach.

I'm not talking about being right by accident.

The government is setting a minimum wage. It should be setting it with regard to the welfare of the population as a whole, not deciding to sacrifice a segment of the population to make the others better off.

It it is. AS A WHOLE, rising wages in the labor market benefits everyone in the long run, even those workers you assume are "the least valuable" because they're too black or too ghetto to ever get hired unless they're cheap. Reducing corporate reliance on depressed wages and forcing companies to reinvest in their workers would have a positive effect on them as well.

It provides no help at all to those forced out of the labor market.

You are, of course, going to try to make the case that those workers are too black and too ghetto to benefit from such an investment and that they are better off flipping burgers for the rest of their lives at $7/hour. That is not a benefit to them, however, nor is it sustainable for future generations as those wages continue to fall behind the inflation rate. If the goal is to eliminate poverty, then adding stimulus to the labor market is a good way to reduce poverty.

And what you miss is that it's not for the rest of their life. Few people remain at minimum wage for all that long.

But it DOES sell more, according to the article, to the research, and according to McDonalds' own profit reports. The author explicitly lists this very action as one of the things that is helping McDonalds boost its sales nationwide.

In the short run. When you take steps to bump productivity you tend to bump productivity whether or not the change you made matters. The change itself helps--for a while.

... and then it's time to make more changes to boost productivity further. This is smart business: you don't rest on your laurels and wait for the world to deliver you profits, you find a way to boost business and make it happen on your own.

Always the business is supposed to pull a rabbit out of it's hat to afford what you want.

Or you go out of business eventually. Both of those things happen.

You are distinguishing the group of people from the group of bosses.

Yes. Because not all people are bosses. "Bosses" are responsible for the conduct of their business and their employees. "People" are not, unless they are also bosses.

No. You gave disjoint sets.

 

[laughing dog]

Others, like yourself, seem to take great pride in declaring your commitment to ignorance and wishful thinking.

Ah, the voice of direct experience.

 

[Crazy Eddie]

No, you're talking about the savings of ONE office repeated 26 times and assuming that, somehow, one of those 26 file clerks is going to be fired because, somehow, each of those machines is worth 1/26th of the clerk's job.

Odds are 1 of those 26 offices now has 1 more employee than it needs to do it's job.

"The odds" are not an argument against using automation to increase efficiency.
And using automation to increase efficiency is not an argument against raising the minimum wage.

Both can be the source of evil but I see the refusal to do anything "wrong" as behind more evil because so often it ends up making perfect the enemy of good

And yet you're talking to the person who rejected the primacy of Universal Basic Income -- in this very thread -- for precisely that reason.

And you are also the person who habitually rejects increased funding for under-performing schools or intervention programs for struggling students PURELY on the basis that it won't help all of them and therefore would be a waste o money.

This comment from you is therefore stupendously ironic.

It provides no help at all to those forced out of the labor market.

It is not possible to force a person "out of the labor market." If you have labor to sell, you're in the market. Period.

Perhaps you mean that nobody anywhere will ever want labor produced by black teenagers unless that labor is dirt cheap? It's almost as if you believe that that black people are universally understood to be next-to-worthless in the labor market...

And what you miss is that it's not for the rest of their life. Few people remain at minimum wage for all that long.

Then there is no reason to assume they won't get hired at $15/hour.

Always the business is supposed to pull a rabbit out of it's hat to afford what you want.

I don't see how "competently run a business" is equivalent to "pull a rabbit out of your hat."

I can see how an incompetent person might feel that way, but protecting incompetence is not sound economic policy IMO.

No. You gave disjoint sets.

"Boss" is a subset of "people."

What is true for "bosses" is not necessarily true for the superset of "people."

So along with arithmetic, business management, personnel management and economic theory, we now add "set theory" to the list of things about which you are utterly clueless.

 

[SimpleDon]

(The basic problem is that you are trying to ignore supply and demand.) The market is very resilient against anything but very heavy-handed intervention in this regard--

I am not ignoring supply and demand. I just said that the interaction of the two doesn't set the price. And that demand is not infinite, that in order to have economic demand it is not sufficient for there to be a supply and the desire to own a product or to consume a service, there has to be money to realize the desire. And that the economy is demand lead and that it is no longer constrained by the supply.

The interaction of supply and demand sets what people are willing to pay. The cost of production + profit sets the minimum that companies will sell for.

You contradict yourself in the span of two sentences. Amazing.

I said that supply and demand exist but that they don't set the price. You say in the first sentence that that they do set the price, but in an unique, typically Loren way, that supply and demand determine what people will pay. This is wrong in every type of economics that I have seen. People buy something if they want it and if the price seems reasonable. If they think that the price is too high they won't buy it. They don't look up how many of the products are produced verses how many are sold and calculate what price they will pay. It must take you forever to grocery shop.

Neoclassical economics have a much more plausible incorrect theory, that supply and demand set the price of a product or service through many barter-like exchanges that drive the price down to the cost of production of the very last item produced.

On second thought, maybe your incorrect theory sounds more plausible than the incorrect neoclassical one. But it doesn't matter, because both are wrong.

Then in the next sentence you say that the producer sets the minimum price at the cost of production plus profit. This is correct, with the qualification of what you meant by adding the word minimum. I would say that the producer sets his price based on the average costs of production plus an anticipated profit. Of course, saying that supply and demand sets the price and then saying that the producer sets the price guarantees only one thing, that you are not right.

You seem to work very hard at being wrong.

When the former exceeds the latter companies rake in the money and in time competitors show up and shift the curve down until the numbers match. If the latter exceeds the former the market disappears. (For example, many types of repair.)

Once again, I think that you are betrayed by the extra words that you feel you have to add. I have no idea what "If the latter exceeds the former the market disappears" means.

Why not, "if the demand exceeds the supply the supply will increase to meet the demand over time." The first sentence is correct, in a grading on a curve way.

Of course, nothing in what you wrote in this post far tells me why you think that I am ignoring supply and demand.

I don't believe that the economy is "very resilient against anything but very heavy-handed intervention" in any regard. If this was true, the government interventions would have a minimal effect on the economy. But we know that this is not true and the vast majority of your fellow free market enthusiasts would agree.

What I'm saying is the market will steamroll over most interventions, not that there will be no effect from them. Consider a case where the effect is very obvious: Rent control. What happens when the state imposes rent controls?

1) Companies find ways around it. I'm thinking of my parents in the 50s, renting an apartment. Unfurnished apartments simply did not exist, all you could get is furnished with some extremely overpriced furniture. You also had to move when your lease was up so they could sock the next guy with the extremely overpriced furniture. In reality renters were worse off than if there were no rent controls in the first place.

2) Companies provide an inferior product. Why spend money on maintenance? The properties turn into disaster areas.

3) Companies don't provide a product at all. Almost nobody builds new apartments in rent control areas.

4) Underhanded dealings. You have to pay bribes to move up the list of who gets in.

Do you believe that rent controls threaten the economy as seriously as you feel that raising the minimum wage does? Is this one of those slippery slope things, let in rent controls or increases in the minimum wage and prepare yourself to say "whatever you want commissar?"

Where did rent controls come into this? Did I defend rent controls anywhere in this or any other thread? I doubt it. I am opposed to wage and price controls. The only time these would be justified is in very rare conditions of a snap shortage of supply or sudden increase in demand, caused by say, the start of a major, maximum effort war like World War II was. Absent such an obvious need like that, which will probably never be required again, the support of the people needed for such controls to work will not exist.

If I have to answer for things that I don't believe in, things I have never supported or advocated then you do too.

Cities are the engines of growth and opportunity in our modern economies. Ours is an increasingly urban world. Cities offer greatest potential for large-scale innovation and for needed sustainable solutions. The future of humanity, in large part, will be a story written by cities.

Because of the increasing urbanization, cities have also become the centers of society's most pressing economic and social challenges. But especially in the US, our form of governance is ill-equipped to deal with these problems. Conservatives are half right, the major problem with government isn't that we have too much government, it is that we have too many governments.

We have too many levels of government between the two absolutely necessary levels, the local government and the national government. And we have to many governments at the local government level, especially around our major cities.

We have too many levels of government because they were needed in the 18th century when communication and travel both moved only as fast as a horse could walk. The government was remote and out of touch for most people, and had to be brought down through the state and county levels to the people, and the people's concerns and needs had to be transferred up through the levels.

And we have too many governments around our major cities for the same reason, based on the speed of a horse walking, but also now we have preserved this balkanization of governments to increase and to maintain property values and to allow the beneficiaries of the higher property values to enjoy the benefits of living in a major city without having to pay the higher taxes of living in a major city.

Once again, we see another paradox of what is good for the individual is bad for the economy as a whole. High property values are good for the individual property owners but the high housing costs that result are bad for the economy as a whole. They increase costs through the whole economy by increasing the wages that are required to support the workers.

I am a capitalist, I believe in the elegance and the power of markets. I just don't believe that they can self-regulate to prevent criminals from taking advantage of the markets and consumers. I don't believe that there is any market mechanism to impose externalities into the simple exchanges of the marketplace. The Austrian/Libertarian so-called solution of writing contracts between a polluter and all of the parties that are affected by the pollution or relying on everyone suing everyone else doesn't strike me as being very practical. Do they to you?

I believe that there are things that the markets can handle, important things like allocating resources of labor, raw materials and real estate. They are excellent in spurring innovation, in fine tuning products in function, cost and response to the needs of the consumer.

But there are other things that markets can't provide us. Things that require balancing the opposing needs of different groups, things that are too complex to be solved by the simplistic mechanism of answering what is the cost. Things that require a vision of more than right now. Things that bring penalties to people for bad behavior. Things that require a moral vision. Things that require the sacrifice of the few for the benefit of the many. Things that build the common property.

Our economy is very resilient. It adapts very well to changes, including changes in policies. I don't see how this helps your argument. It means that exactly what I am proposing, raising the minimum wage won't damage the economy. The CBO, all trained mainstream economists said that raising the minimum wage by three dollars an hour would increase wages for the working poor by a total of 20 billion dollars a year, at a cost of 17 billion dollars a year in lower profits. In a 20 trillion dollar a year economy. What is that, 0.1% of the economy?

You deny that it will reduce profits. You believe that it will produce unemployment and bankruptcies of businesses and higher costs for consumers, all at the same time, an impossibility if you consider our economy to a resilient economy like the CBO does. You are arguing that the economy isn't resilient, that it is fragile. Somebody is wrong. Somebody is right. I am going with the CBO on this one.

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[SimpleDon]

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In 1980 supply side economists were certain that the market was not resistant to government intervention and that it was government intervention that had pushed up wages and suppressed profits. They were correct.

You continue to blame this on government intervention when there is no reason to think it was. There were two big factors at work here:

1) Imports of manufactured goods were becoming an important factor. Unions had been riding fat based on the fact that the US was the only real source of many products, if the union controlled the US workers in the field they had great power. However, now the companies had to deal with foreign competition and could no longer pass the cost on to the consumer. Unions were basically destroyed except when they had a somehow captive market.

I agree that it was a mistake to open our markets to expose American workers to competition from low wage countries. Once again, I don't know how your making this point helps your argument.

2) The information revolution. More and more workers were replaced with automation and that automation costs money. The higher the capital/worker ratio the more of the profit you would expect to go to the company.

If you don't believe that it was government interventions like the minimum wage and the support for the unions that pushed up wages before 1980, why on earth would you now object to us raising the minimum wage and supporting the unions? Do you ever read what you write?

You have been arguing all of this thread that raising the minimum wage will damage the economy. Now you tell me that the economy is very resilient, that it adapts easily to change and to all but the heaviest of government interventions. Now you tell me that the minimum wage and the government support for the unions didn't have any impact on the wages before the supply side economic policies, that the high wages were the result of other factors.

WTF Loren, can't you at least try to put two thoughts on paper sequentially that don't contradict each other?

And what they proposed to do was that the government should intervene to reverse this and to suppress wages and increase profits to increase the the incomes of the already wealthy. And the government did do this. They passed tax cuts, they stopped raising the minimum wage, they stopped supporting the unions, started increasing the government's support of the corporations, started allowing the concentration more corporate control over the economy by larger and fewer corporations, started rolling back the burdening of exchanges with externalities such as having to clean up their own pollution or the burden of having to sell only safe products manufactured in safe factories paying decent wages.

You realize Reagan's tax cuts weren't really that big? He closed an awful lot of loopholes at the same time. Reagan-era taxes collected a smaller percent of a larger pie (not the neo-con fantasy of huge growth, but a lot of money that had been previously sheltered from tax became taxable.)

So the massive budget deficits of the Reagan era happened just because of the increases in defense spending?

Yes, across the board the impact of the Reagan tax policies were a fairly low decrease in revenue, although I don't think that it was because of closing loopholes. What he did was to dramatically lower the marginal rates that higher earners paid but he increased the FICA taxes that impacted the middle class. He lowed taxes on the rich and increased them on everyone else. This is straight out of the supply side economics playbook, that the rich save and invest more of their money, the non-rich don't save, they just spend. If we take money from the non-rich and gave it to the rich they would invest it by building new job producing factories. Unfortunately, the factories that the money built weren't in the US, just one of many major flaws in supply side economics.

That the increase in supply would lower prices to offset the increase in taxes of the non-rich. This argument was resurrected later to justify globalization. That the lower prices from globalization would compensate for the lower wages paid to Americans. Neither worked out.

The larger economic pie of the 1980's and 90's had little or nothing to do with the tax cuts for the rich, and everything to do with the impact of millions of baby boomers entering the economy and earning and spending in it.

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[SimpleDon]

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Minimum wage, I agree.

What about globalization, did that happen organically because of automation too? Or did some laws have to be changed, duties lowered and treaties negotiated?

Was the surge in illegals also a natural evolution of the economy and had nothing to do with the Reagan amnesty bill and its virtually making it impossible to prosecute employers who hired illegals?

Setting a minimum wage is nothing more than the government setting the minimum standards for businesses to do business in this country. It is no different than telling businesses that they have to clean up their own pollution, that they can't employ children, that they can't make false claims in their advertising, that they have to sell safe products produced in factories that are safe for their workers, that the work week should be 40 hours, and hundreds more requirements. And every time the government has imposed these standards fire breathing conservatives like you declared that the new requires would ruin the economy, cause massive unemployment, widespread business bankruptcies, and the loss of the pure American essence. And every time you conservatives are proven wrong. Why do you keep doing it?

Unions, they still get support. They were destroyed through their loss of a monopoly position.

You are saying that Reagan and the conservatives who followed didn't reduce the support for the unions? That Reagan didn't fire air traffic controllers? That no one is demonizing the teachers unions as the cause of a supposed decline in the quality of our schools? That the number of right to work states didn't increase?

Corporate consolidation--this wasn't an issue of the government allowing. It was an issue of the information revolution making it beneficial for companies.

Of course, it is in the benefit of corporations to become a monopoly or to join a price setting cartel. The problem is that these short circuit the market by allowing monopoly price setting, ending competition and ending any need for innovation.

Once again, you fail to offer any sense of consistency. You say that unions collapsed because of their monopoly power harmed the economy, a power they never had, and here you are supporting monopoly power for companies as beneficial.

You are saying that the enforcement of the anti-trust laws hasn't dropped off under the Republican administrations? That it is as natural for companies to become bigger while it is also natural for employees to disband the unions because of automation, Loren's magic reason for everything that happens?

Externailities--the government has become stricter about such things, not looser.

What is happening currently in the EPA is all fake news? That the Supreme Court unfairly slapped George W. Bush's hand for re-writing regulations that allowed more pollution in direct violation of the environmental laws that authorized the regulations? Republicans really believe that global warming is a threat to the future of man, that they haven't spent four decades refusing to believe it? There is widespread support in the Republican agenda for the endangered species act? That no organized largely conservative opposition delayed the removal of lead from paint and gasoline, or the recognition that smoking causes cancer, or that cars could be made safer, resulting in hundreds of thousands of deaths and damaged children?

That there was no reason to blame the Great Financial Crisis of 2008 on the lack of regulations on derivatives and the lack of enforcement of the existing regulations against banks speculating in the financial markets with government guaranteed deposits? Simply because the crisis was caused by banks speculating in highly leveraged unregulated derivatives, is there? And despite the admission of Alan Greenspan that he didn't enforce the regulations because he thought that the banks had learned to self-regulate.

... and I don't want to give the government the sort of control on our economy that would be necessary to force what you want.

What makes you so fearful of the government?

Powerful governments have a very bad track record.

Some do, but the vast majority don't.

The way to avoid abusive governments is through a democratic government with adequate check and balances internally to guarantee civil rights. This was true in the US until the economic pain that you gleeful support was inflicted on the poor and the middle class grew to the point of forcing bad choices like we did last November when we elected the wholly unprepared, treasonous, self-absorbed man-child to the Presidency.

Do you believe that our government is intentionally trying to damage the economy? If so why?

I believe that it is the other way around, that businesses are trying, with the help of conservatives and the Republican party, to damage the government. This is a coordinated, planned attack to take over the government and to use it to enrich the rich. They are succeeding.

What do you think that I want the government to do and to force what changes?

I want the government to start building new infrastructure and maintain the existing infrastructure. I want the government to stop the half measures and chasing the fantasies to come to grips with the problem of the cost of our health care, the single biggest factor in the loss of competitiveness of our products in the world markets. I want the government to resume funding research, even the research that upsets conservatives. I want the government to fully fund education even in places that don't have a high real estate valuation. I want the government to stop the endless wars.

I want the government to start reversing the supply side economic policies that intentionally increased the incomes of the already rich at the cost of wages for the non-rich. The lifting of the thumb off of the side of the scale that boosted wages and putting the thumb on the side of the scale to boost profits has reduced wages and boosted profits. This is causing social strife that can only get worse as income inequality keeps getting worse.

They could start by increasing the minimum wage that has been allowed to decline because it isn't indexed to the cost of living. You are arguing that this would cause damage to an economy that you believe is resilient to this kind of a policy change. I still don't understand why this is, but it seems to have something to do with automation

You believe that the government is always evil, even after decades of conservative administrations. That when a group of people come together to form a corporation to satisfy their mutual greed that magic and automation happens. And when people come together to organize a government they do so to destroy their own economy and to imprison their fellow citizens, every government, every time.

Do you trust the corporations more than you trust the government?

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[SimpleDon]

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I would think that you would be happy with the government that we have now. It is solidly in the control of the party of neoliberalism and anything the wealthy and the corporations want, they get. Exactly the principles that you support, here in this blog.

I don't support the neocons.

But the question is about the economy, not foreign affairs. You seem to support the goals of the neoliberals, who want to return to the economic theories of the classical economists; Smith, Ricardo, Mathis, Say, etc., and who support the classical liberal political economic ideals of free trade, free markets, a true free market for labor and the gold standard. A political economic philosophy developed by Hayek and von Mises and championed by Milton Friedman and his University of Chicago school of Economics.

The neocons are primarily conservative former Democrats who turned into Republicans because of disgust with the Democrats' foreign policies, think of Bill Kristol and Robert Kagan. There is probably an overlap between the neoliberals and the neoconservatives but to be precise they are concerned with different subjects. I tend toward being a neocon in my initial response to things, less so as I think them through. I know, too much information.

I don't need a label to apply to you, but I would appreciate some idea of where you get your economic ideas. A simple paragraph would do. For example,

I am most influenced by the heterodoxical economics of the post-Keynesians, who don't consider Keynes to have been even half right about the economy of the 1930's, but rather to be a good starting point from which to develop a realistic economics, that strives to explain and to work with the economy that we have, not to dream about the economy that we should have. In addition to Keynes, Michał Kalecki, Piero Sraffa, Joan Robinson, Nicholas Kaldor, Hyman Minsky, Paul Davidson and Jan Kregel established the basic tenets of post-Keynesian economics in the 1940's through the 1970's. The economists who prevailed in the Cambridge Capital Controversy of the 1960's. The only economists who predicted the 2008 financial meltdown and who were right about why it would occur were post-Keynesians. Mainstream economists struggle today to explain why it happened.​

They have promised to do the things that you want to do, relieve the free market of government oversight, especially the financial sector, banks, because they have learned to regulate themselves and to play nice, not like they did before 2008. To reduce taxation on the rich and to shift it to the non-rich, because the wealthy don't need the government, why should they pay for it? To re-establish the joys working for a living rather than living off of government largess, people like me, disabled and all of those children who chose the wrong parents. To turn government services into private, for profit corporations like was done in Russia. You want the US to be like Russia don't you?

I'd like more oversight, not less. However, oversight != taking. I do not approve of using the corporate world as an off-the-books welfare scheme. If welfare should be provided it should be done by the government, account honestly for the costs as taxes rather than make companies pay it and pretend the cost isn't there.

This seems to be a little confused, for example, you want more oversight but oversight is taking and you don't want taking. It seems to me that you are making three assumptions.

1. That the natural state of the economy is with minimal government intervention.
2. That this natural state of the economy is somehow the best economy.
3. That the supply side economic policies were on the whole a step toward reducing government intervention in the economy.

Is this a reasonable list of the assumptions that you base your understanding of the economy on?

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[SimpleDon]

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See, this where your memorized, randomly placed talking points fail you, not to mention your failure to read and/or to understand my posts.

A failure to agree is not a failure to understand.

Granted. I went too far and my statement is unfair.

I am proposing to keep the economy that we have right now, the mixed market, government and private enterprise working together, capitalistic economy that you see working quite well everyday. The economy that has provided for you and yours everyday that you and yours are here. The most successful economy that the world has ever seen. The economy that defeated both fascism and communism within fifty years.

Why do you think that it is a failed system?

You want the economy of the 50s and 60s--never mind that the conditions that allowed that no longer exist. It just exported the shit.

No, I don't. I thought that what I wrote was pretty clear. What don't you understand about the phrase "economy that we have right now?" No where have I said that I wanted to return to the previous economy of any time. The economy has made tremendous progress since any previous point in time that can be named.

What I have said elsewhere is that the economic policies of the 40's, 50's and 60's produced a better economy than the supply side policies of the 70's, and 80's. There is no doubt that this is true. You claim that this was because we exported so much more in the Benton Woods era, that you believe this so that it is true. Here is a graph of US exports of goods and services from 1947 on in 2009 dollars, that is allowing for inflation. Where is your surge of exports after the war that tailed off after 1980 that suppressed the American economy?

​

I even thought that maybe you misspoke and you meant to say that it was net exports, the trade deficit or surplus that impacted the economy, which I agree with. Which is why I advocate against free trade and for protecting American farmers, producers and workers.

But once again, the net exports barely registered before the serious increase in the trade deficit starting in the mid-1970's, largely because of the dramatic increases in the price of oil. No joy there either.

Then I hit upon it. I looked up the net exports as a percent of the US GDP. Here it is. And yes, finally it demonstrates what you said, that the (net) exports after the war were high and they started going negative seriously in the 1980's. See here,

​

But the large post war trade advantage was over by 1950 and doesn't support your argument that it lasted into the 1970's.

So the unanswered question is why did the US trade deficit balloon from 1980 on? I suspect that it was because of the volume and price of imported oil.

Also, the post war boom in our trade surplus, didn't help all that much according to Econ 101. It is true that the war torn countries needed goods from the US because their countries and their industries were destroyed, but it is also true that they didn't have any money to buy the needed goods because their countries and their industries were destroyed.

Where did they get the money from to buy American goods with and to drive our trade surplus to 5% of GDP? And you are right again, we gave it to them! Or the next best thing, we loaned it to them and never asked them to pay us back! And where did our government get the money to give to them? Why we did the same thing that we did to fight the war, deficit spending and magic money created by running the printing presses overtime.

You would have to be a Keynesian to believe that we could generate prosperity that way, instead of giving it to the rich and waiting for the magic. And we know that you aren't a Keynesian or we wouldn't be having these discussions, would we?

Could it be that the trade deficit after 1980 was due to supply side economists putting in place policies that actually encouraged free trade and globalization as a method to suppress wages in the US and to increase profits? I don't think that is much the case either. The trade deficits since 1980 are pretty much due to the importing of oil.

And to lower wages in the US you don't need the reality of a large number of dollars going over seas, the threat of moving production over seas is enough. Workers go from wanting higher wages to workers happy to have a job. This is the essence of the imbalance in the negotiating power that businesses have over their workers. Increases in wages represent some percentage decrease in their current profits. Having a job is the most important thing to the workers, it is no less than life itself.

This is why, for example, supply siders tolerate a poorly performing economy and a lower employment participation rate, that is fewer people who are employed. This kind of economy means that wages stay low. They aren't even guaranteeing themselves higher profits, they are just claiming a higher part of the income verses wages from the relatively poorer performing economy.

Look at what this means. It means that there is no labor market that rewards the workers with wages commensurate with the value of their labor. There is no "the less they cost, the more will be hired." There is no tendency of the economy to a full employment equilibrium.

If you do believe that the economy is very resilient as you stated you did, (but then seemed to back off from) then you have to also believe that whatever we try to do to the economy will have at best, a limited impact on the economy and that what impact that it does have will only appear slowly over time.

Since this is true we must base any changes in economic policies on a clear understanding of how the economy really works, and not on how we wish that it would work. I wish that it was true that the self-regulating, self-organizing free market could exist but there is no evidence that it could either looking at history or at theory.

I wish that human beings were wired naturally so that criminal laws, the police, courts and prisons weren't needed. But trying to change society based on the hope that this wish would come true and dismantling the police and the courts and letting the prisoners out is not a wise policy change.

And this is what you are proposing that we should base our policies on in the economic sphere. How we wish that the economy works, not how it actually does.

=============== continued below ===============​

 

[SimpleDon]

=============== continued from above ===============​

But you are wrong about there being no need to raise wages, the income inequality that we are seeing now will just continue to grow and it will continue to anger the workers even though they don't know what the problem is.

This hurts. You have no comment for this?

And I find your desire to not offend the capitalist system unconvincing. It is what happened in 1980, and then the neoliberals weren't concerned with offending the system when they bent it to increase profits.

No comment to this either? This is some of my best stuff. You don't deserve me.

Besides, it is this redirection of money from wages to profits that explains the Great Moderation and the low growth in the economy because the rich save their money, which takes it out of the economy and the non-rich spend their money which boosts the economy. I know that you believe that savings somehow find their way back into the economy, but it isn't true and I can tell you why in a later post. For now, just think about why hasn't anyone worried about too much savings causing inflation?

You continue to think there's an active redirection, yet ignore the forces that would have caused a redirection.

Of course the supply side economic policies were an active change in our direction of the economy. Do you believe that natural forces and not men lowered taxes on the rich, raised taxes on everyone else, stopped active support for the unions, let the minimum wage become lower in real terms, negotiated treaties that exposed the American worker to competition from low wage workers around the world, etc., etc.?

You are asking us to accept your definition of what the natural economy is and that your "natural" economy is the best possible economy possible economy totally without any evidence at all. And you are ignoring the very real evidence that the opposite is true, that your so-called natural economy is an unsustainable man made construction with the sole goal of dramatically increase the wealth of the already wealthy.

You imply that there are unknown and presumably unknowable forces that have eliminated the bountiful boost to the economy that changing our economic policies to redistribute income from the poor and the middle class to the already rich was suppose to bring about, increasing investments producing jobs and raining down riches on everyone.

No, I specifically believe that there are forces in the economy that redirect the economy and unlike you I have named them and I have explained how they redirect the economy. Forces that explain the great moderation when recessions caused by the business cycle disappeared to be replaced by crises caused by financial sector malfeasance triggered recessions. Forces that explain why no matter how much money we give to the rich by lowering taxes and suppressing real wages we don't suffer from inflation in the real economy, except for housing prices. And yet when we give too much to wages we suffer from high inflation. If the economy was supply side constrained and starved for investment wouldn't it be the other way around?

One final note. You told me I wasn't right that the money that goes into savings doesn't have any impact on the economy. I thought that you were just defending the sanctity of good old American thrift. But then I remembered that you said that somehow savings eventually is spent, that every penny eventually gets out, or something like that.

It reminded me of the time that you argued with me when I said that wealth is accumulating at a frightening rate. You said that no, wealth tends to dissipate over time, not to grow. Except that you didn't say time, you said over the generations. You were talking about the wealth of one family and I was talking about the total wealth of all the wealthy in the whole country. What is dangerous for the economy is the ever increasing wealth inequality in society. Wealth is power.

If you are going to discuss the impact of policies on the whole economy, you are going to have to learn to look at the economy as a whole and not just the impact on individuals. I suspect that this one of the reasons that you have so much trouble with the minimum wage.

This means that I have to ask, if when you you said that savings eventually gets out, do mean that that each dollar that is put into savings will somehow, someday be spent? If you did we have once again failed to communicate and your limited vision is betraying you.

Money is only impacting the economy if it is flowing. Even if what you say is true, that every dollar saved will eventually be spent, and that is a big "if," it doesn't matter. If the amount of real wealth is growing it means that more money is going into the pool of wealth than is flowing out of it, and the economy isn't seeing the benefit of the flow of money that it is generating.

But this is only part of the problem. Not only are we seeing the pool of wealth growing because the wealthy are capturing all of the growth in the economy, the wealth of the non-rich is decreasing, the wealthy are capturing the wealth of the non-rich. You can see this in the growth of "reverse-savings," debt.

This is unsustainable. Eventually the social pressures that will building up, the social pressures that are building up, will boil over and express themselves in undesirable ways, like electing a morally un-grounded, malevolent, proto-fascist, treasonous, narcissist to the presidency.

Last post in this response.

 

[Loren Pechtel]

Odds are 1 of those 26 offices now has 1 more employee than it needs to do it's job.

"The odds" are not an argument against using automation to increase efficiency.

You're changing the topic. I'm not saying we shouldn't automate. I'm saying that automation leads to job loss.

And using automation to increase efficiency is not an argument against raising the minimum wage.

It's a red herring.

And you are also the person who habitually rejects increased funding for under-performing schools or intervention programs for struggling students PURELY on the basis that it won't help all of them and therefore would be a waste o money.

This comment from you is therefore stupendously ironic.

It's not that it won't help all of them, it's that it will help almost none of them as the fundamental problem is the students, not the money.

What we should be focusing on is sorting out the students by their ability--put the ones that want to learn in different classes than the ones that don't.

It provides no help at all to those forced out of the labor market.

It is not possible to force a person "out of the labor market." If you have labor to sell, you're in the market. Period.

"Forced out" is the term normally used--while they may be seeking to be part of the labor market employers do not perceive the value of hiring them to be worth the cost and thus they sit on the sidelines. The higher the minimum wage the more such people will be displaced.

Perhaps you mean that nobody anywhere will ever want labor produced by black teenagers unless that labor is dirt cheap? It's almost as if you believe that that black people are universally understood to be next-to-worthless in the labor market...

Black teenagers with no work history. They need jobs they can actually get to build up the experience to get better jobs.

And what you miss is that it's not for the rest of their life. Few people remain at minimum wage for all that long.

Then there is no reason to assume they won't get hired at $15/hour.

You're not making sense here.

Always the business is supposed to pull a rabbit out of it's hat to afford what you want.

I don't see how "competently run a business" is equivalent to "pull a rabbit out of your hat."

You define "competent" as always able to change something to pay for your pet program.

You sound like the EPA guy that made things hard for my former boss. You were doing so well at reducing emissions, why have you stopped? Boss: What else should I do? (He had already done everything feasible with the tech of the day.) EPA: Do what you were doing before, reduce emissions.

 

[Loren Pechtel]

I am not ignoring supply and demand. I just said that the interaction of the two doesn't set the price. And that demand is not infinite, that in order to have economic demand it is not sufficient for there to be a supply and the desire to own a product or to consume a service, there has to be money to realize the desire. And that the economy is demand lead and that it is no longer constrained by the supply.

The interaction of supply and demand sets what people are willing to pay. The cost of production + profit sets the minimum that companies will sell for.

You contradict yourself in the span of two sentences. Amazing.

I'm not contradicting myself, I'm saying the situation is more complex than you're making it.

Supply and demand sets what something can be sold for. Production + profit sets the minimum it can be sold for. If the former exceeds the latter (ie, most Apple products) then company pockets the difference. If the latter exceeds the former the company quits making the product, this causing the supply & demand curve to be rebalanced for the other producers of the product.

Now, there may be specific deviations from this for a while in markets that aren't too competitive. If widgets are underpriced and thingamajigs are overpriced the company can continue in that state until someone else comes along and undercuts them on thingamajigs. At that point they have to fix the situation or go under.

I said that supply and demand exist but that they don't set the price. You say in the first sentence that that they do set the price, but in an unique, typically Loren way, that supply and demand determine what people will pay. This is wrong in every type of economics that I have seen. People buy something if they want it and if the price seems reasonable. If they think that the price is too high they won't buy it. They don't look up how many of the products are produced verses how many are sold and calculate what price they will pay. It must take you forever to grocery shop.

You don't have to look them up, you just have a mental impression of what's a good price for <x>. (And woe to the person who doesn't. While my father was never diagnosed with any sort of memory issue in his last years he had what I described as fossilization of the intellect. His worldview was basically fixed--he could incorporate new information but couldn't update what he already knew. He kept refusing to buy needed things because he was waiting for a price that would never be seen again. I utterly failed to teach him how to handle a word processor because he was stuck on using space and backspace as cursor-movement keys.)

Once again, I think that you are betrayed by the extra words that you feel you have to add. I have no idea what "If the latter exceeds the former the market disappears" means.

Why not, "if the demand exceeds the supply the supply will increase to meet the demand over time." The first sentence is correct, in a grading on a curve way.

There is no fixed demand. A company with a monopoly may set it's production for maximum revenue, not maximum sales.

Do you believe that rent controls threaten the economy as seriously as you feel that raising the minimum wage does? Is this one of those slippery slope things, let in rent controls or increases in the minimum wage and prepare yourself to say "whatever you want commissar?"

I used it as an example as the bad effects are reasonably well known.

Where did rent controls come into this? Did I defend rent controls anywhere in this or any other thread? I doubt it. I am opposed to wage and price controls. The only time these would be justified is in very rare conditions of a snap shortage of supply or sudden increase in demand, caused by say, the start of a major, maximum effort war like World War II was. Absent such an obvious need like that, which will probably never be required again, the support of the people needed for such controls to work will not exist.

The minimum wage is a form of wage control.

We have too many levels of government because they were needed in the 18th century when communication and travel both moved only as fast as a horse could walk. The government was remote and out of touch for most people, and had to be brought down through the state and county levels to the people, and the people's concerns and needs had to be transferred up through the levels.

And we have too many governments around our major cities for the same reason, based on the speed of a horse walking, but also now we have preserved this balkanization of governments to increase and to maintain property values and to allow the beneficiaries of the higher property values to enjoy the benefits of living in a major city without having to pay the higher taxes of living in a major city.

I'm not sure it's that bad. Yes, extra levels of government are a cost, but they also are a protection. The county I live in has 2/3 of the total population of the state. It results in the rest of the state seeing us as a cow to be milked. City and county funding don't get sucked off by this.

I am a capitalist, I believe in the elegance and the power of markets. I just don't believe that they can self-regulate to prevent criminals from taking advantage of the markets and consumers. I don't believe that there is any market mechanism to impose externalities into the simple exchanges of the marketplace. The Austrian/Libertarian so-called solution of writing contracts between a polluter and all of the parties that are affected by the pollution or relying on everyone suing everyone else doesn't strike me as being very practical. Do they to you?

The Libertarian answer here doesn't work. However, I don't like the current answer, either. The decisions as to what to permit or not permit are far more political than scientific. Instead, how about working with the market instead of against it?

Forget about regulating what industries can emit what. Instead, when a pollutant is created you tax it. When a pollutant is destroyed or rendered non-polluting the tax is refunded. Note that there is no requirement that it be the same company. Company A mines a pound of coal. They pay the carbon tax on one pound. Company B grows a tree and sticks wood from it totaling one pound of carbon in an old salt mine. They are paid the tax on a pound of carbon for doing so.

But there are other things that markets can't provide us. Things that require balancing the opposing needs of different groups, things that are too complex to be solved by the simplistic mechanism of answering what is the cost. Things that require a vision of more than right now. Things that bring penalties to people for bad behavior. Things that require a moral vision. Things that require the sacrifice of the few for the benefit of the many. Things that build the common property.

In most cases I think it can be reduced to balancing cost by measures that translate that cost into dollars.

Our economy is very resilient. It adapts very well to changes, including changes in policies. I don't see how this helps your argument. It means that exactly what I am proposing, raising the minimum wage won't damage the economy. The CBO, all trained mainstream economists said that raising the minimum wage by three dollars an hour would increase wages for the working poor by a total of 20 billion dollars a year, at a cost of 17 billion dollars a year in lower profits. In a 20 trillion dollar a year economy. What is that, 0.1% of the economy?

And no cost in job loss? I'm not buying it.

 

[Loren Pechtel]

I agree that it was a mistake to open our markets to expose American workers to competition from low wage countries. Once again, I don't know how your making this point helps your argument.

You utterly missed my point. I'm not saying we shouldn't have opened our markets--especially as they were already basically open, there wasn't much opening involved. Furthermore, protectionism wouldn't even help as the problem isn't so much with foreign imports as unions making American goods uncompetitive on the world market.

Protectionism helps the powers that be, not the average person. If we didn't allow imports of things like cars it would help auto workers--but everyone else would be hurt more than they are helped. It's only when a good chunk of the costs were being exported that it was a good thing for America.

2) The information revolution. More and more workers were replaced with automation and that automation costs money. The higher the capital/worker ratio the more of the profit you would expect to go to the company.

If you don't believe that it was government interventions like the minimum wage and the support for the unions that pushed up wages before 1980, why on earth would you now object to us raising the minimum wage and supporting the unions? Do you ever read what you write?

You're obsessed with unions.

I'm not talking about unions here, I'm talking about the amount of capital per worker. That raises worker productivity but lowers the percent of total output that gets paid to said workers (as some of it is instead paid to the suppliers of the automation.)

You have been arguing all of this thread that raising the minimum wage will damage the economy. Now you tell me that the economy is very resilient, that it adapts easily to change and to all but the heaviest of government interventions. Now you tell me that the minimum wage and the government support for the unions didn't have any impact on the wages before the supply side economic policies, that the high wages were the result of other factors.

So long as the hikes are small the overall economic damage is small--except for those who it hits the hardest, the workers just starting out.

WTF Loren, can't you at least try to put two thoughts on paper sequentially that don't contradict each other?

You're filtering what I say through your bias towards the glory days that will not return.

So the massive budget deficits of the Reagan era happened just because of the increases in defense spending?

Republicans have a big spending problem.

Yes, across the board the impact of the Reagan tax policies were a fairly low decrease in revenue, although I don't think that it was because of closing loopholes. What he did was to dramatically lower the marginal rates that higher earners paid but he increased the FICA taxes that impacted the middle class. He lowed taxes on the rich and increased them on everyone else. This is straight out of the supply side economics playbook, that the rich save and invest more of their money, the non-rich don't save, they just spend. If we take money from the non-rich and gave it to the rich they would invest it by building new job producing factories. Unfortunately, the factories that the money built weren't in the US, just one of many major flaws in supply side economics.

He also made a lot more of the money the rich made be taxed. A smaller percentage of a bigger pie. (Note that I am not talking about their fiction of low taxes causing huge economic growth to make up the revenue. Rather, I am talking about money that already existed but was masquerading as not being income. The crazy high tax rates of the post-war years weren't actually being paid.)

 

[Loren Pechtel]

Setting a minimum wage is nothing more than the government setting the minimum standards for businesses to do business in this country. It is no different than telling businesses that they have to clean up their own pollution, that they can't employ children, that they can't make false claims in their advertising, that they have to sell safe products produced in factories that are safe for their workers, that the work week should be 40 hours, and hundreds more requirements. And every time the government has imposed these standards fire breathing conservatives like you declared that the new requires would ruin the economy, cause massive unemployment, widespread business bankruptcies, and the loss of the pure American essence. And every time you conservatives are proven wrong. Why do you keep doing it?

I disagree. Most of these things amount to "thou shalt not make the situation worse". A perfectly acceptable requirement. However, wages are a different beast--the company is simply offering a job. That is, taking wages from $0 to some value higher than $0. Even if it's not as high as you want it to be it's still making the situation better.

Unions, they still get support. They were destroyed through their loss of a monopoly position.

You are saying that Reagan and the conservatives who followed didn't reduce the support for the unions? That Reagan didn't fire air traffic controllers? That no one is demonizing the teachers unions as the cause of a supposed decline in the quality of our schools? That the number of right to work states didn't increase?

Unions still get support, just not as much as they used to. Off the top of my head: Companies are forced to deal with a union. Many government contracts require paying union wages.

I do agree the teachers unions are getting demonized. There is a very real problem (I've encountered a few teachers that were seriously incompetent and at worst they just end up shuffled around, never forced out of the career) but they're getting more blame than they deserve.

Of course, it is in the benefit of corporations to become a monopoly or to join a price setting cartel. The problem is that these short circuit the market by allowing monopoly price setting, ending competition and ending any need for innovation.

True, but that's not what I was saying. What I'm saying is that the information revolution greatly reduced the costs of being large. Being large has it's advantages--thus the balance shifted towards larger companies. The government is too liberal about permitting mergers, though--I would like to see a blanket prohibition against a merger involving a company with more than say a 10% market share.

Once again, you fail to offer any sense of consistency. You say that unions collapsed because of their monopoly power harmed the economy, a power they never had, and here you are supporting monopoly power for companies as beneficial.

You're mixing up my points.

You are saying that the enforcement of the anti-trust laws hasn't dropped off under the Republican administrations? That it is as natural for companies to become bigger while it is also natural for employees to disband the unions because of automation, Loren's magic reason for everything that happens?

Correlation != causation.

Unions got trashed because they couldn't compete against non-union companies. It has nothing to do with size.

Externailities--the government has become stricter about such things, not looser.

What is happening currently in the EPA is all fake news? That the Supreme Court unfairly slapped George W. Bush's hand for re-writing regulations that allowed more pollution in direct violation of the environmental laws that authorized the regulations? Republicans really believe that global warming is a threat to the future of man, that they haven't spent four decades refusing to believe it? There is widespread support in the Republican agenda for the endangered species act? That no organized largely conservative opposition delayed the removal of lead from paint and gasoline, or the recognition that smoking causes cancer, or that cars could be made safer, resulting in hundreds of thousands of deaths and damaged children?

A few examples of misdeeds doesn't change the basic pattern.

That there was no reason to blame the Great Financial Crisis of 2008 on the lack of regulations on derivatives and the lack of enforcement of the existing regulations against banks speculating in the financial markets with government guaranteed deposits? Simply because the crisis was caused by banks speculating in highly leveraged unregulated derivatives, is there? And despite the admission of Alan Greenspan that he didn't enforce the regulations because he thought that the banks had learned to self-regulate.

Few people saw the problem. Yeah, many of us saw that things were getting overextended and expected a recession but not the meltdown the derivatives caused.

You believe that the government is always evil, even after decades of conservative administrations. That when a group of people come together to form a corporation to satisfy their mutual greed that magic and automation happens. And when people come together to organize a government they do so to destroy their own economy and to imprison their fellow citizens, every government, every time.

Do you trust the corporations more than you trust the government?

It's not a matter of trusting government vs trusting corporations. Both are evil.

The basic problem with government is that it's very much a one-right-path approach--but we have no way of knowing that we are really on the right path. The corporate world will beat out many paths and the ones that are closer to the target will fare better than the ones that are far from it. This course correction is a very powerful force but it only comes from competition.

I see the role of the government as keeping evil in check but doing a minimum of meddling consistent with this objective. They aren't very good at mandating good, it should be kept to a minimum.

 

[Loren Pechtel]

But the question is about the economy, not foreign affairs. You seem to support the goals of the neoliberals, who want to return to the economic theories of the classical economists; Smith, Ricardo, Mathis, Say, etc., and who support the classical liberal political economic ideals of free trade, free markets, a true free market for labor and the gold standard. A political economic philosophy developed by Hayek and von Mises and championed by Milton Friedman and his University of Chicago school of Economics.

I'm pretty much for free trade, free markets but the gold standard is nuts--it means the government can't even try to keep the economy on an even keel.

The neocons are primarily conservative former Democrats who turned into Republicans because of disgust with the Democrats' foreign policies, think of Bill Kristol and Robert Kagan. There is probably an overlap between the neoliberals and the neoconservatives but to be precise they are concerned with different subjects. I tend toward being a neocon in my initial response to things, less so as I think them through. I know, too much information.

I don't need a label to apply to you, but I would appreciate some idea of where you get your economic ideas. A simple paragraph would do. For example,

I am most influenced by the heterodoxical economics of the post-Keynesians, who don't consider Keynes to have been even half right about the economy of the 1930's, but rather to be a good starting point from which to develop a realistic economics, that strives to explain and to work with the economy that we have, not to dream about the economy that we should have. In addition to Keynes, Michał Kalecki, Piero Sraffa, Joan Robinson, Nicholas Kaldor, Hyman Minsky, Paul Davidson and Jan Kregel established the basic tenets of post-Keynesian economics in the 1940's through the 1970's. The economists who prevailed in the Cambridge Capital Controversy of the 1960's. The only economists who predicted the 2008 financial meltdown and who were right about why it would occur were post-Keynesians. Mainstream economists struggle today to explain why it happened.​

They have promised to do the things that you want to do, relieve the free market of government oversight, especially the financial sector, banks, because they have learned to regulate themselves and to play nice, not like they did before 2008. To reduce taxation on the rich and to shift it to the non-rich, because the wealthy don't need the government, why should they pay for it? To re-establish the joys working for a living rather than living off of government largess, people like me, disabled and all of those children who chose the wrong parents. To turn government services into private, for profit corporations like was done in Russia. You want the US to be like Russia don't you?

I'd like more oversight, not less. However, oversight != taking. I do not approve of using the corporate world as an off-the-books welfare scheme. If welfare should be provided it should be done by the government, account honestly for the costs as taxes rather than make companies pay it and pretend the cost isn't there.

This seems to be a little confused, for example, you want more oversight but oversight is taking and you don't want taking. It seems to me that you are making three assumptions.

Huh? I just said oversight isn't taking. Taking often masquerades as oversight, though.

1. That the natural state of the economy is with minimal government intervention.
2. That this natural state of the economy is somehow the best economy.
3. That the supply side economic policies were on the whole a step toward reducing government intervention in the economy.

Is this a reasonable list of the assumptions that you base your understanding of the economy on?

=============== continued below ===============​

1) Agreed.
2) The economy will seek the most productive path on it's own.
3) I don't think the government should be intervening in most labor vs capital issues.

Basically, I see business as the driving force of the economy and the government as the rudder that guides it, as well as the rescue service for those who fall overboard. The government does a pretty bad job of being a driving force and should not attempt to play this role.

 

[Loren Pechtel]

No, I don't. I thought that what I wrote was pretty clear. What don't you understand about the phrase "economy that we have right now?" No where have I said that I wanted to return to the previous economy of any time. The economy has made tremendous progress since any previous point in time that can be named.

What I have said elsewhere is that the economic policies of the 40's, 50's and 60's produced a better economy than the supply side policies of the 70's, and 80's. There is no doubt that this is true. You claim that this was because we exported so much more in the Benton Woods era, that you believe this so that it is true. Here is a graph of US exports of goods and services from 1947 on in 2009 dollars, that is allowing for inflation. Where is your surge of exports after the war that tailed off after 1980 that suppressed the American economy?

I'm confused. You keep holding up the 50's and 60's as the example of what we want, but then you say it's not what you want.

Then I hit upon it. I looked up the net exports as a percent of the US GDP. Here it is. And yes, finally it demonstrates what you said, that the (net) exports after the war were high and they started going negative seriously in the 1980's. See here,

Most such issues are easier to see in % rather than $. However, you still are off target--I'm not talking about the balance of trade, but the nature of the trade. We were importing raw materials and exporting manufactured goods--and were pretty much the sole source of said goods. Monopoly power at work.

Could it be that the trade deficit after 1980 was due to supply side economists putting in place policies that actually encouraged free trade and globalization as a method to suppress wages in the US and to increase profits? I don't think that is much the case either. The trade deficits since 1980 are pretty much due to the importing of oil.

You're way too quick to ascribe malice to things that happen.

The trade balance got so negative because of the perceived value of the $. (And, yes, there was a great perceived value. I was in a lot of countries back then and in general the $ was seen as king. Of the places we went {not exactly representative, we pretty much stayed out of first world countries} the only places where that wasn't true were countries in the southern part of Africa where the Rand {South African currency} was king and the $ was in second place.) Everyone wants $, they'll accept $ even given the balance of trade. In the short run, a bonanza for America, dealing with it would have been painful so nobody did.

And to lower wages in the US you don't need the reality of a large number of dollars going over seas, the threat of moving production over seas is enough. Workers go from wanting higher wages to workers happy to have a job. This is the essence of the imbalance in the negotiating power that businesses have over their workers. Increases in wages represent some percentage decrease in their current profits. Having a job is the most important thing to the workers, it is no less than life itself.

Note, however, that until recently the jobs that went overseas were mostly shit jobs in the first place. Most of what is blamed on jobs going overseas is really a matter of job loss to automation. (This i)

This is why, for example, supply siders tolerate a poorly performing economy and a lower employment participation rate, that is fewer people who are employed. This kind of economy means that wages stay low. They aren't even guaranteeing themselves higher profits, they are just claiming a higher part of the income verses wages from the relatively poorer performing economy.

Look at what this means. It means that there is no labor market that rewards the workers with wages commensurate with the value of their labor. There is no "the less they cost, the more will be hired." There is no tendency of the economy to a full employment equilibrium.

Conclusions unsupported by evidence.