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Economics
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The US and China aren't "winning" anything in relative terms.
The parties that operate these governments are shooting each other in the knees.
Both Xi and Trump will be regarded as poor businessmen who operate in the dark.
All of China is affected by Trumps tariffs, republican Americans are about the only ones feeling anything on this side, along with anyone who doesn't realize that trump is going turn his back on them too when the moment arises.
At the end of the day, all these tariffs and embargoes are just pushing other countries to become more resilient and become surf-sufficient where it's best. An expensive route, but it's a desperate wake up call to citizens to empower themselves with more knowledge and how to use it against companies, corporations, and governments that would prefer that they become modern day slaves.
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Economics
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So what do you propose the US do about china regarding IP, market manipulation, etc? I feel like most people are being short sighted by calling a trade war a bad decision. Who cares if we are in a trade war for 1 year and the renegotiated terms last for decades ultimately resulting in more a more efficient market? It's a strategy and unless you are a time traveler from the future you can't say it's not going to work.
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Economics
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This isn't like poker where you can outbid others and make them drop the game.
China just has to weather the economic storm better. Tariffs hurt both sides.
To put it another way. China could levy no tariffs at all and still not be "losing". The only effect of US tariffs is to raise prices for US consumers and maybe get companies to buy from the US itself or other countries.
So unless the tariffs actually lead to less buying from China, they aren't hurt.
And even if they are hurt, the Chinese political system has a lot more capacity to just sit it out on principle..
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Economics
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The renminbi is still the third biggest reserve currency. If China goes down, it will at first take the rest of Asia with it (about 1/3 of the world's GDP btw.), then anyone with major reserves and any country reliant on Chinese money, at which point at the very latest any other country will be in crisis, too.
I know it doesn't look like it because we westerners like to forget a bit about Asia and only see China, but countries like Indonesia, Thailand, the Philippines, Taiwan, etc. *actually aren't all that tiny* in economical terms, and they are some of the first to fall when China does.
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Economics
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I propose the US do what it has always done since learning that tariffs don't work - encourage free trade which has better and more sustainable market based results. Unless the US goes full nationalistic by banning all imports, a policy of tariffs means we will be chasing countries poaching US manufacturing after the last country is no longer attractive.
China is already becoming less and less attractive for new manufacturing. Wages are rising and workers are getting fed up. Companies have other operations in other countries with awful labor practices and low wages. Once China is no longer attractive they'll move to a different country - then their quality of life will rise and so on and so forth. Chasing countries by tariffs isn't sustainable. Free trade is.
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Economics
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So you propose we do nothing ("*encourage* free trade which has better and more sustainable market based results." Ok then, thanks for your opinion. I would argue doing nothing led us to economic decline (relative to China) and a loss of manufacturing. Ever since Trump has stated his intentions, to make the US more competitive and clamp down on China not being fair, the market has favored the US. You can postulate anything you want but in the end I don't think anyone can prove doing x is better than doing y. People can hate trump all they want but that doesn't mean their economic theories are any more correct than his. I also want to point out most of his voter base voted him in to make a change so, doing nothing, your idea is not what the general population wanted.
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Economics
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It's not an opinion. It's based on a Nobel Prize winning postulation. This is an economics sub. This new policy is not focused on economics. Maybe you can argue it's geopolitical, but it is not based on economic models - macro or micro.
Free trade is why the US is the biggest economy in the world. Free trade is why the US has had so many trading partners. What China is engaging in is not free trade, which is why other US trading partners work together to isolate China. That's what the TPP was. It was the exact opposite of doing nothing. But people think they know more than Ivy League trained experts and picked the guy who without evidence said the TPP was bad.
But you've already said you don't accept what experts say about free trade, and argue it's an opinion rather than acknowledge we haven't had successful tariffs since the 1800s. You base this on a belief, a *pure* belief based on no evidence whatsoever and because "hey it's different and it's what I wanted so that's that." At best, all you're doing is comparing independent and unrelated variables to each other because you dont really know any better. So I guess there's no arguing or winning over someone who rejects expert consensus based on nothing at all.
Why are you even on this sub? Go somewhere else if you're going to double down on nonsense.
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Economics
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I'm not disagreeing with free trade but I'm arguing for imposing tariffs as a bargaining measure. I do appreciate your response and yes I suppose there are more ivy leave economists who think Trump is playing a bad hand however I don't believe economists have all the answers or are right all the time. For example, we have the best economists leading the Federal reserve yet we still go through bubbles and recessions, economic policies have changed over time, and most importantly I believe most of economics relies on assumptions which are mostly predicated on past events. No one can predict the future and always relying and past economic policies while the world changes around it is bound to fail at some point.
I think you put it best when you said this is more about politics and less about economics. In that context, economics theory is meaningless.
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Economics
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It's the loss of business channels and relationships. To compensate for the tariffs, companies took their money elsewhere, setup supply lines, signed contracts, and made friends. All of these things cost time and money.
It's not appealing to throw all that work away, only to have to do it *again*, but this time with a nation that's already been shown to have an unstable relation with the US. Putting them back into your supply chain is just high risk low reward situation.
So not only are you missing out on that potential, but in taking losses during the entirety of the trade war, competitors outside of the US and China were gaining ground. The relationships, supply lines, and contracts that third parties setup with either country are giving them an edge that gets harder to overcome the longer it lasts.
For example: China will still need soybeans, and the tariffs will raise prices across the board. Companies in Brazil and elsewhere will see that there's more money to be made, so they'll invest more in land, equipment, and marketing for their soy crops. When the tariffs do finally go away, American farmers will have a whole new set of stronger competitors to deal with, and they'll be in a weaker position than they were to start.
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Economics
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Most moderates with knowledge of China's trade practices agree that something should be done about China's economic policies, and the trade war is a valid way to do that.
What they *don't* agree with is simultaneously starting a trade war with the rest of our Western Allies. We should have hit China alongside our Allies as a unified front, which would have certainly caused this whole business to end faster and with less of a negative impact on the economy.
I mean, what's China going to do, put tariffs on every product coming from Europe and the Americas? They're struggling with just America, but at least that's a storm they can weather for a while.
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Economics
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Because it's over a century later and applying standards from 1-3 centuries ago is an asinine. We also don't own slaves, we let women and minorities vote, we use sterilization in surgery, and we have a globally integrated market where stealing IP is directly damaging to the aggrieved entity.
This is one of the stupidest arguments I've heard, and I hear it often. If you think China should be treated like an emerging world power from a few hundred years ago, then we can explore that. The result is that we'd bomb the country into submission, subjugate its people, and steal it clean of natural resources. I don't think that's the kind of standard we want to apply. We're a few hundred years better than that. Nice try though.
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Economics
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>
> Free trade is why the US is the biggest economy in the world. Free trade is why the US has had so many trading partners. What China is engaging in is not free trade,
And China doesn't do free trade and they have been growing their economy at a much faster rate the the US for the last 15 years.
All the experts agree that maintaining a one-sided free trade relationship would be the best course of action?
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Economics
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Hence why china needs us more than we need china. Cheap labor is easy to find in a global market, know what's hard to find? A market as good as the US. All of the media u see saying how china will win the trade war and how we're screwed is just propaganda. The shanghai index is down nearly 40% in 2 months. China has a bigger debt problem than the US. Their smaller components manufacturers are already going out of business.
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Economics
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>Cheap labor is easy to find in a global market
This is very misleading and honestly not true.
Finding manufacturers in other countries who can compete on the same production scale with similar quality is very, very difficult.
Beyond that, companies with large scale operations cannot just pick up and relocate to a new country. There's an enormous amount of logistics that goes into these things and it's not like you just click a button to move your multi million dollar manufacturing contract to a new vendor in a new country with completely different laws, standards, wages, culture, and geography.
This WILL hurt us badly. I'm not saying it won't hurt China even worse as I cannot grasp that level of economics, but I do know that it is NOT easy to just replace China like people suggest.
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Economics
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> Finding manufacturers in other countries who can compete on the same production scale with similar quality is very, very difficult.
This is the big thing. If you're looking to stand up a factory and hire 300 workers who can make your new chips for your device, China can have it ready to go in a matter of *days* in some cases. Doing that in the US would take months at least. Doing that in other countries is a tradeoff between either time or quality.
China really does have the market cornered on acceptable-quality high-speed manufacturing, and they can make major factory shifts very quickly - much faster than most countries could ever hope to - without sacrificing quality.
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Economics
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> If you're looking to stand up a factory and hire 300 workers who can make your new chips for your device, China can have it ready to go in a matter of days in some cases.
Have you checked where your CPU is made? Hint: It's not China and has not been for a very long time. Even Xiaomi now makes phones in India. Samsung has been making their phones and displays in Vietnam for quite some time now.
I'm not sure if you've visited Asia but it's one giant factory and the quality is actually just as good as China, and sometimes even better. This is in particular with fine Japanese stationary which requires insane precision with plastic parts which more and some of the best is made in Japan, then Vietnam, then China.
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Economics
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You know where cheap labor isn't found? In the US. There's a reason there's so much business with China, it's a big fucking country advanced enough to produce a ton of stuff but comparatively poor enough that cost of living and wages are low. On *this scale* that's not really found anywhere else.
America is losing a major market for their goods, not only consumer goods but products and resources American companies need, and can't afford at domestic prices. China has literally the rest of the world to trade with, for what they buy from the US, a comparatively expensive country, they can find elsewhere, but the US in turn is hard pressed to find another country that can produce enough for prices in the same ballpark as China can.
And I really don't know how the fuck it got into people's heads that the stock market is such a great indicator for how an economy is doing. The stock market is an unpredictable, jumpy, fickle bitch, and while it *can* say a lot, it's entirely useless at saying anything on its own other whatever the stock market decides to do.
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Economics
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That's because China has gotten so damn good at this that they're able to start charging higher prices. That changes nothing about the speed and quality considerations of what comes out of that country.
It's still the first place everyone looks when considering where to build a chip, but other countries are *finally* catching up in their ability to produce, while Chinese labor prices slowly rise in response to their popularity.
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Economics
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Except we've been seeing more and more items not made in China from smaller companies as well because if you've been travelling around Asia, factories are everywhere here, big and small, along with huge supply chains.
Vietnam is already a major alternative hub to China for assembly and manufacturing. It's not as good as Shenzhen for a startup hardware company. But it's the alternative replacement label for whatever crap you need not in China, and cheaper at it too. It's a side effect of major companies like Nike, IBM, Samsung and so on moving there and generating the environment necessary.
Its mainly because the manufacturing companies tend to be not Chinese. For example, Foxconn, TSMC, or Pou Chen are not PRC companies, and have factories all over the world. Pou Chen makes all your Nike, Adidas, Clarks, Reebok, New Balance, Crocs, Timberland, etc etc shoes (and most sports shoes) in countries all over and they have their largest factory in Vietnam.
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Economics
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You're not understanding what I'm saying.
I'm not talking about individual companies. There are alternatives for most companies somewhere.
The problem is that we've got billions of dollars wrapped up in Chinese manufacturing as a whole that cannot be easily moved. No other country currently has even remotely the capacity to do what China is doing.
And even if all those companies moved, in 2 years we may have a new administration which changes everything and all the companies will have to move right back.
This is not an easily solved situation. People on the internet tend to break things down into numbers without realizing the reality of logistics and the many factors that go into outsourcing massive amounts of manufacturing. Just saying something like "there's tons of cheap labor around the world" is short sighted and stupid. This will have massive effects on the global economy.
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Economics
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>And even if all those companies moved, in 2 years we may have a new administration which changes everything and all the companies will have to move right back.
Many of these companies moved a decade ago. I feel like there always seems to be outdated information on Asia especially on this subreddit. The facts are manufacturing is cheaper in Vietnam and while the total capacity isn't as large as China, the population and geography makes it so there's not really that much of a difference. I did see some people already heavily invested in China trying to argue differently, but a lot of these major manufacturers diversified to Vietnam and the rest of SEA over a decade ago.
As you already know, factories use a ton of energy. One key indicator is the fact that China is curbing power plant production. Meanwhile in Vietnam it is being built on a massive scale.
What I'm saying is, as someone who is Taiwanese, and naturally has a family that is into manufacturing, who has relatives who work in some of the largest manufacturing companies on the planet, which includes, as I've written elsewhere, PCC, Foxconn, TSMC, etc, that the move has long been happening.
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Economics
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Yeah but they're not impressive at all. Also, real life testing shows that while Kirin processors seem nice, but they are energy hogs and still perform slower than Qualcomm processors which defeats the point of a mobile processor.
When ZTE faced a US ban, they were dire straits to go out of business.
I can dump a laptop CPU into a phone and then claim impressive specs, but real life will show its fallacies. See Asus Zenfone 2 series with its palty 2-5 hour real life battery because they used barely modified Atom processors. Meanwhile I have a 8 hour SOC on a modern Qualcomm 845 snapdragon and can get 12+ out of a big battery 636.
Plus any SOC's that China assembles have critical parts not made there.
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Economics
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Ah that was the case.
In general, no not really not anymore. Most of the people I see going there do so for other reasons or sometimes just ignorance.
**You can get the same exact manufacturing machinery, with the same skillset of labour, at a quarter of the price, in Vietnam, overseen by the same exact manufacturing company (Foxconn, TSMC, PCC) as the ones they have in China.**
It really depends on the factory and manufacturing partner. It's not locale based anymore. It varies even within China just like elsewhere. Even a major manufacturing partner will have varying quality depending on teams.
But as I said, even for fine plastic and metal stationary, Vietnam does it just as well, for cheaper. It's why some of Japan's best stationary is now made in Vietnam, not China. It's why the best android phones are made in Vietnam as well.
Things have changed a lot. I don't expect everyone to catch on and most don't until a long time later. Look at how many boutique bicycle makers still go to China when its long moved away. FFS, a lot of people until a year or two ago still thought that Starcraft was still a thing in SK. It's stuff like that.
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Economics
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No, China doesn’t need us. China has global customers. Cheap labor is not easy to find, nobody is going to make iphone until they feel like jumping out of the building. This is not propaganda China has got US by the balls. US has more debt problems than China. Almost 90 percent of US citizens are in debt, thats is not the case in China. Their nothing is going out of business.
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Economics
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No worries! It was also a bit more brash than I meant for it to come across, so I hope this one came along a bit better :)
It doesn't surprise me that things are expanding to other countries - that's the way a lot of these cheap labor factories tend to go. It happens a lot in the clothing industry as well. One country is picked as the primary place for something to get made. That industry grows and so do the factories supporting it. The country now has a ton of people making way more money than they ever did on their farms, so their quality of life improves. The economy improves along with it, and labor costs go up. These industries cause the economies to improve so much that they essentially price themselves out of the market, and the industries move to other countries (like how shirts used to be made in China, then Bangladesh, then...).
I still maintain that China is generally the best balance of speed, quality, and price, but since manufacturing has been around for this long, the alternatives are probably much more viable than they have been, and in some cases probably surpass what China can do now.
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Economics
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Yes it is true. Indonesia has been literally marketing itself to the world as the alternative to China. Same with Malaysia. India is also clamoring that they can handle more manufacturing.
Uhhhhh please cite examples. If you'd like an example to prove mine, look at data storage manufacturing. Companies like seagate and western digital moved their manufacturing from mainland china to Indonesia and south east Asia. Even before the tariffs, countries were more interested in China's market than just their manufacturing. You think companies were going to let their IP get stolen? They suffered and put up with it cause it was the way to gain access to the Chinese consumer market. But times are changing the yuan doesn't show the international promise it once did. China is trying to use the yuan to help developing markets but has failed miserably. Look at Chinese investment in Africa and its silk road projects, major fails. In Sri Lanka alone, India has been laughing it's ass off at the Chinese building a port that cost over a billion dollars and yet no ships show up to it. The Chinese are desperately trying to force open new markets for when automation will destroy their business model.
You have no clue what you're talking about when you wrote "it's very difficult to find production line to match quality". Not a single clue what you're saying. Alibaba is the world leader in doing what you just said isn't easy. Alibaba even offers you supplemental insurance in case your order comes fucked up from the factory. Once again, it couldn't be ever easier to find suppliers who will match quality. In fact most of them send you samples before you even commit to an order. I work in purchasing for a US manufacturer... yes yes it is easy. Only critical components you don't risk your butt on but for cheap plastic components, china is still our go to. With the tariffs we've been looking at suppliers in India and Taiwan. We're even in discussion with a mass 3D print shop over in Wisconsin. What's interesting is that 3D print shops can work overnight, so where they miss out on mass scale production, they have advantages of non human labor.
Once again, you're just making generalities on what common sense might be, that yes it would be extremely difficult to move your major operations from china to another country, but once again you have no idea what you're talking about cause China ONLY allows dual ventures with Chinese owned companies. Which is why there was even a debate on why there is a trade deficit and how the Chinese market is unfair to American companies wanting to do business there. Our companies have restricted access that we can't sell freely in china. Any business that has that much standing in china, that it would kill their business model to not be in china, would have to be a Chinese business lmao
Yes, do stick to your level of economic comprehension cause china is 1000000x worse off than America from the trade war. Americans will have to pay marginally more for cheap consumer goods, that's probably the worst our economy will feel from it. Mean while, China's entire private sector was funded through the west. When china opened up in the mid 90's who the fuck think financed all the factory building? Groups like HSBC. I don't think you realize just how bad China's private debt is. Their government may have surplus but that means jack shit when they keep their currency artificially low to increase exports. So china has to make a decision, its buy back and selling of currency needs to stop so it's currency can float with the market (which will explode the Chinese middle class to a level the world can't imagine, their purchase power will go up tremendously) which china will never do as a community political state cause of huge population to keep employed, or to accept that western capital is dried up.
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Economics
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> Owning foreign reserves like US treasures is a way they do this.
Yes exactly. But if they want to keep their currency pegged without supporting "evil and bankrupt without their help" regime, then moving holdings to hard assets is a way for them to preserve their wealth and surplus by turning them into goods they will eventually consume anyway.
The suggestion is entirely and purely about keeping their currency pegged while sinking the US into a more reasonable attitude.
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Economics
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No. They won't. We already import from many other countries because their costs are cheaper. China's economy isn't that great and their GDP is probably inflated by the games they play by a good 20%.
The people who feel the pain immediately will be us companies who manufacturer solely in China.
China is also famous for product dumping. We're seeing this a lot with Amazon and China. In fact, an item we import from China costs us $7 landed. Walmart sells the exact item for 4.88 cents. This forced us to stop selling this item and now after China wrecked the market, the item is finally restricted by anti dumping laws.
Many items on Amazon now are sent directly to Amazon from a seller in China, cutting out US companies. Of course this isn't Amazons fault and eBay, etc allow it.
The part that should piss you off the most, is your tax dollars being used to subsidize a Chinese seller to mail you that item cheaper than a us company can mail it. If you're a decent size retailer, you're very aware of how bad this problem is becoming.
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Economics
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Of course you can, but it might not be the same price. If they were buying it from the US in the first place it's that it was either cheaper or of better quality (or both) than the alternative, or that the supply chain for exporting these products to China was more efficient, etc. Chinese businesses will find these products elsewhere, but it might not be as efficient or cheap or good.
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Economics
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Wtf are u talking about? Manufacturing set up from scratch.... are you really that ignorant that you think a company just shows up, clears out some land, builds a factory then hires local workers? Indonesia and Malaysia have industrial sectors also and just because they're not as developed, they have the infrastructure to support manufacturing.
".01%".... please just stop spewing bullshit facts that are fake to make yourself sound knowledgeable about the situation. You have no clue what you're talking about. Alibaba and supplier platforms feature suppliers from all over the world including Indonesia and Vietnam. Whatever component or piece you need, there's always competitors in other emerging markets, like India who can copy Chinese manufacturing and are ready to do so immediately. When you work in manufacturing you usually complete production in "runs". On your first run you can sure up quality and logistics with a new supplier in less than a month. What matters are the dyes, molds, imprints, or base unit that used to create or guide the manufacturing process.
Once again.... I'll repeat..... markets that have valuable currency have more leverage than emerging markets with cheap labor.
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Economics
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I categorically disagree with you on the basis of finance. Chinese growth was financed primarily from western capital doing joint ventures with Chinese banks, like HSBC. This is what financed the building of the factories. China has a double edged sword cause if they abandon western capital and subsidize the Chinese banks who are losing their western capital backing, they'll be forced to float their currency to be able to pay back everything and the system to still work, otherwise Chinese banks won't keep funding operational loans on companies who don't have purchase orders (aka your Chinese manufacturer), so if tariffs are put in place, and the combination of western capital disappearing and suppliers have less orders to prove they're good to pay it back.... who's going to underwrite the risk? Oh that's right... it points back to the Chinese government to try to bail out their banks that with the currency they don't float (meaning not really worth that), then the finance industry gets destroyed over night. Once again.... I'll repeat what I said before.... the shanghai index lost 40% in 2 months. Once the capital dries up, industry will slow down. Western purchase orders and western capital is what keeps the game going for Chinese suppliers and their lenders who keep them afloat.
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Economics
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You have absolutely no clue what you're talking about. Not a clue.
Samsung makes their phones in Vietnam now, they stopped making in china about 5 years ago.... so shows how much you know about that. Foxconn also manufacturers in both china and Malaysia, that's the supplier of the iphones.... once again, you have no clue what you're talking about.
Tell me about China's global customers? You mean Zimbabwe that they bailed out? Or do you mean Sri Lanka that they had to build a 1 billion dollar port for them, to accept their trade, and the port sits empty, cause no one wants to take Chinese infrastructure loans for their "Silk Road" project. The whole Silk Road project is proving to be a huge fail as emerging markets are developing on their own. Look at India... it could replace China easily.
Once again you have no clue what you're saying about debt. In china, there's more private debt than the US, much more. Maybe our governments debt is higher than their governments debt, but that doesn't mean much cause the Chinese govt holds and pushes for yuan, which isn't valued currency, it's manipulated currency, which the only countries who want to accept it, are countries who will just take the free help to allow Chinese influence to come in (ex: Zimbabwe, Sri Lanka). These countries that have huge economic issues are ready to take whatever Chinese hand out they can get, but doesn't mean they have valuable currency to buy Chinese goods, which is what private Chinese companies want.
Meaning yuan isn't worth shit to people unless they get a hand out with it. The yuan will continue to be worth shit as long as their government drastically fucks with the value of its worth, the markets can't float it.
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Economics
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>This is the big thing. If you're looking to stand up a factory and hire 300 workers who can make your new chips for your device, China can have it ready to go in a matter of days in some cases. Doing that in the US would take months at least. Doing that in other countries is a tradeoff between either time or quality.
One does not simply stand up a multi billion dollar fab, they are planned years in advance. Nor does a chip go from design to tapeout in days. Finally, semiconductor manufacturing is dominated by the US, Japan, SK, and Taiwan.
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Economics
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China wants to keep their currency pegged to the US dollar, their most important trading partner. They don't want their currency appreciating against the dollar and destroying their relationship as #1 supplier and manufacturer to the US economy. Pegging their currency to commodities unfixes it from the USD. Their USD peg isn't really a political position, it's an economic decision to reduce volatility of their trading relationship and support their main goal of steady economic growth, which for the near future is still mainly dependent on exports.
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Economics
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Yes, absolutely, the west and the US dollar are very much important for China, not disagreeing with that. And while China knows that it's a weakness and is trying to move away from that, they also still have a long way to go.
But what you apparently fail to realize is that this isn't a one sided relationship. Daddy America isn't giving little China some lunch money. America needs that money back just as much as China needs it being given to them. And if China can't deliver, a country like America, who has a *lot* of money on foreign countries and assets, is getting dragged down right with them. America is so afraid of China not being able to pay that they have at multiple points foregone long planned interest hikes. China is really the last (single) country America can afford to drop the ball on. Fuck, it even goes as far as the US *asking China* to shift more towards domestic savings, a problem the US too has btw. They are literally asking China to take less of their Dollars because the codependency is so great.
If Germany had to bail out Greece because they would have dragged them down with them, a country with a relatively way smaller GDP, the US sure as fuck has to bail out China (if it can) because they are so dependant on the other doing well.
And again, it's really the US waging the war here, not only on one front, but battling with some of the biggest economies of the world, although maybe not always to the same extend, like South Korea, Canada, the EU, Mexico, etc. China is just fighting back, and China has zero trouble doing business with literally any other country on earth.
But in reality, it's just two guys poking each other with sticks, anyway. Neither China nor the US can afford to substantially hurt each others economy. Not that it's really an economical war, anyway, but a political one.
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Economics
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Maybe, depends on if supply chains are there. The problem for US farmers is as Brazil and other countries start to expand their production this will start to eat away a huge portion of the US market base. This could hurt the US farmers in the long term but it does also hurt in the short term as switching customers and placing systems to get it to new markets is going to cost alot of money and hassle.
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Economics
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It will be Argentina and Brazil. Soybean prices will increase. It’ll be a small part of American soybeans that will still be sold to China. China has around 60% of imports, brazil and USA around 40% each, Argentina around 10%. Basically, they’ll still have to buy around 10% of us soybean. So prices will decrease for American soybeans, as the main buyer will prefer other soybeans to theirs. It’s what has actually de facto happened. It’s not much discussion to be had.
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Economics
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To put it perspective- it’s not whether American soybeans are still competitive or not. This is a completely commoditized market, só American farmers are complete price-takers. Yeah, at these low prices they are competitive, in the sense that they still manage to sell some to China (Well, they have to), and to some other countries, but at this price, soybean producers might switch their crops (if possible) to others such as cotton, or corn (tbh, not sure if corn is remunerative either), or even just decrease crop land. Net farm income is at such a low, that if this pushes it into a negative, you could see crop land decreasing. With commodity prices pressured and interest rate/cost of debt increasing, the perspective isn’t great either.
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Economics
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Do you think the true market value of labor has been distorted by government intervention at both the state/local level? I would consider property tax abatements, exclusive servicing contracts and certain forms of welfare a large determining factor in market value.
We’ve all seen the billions in corporate welfare he Walton’s have received through poverty assistance problems and he country doesn’t seem to care. I would be curious if the true size of the assistance to Fortune 500 companies was made public how the taxpayers would feel.
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Economics
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The simple answer to this is no. The complex long answer would flow along the lines of many variables affect the value of labor for a market sector. Bargaining power of labor isn't a simple demand and supply graph as we'd like to think. Labor value is inherently something only capital can truly know based on their own set of criteria that achieves their goal. There are always positions that are must fills to ensure production, but there can be positions that are nice to have where capital can hold out on hiring until their criteria to bring on more workers is met. This can work both ways obviously.
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Economics
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I wouldn't suggest we make Walmart or other retail employees ineligible for SNAP but instead not reward companies that utilize these programs as a pillar of their entry-level compensation equation.
Poverty assistance programs should be a transfer to individuals and never something that large corporations consider when deciding their wages. The way I see it for certain companies is if you don't pay an employee enough to be healthy, appropriately dressed and reliable then you can't ever expect them to be a good employee?
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It always feels like cheating and a low effort example but when discussing Walmart you have a company that produces extraordinary gains for a small number of family members. Three of the operating principles behind this company are to charge as little as possible for their products, pay as little for land and property tax as possible and pay their employees as low of a wage as possible.
Inherently I don't see anything wrong with those goals as a business, no individual let alone company wants to pay more for a service than they are required. When these are combined however it appears as though taxpayers through increased taxes and social services are subsidizing the labor cost for a company that sells $500 Billion in goods a year, part of which is only due to their ability to pay their labor so little relative to the true cost of supporting that employee.
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Economics
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Some may misinterprete what you mean so I'd like to clarify.
To be clear you're calling out that if a company decides to invest in themselves like expanding the business or updating their systems it increases demand for employees which leads to job growth, right?
As opposed to some people who think if there is more money for operations it'll naturally be used to increase supply of a good when really a company will only increase supply of there is an existing unmet demand.
I call this out to say just bc there are tax cuts doesn't mean there will be wage growth or an increase in jobs. However if there is an increase in demand due to those with a higher velocity of money having more money then it is likely to increase the need for employees and likely lead to wage growth.
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Economics
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People use these programs as a pillar of their entry-level compensation. Walmart pays people whatever the market requires. Any kind of welfare will require Walmart to pay *more* to lure them into the labor market. To illustrate this consider an extreme case - suppose right now a Walmart worker earns $12/hr and $1/hr in SNAP (divided across # of hours). If you increased SNAP to $5/hr, do you think Walmart would cut its wages to $8/hr? People would just go across the street, keep their $5/hr in SNAP and work for $12/hr somewhere else...
I don't think the number of owners is really relevant. It's the same business whether it has 4 owners or 400,000.
The operating principles behind the company are ruthless efficiency and giving the customer what they want, among other things. Like you said, in any buyer-seller relationship the buyer wants a low price and the seller wants a high price.
To reiterate, SNAP/etc are not subsidies to Walmart. Who is more desperate for a $12/hr job:
- Someone receiving $25,000/year in state/federal benefits
- Someone receiving $0/year in state/federal benefits
Obviously the person with a large number of benefits is less desperate, which IMPROVES their ability to walk away from a $12/hr job. This is the OPPOSITE of a subsidy - higher benefits force Walmart to pay higher wages to attract the same number of workers.
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Economics
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>Do you think the true market value of labor has been distorted by government intervention at both the state/local level?
I think this is a dubious question. I wouldn't say that there is a true market value of labor. Markets exist in a context; some market maker sets the rules of the game and those rules strongly constrain market activity.
As written, your question hinges on whether you believe a given policy constitutes a distortion or a helpful market making action. This is often a question that cannot be addressed solely with economics. For example, would a carbon tax distort the energy market? That depends on whether you view climate change as a problem worth solving. If you do believe it's worth solving, you will frame a carbon tax as a fair pricing of a negative externality. If you don't, you will frame a carbon tax as a harmful distortion.
>We’ve all seen the billions in corporate welfare he Walton’s have received through poverty assistance problems and he country doesn’t seem to care. I would be curious if the true size of the assistance to Fortune 500 companies was made public how the taxpayers would feel.
I believe poverty assistance programs harm Walmart in the labor market. A more desperate workforce will have a lower reservation wage and be more eager to supply more hours of labor.
The value in poverty assistance programs to Walmart comes from the buyer side. More dollars for poor people implies more spending at Walmart. This makes policy intervention to reduce the number of taxpayer dollars spent at Walmart quite uncomfortable, and also implies that Walmart raising its wages won't much reduce the amount of subsidy Walmart receives.
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Economics
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> Or they could try to increase sales of widgets because they feel they are in a position to grow and hire more people if that marketing was successful.
This is entirely dependent upon the demand/market for widgets and not on the tax bill of the firm. If they can sell more widgets via better advertising (or whatever), then they will do that regardless of their tax bill. This is the fundamental flaw with Supply Side theory. In a competitive market, the firm faces a given (market) price for their product; reducing their tax rate will not change the price/demand that they face, so will not affect how much they can sell. Therefore, there is no reason (all other things being the same) that a reduction in tax rate will prompt firms to hire more workers or pay existing workers more.
What the article is positing is that wages are going up because the supply of Labor is tight, so firms have to pay slightly more to retain workers. This agrees with my anecdotal experience in the SoCal manufacturing labor market. We have a hard time retaining and hiring mechanics, drivers, and other positions. That is what is driving our wage growth, not the tax break.
The tax break *is* making investment more attractive however, so that could spur job/wage growth in ancillary industries.
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Economics
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The relationship is also watered down at each stage. Some of the increased funds go towards dividends for investors; of the reinvested money is invested in things other than labor; some of the money invested on labor is not invested as wages, but as recruiter fees, benefits, equipment or something like that (obviously increased benefits are good for workers too, but it's another reason the long-term effect on wages might still be tiny).
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Economics
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> Unlikely,
What, exactly, is unlikely?
Because of the tax law, we had to make changes to the Excel models we use for Capital Investment projects that made the ROR on all projects improve. One of the key parts that isn't talked about much is the fact that you can now depreciate some assets 100% in the first year so you get an immediate tax break when buying a capital asset. This dramatically decreases the effective price of the asset. On the whole, this should increase the quantity of capital demanded in the economy.
That said, for our company at least, we might not increase our overall capital budget significantly because we face other constraints in the market (e.g. rising material costs, increased freight costs, lower recycling rates due to China's new restrictions on imported post-consumer material, etc.).
I do work for a private company though, so stock buy-backs are off the table as an "investment" option. It's entirely probable that buybacks will be more attractive than capital investment for most public firms.
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Economics
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This is that whole hidden 'costs of being poor' I think it mostly applies to access the things like credit and banking services. Things like getting early Healthcare instead of using emergency rooms for chronic illnesses. Most of the publication's I've seen on this only allude to the material cost of goods. And provide evidence more towards the cost of services. Anecdotally I think the buy it for life subreddit is full of 20 and 50 year old American and German made Goods. It specifically not full of cheap Chinese consumer products. Not that all American goods are good, but I think it's telling none the less
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Economics
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Cheap things have to get replaced more or cause injuries/inconveniences/cost that a superior product would. Toilet Paper is an example. Shoes are the best example.
A good pair of shoes can last multiple years and sustain elements. A bad pair of shoes can't. They can lead to foot injuries and those with cheap shoes usually don't have insurance or the best insurance. The bad pair of shoes is now more expensive because it leads to medical bills that are substantially more than the cost of one good pair of shoes.
Bad quality items have to be replaced more. A pair $150 sneakers will last you for years if you take care of them. A $40 dollar pair won't. You will have to replace them multiple times before you ever have to replace the $150 dollar pair. This what companys like H&M and Forever 21 do with clothing.
They offer "Cheaper" products, but those products stretch in the wash, stain easily, tear, and end up having to be replaced several times over. Consumers will do this willingly because no one thinks about the times they've said "Eh it's only $4 dollars" and fail to realize that a $20 pack of V-necks is substantially cheaper than ordering a $4 dollar vneck (+ shipping & fees) multiple times
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Economics
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No. I just reject the notion of “disqualifying” an example arbitrarily. You didn’t want it used because it answers everything. I also provided toilet paper as an example.
Furthermore, I provided another shoe example, which illustrates how a bad pair of shoes can lead to medical cost making them more expensive.
Your insult was garbage. The fact you want to disqualify an example because you don’t have a retort is even worse. However, cherry picking parts of my reply, and then being a smug a-hole because you can’t answer it takes the cake.
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Economics
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She should develop more skills to make herself more valuable to an employer. I was working crappy low paying, low skill jobs, so I went and worked in crappy sales jobs (house painting door to door, then car sales) for 4 years to develop a skill, and now just got a job paying nearly double the national average pay for people without a college degree get, plus commissions.
Before the 4 years of sales experience, I was worth about $10/hr to employers, now I'm worth somewhere around $50/hr. It didn't come because I need the $, or because I'm a good person, it came because I made myself valuable by gaining skills!
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Economics
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Yes, I think most people want to work. It gives them something to do, something to identify with, something that lets them feel like they contribute to society, something they can be proud of. And if it's a half decent working environment, something can be proud of stocking shelves just as much as an accountant or a doctor or whatever. Even being unemployed for a few months sucks *hard* for most people, doesn't matter if they have been fired as a server or just graduated from UCLA.
And of course people want money, but it's not like working at Walmart is about buying fancy cars and going on vacation, it's the difference between being able to put food on the table and not wearing clothes that have holes in them. That's not about "money", that's about being able to live a half decent life or not.
And yes, sure, that's how stuff works on a basic level, but Walmart, and Amazon, and whatever, don't work like a relatively normal labor market relatively reasonably governed by supply and demand for these people.
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Economics
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It's not even an example! It's a quote from a novel! There's literally no proof in economics that this is a real concept! I might as well quote from Atlas Shrugged to justify trickle down economics.
Did you know that poor people smoke more and watch more TV than wealthy people? Therefore, based off of these 2 examples alone, poor people are entirely responsible for their situation. I'm gonna ignore your anecdotal examples and you can ignore my anecdotal examples and we can both ignore economics.
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Economics
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I don't think your claims are borne out by time use surveys of the general population or time use surveys of the unemployed specifically. The average American watches a staggering 4+ hours of TV per day, and plenty of other time on leisure activities, not work.
There is a large gulf between fancy cars and food on the table. Making $12/hr (Walmart Full Time Average) over min wage is the difference between a 2BR and a 1BR, the difference between clothing from good will and clothing from Walmart, from a $300 phone and a $50 phone. I would not say that someone who lives in a small apartment with a cheap phone and wears used clothing is somehow living an awful life - most of the quality of life is your social network.
You don't think Walmart's labor market is governed by supply and demand? How does this strange claim turn SNAP benefits into a subsidy?
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Economics
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Well I'm a verified member on /r/askcarsales for the past several years while I've worked in car sales, and now I've been hired as a financial advisor. If you prefer to not believe that someone can work hard, gain experience and land a great job, I think that says more about you than anyone else.
If your wife had great sales skills, she probably wouldn't be applying for jobs cutting pot plants though.
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Economics
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Right place at the right time? I've had a bunch of recruiters reach out to me recently. There are tons of companies looking for people with sales skills here. Anyone who's worked the past several years in sales could probably at least get an interview with a medical device sales company, or do what I did and interview for a financial advisor role. From there it comes down to hard work to pass the interviews and tests involved.
I was hired by Edward Jones. They are looking for hundreds of employees nationwide. They are consistently rated one of the top 5 companies to work for by Fortune. It's not some magical, hidden or lucky opportunity, it's out there for people who want to work for it.
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Economics
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>I don't think your claims are borne out by time use surveys of the general population or time use surveys of the unemployed specifically. The average American watches a staggering 4+ hours of TV per day, and plenty of other time on leisure activities, not work.
Yes, *because they are also at work*. I'm not saying people want 40 hour + work weeks. Please look up some statistics on unemployment and happyness.
>There is a large gulf between fancy cars and food on the table. Making $12/hr (Walmart Full Time Average) over min wage is the difference between a 2BR and a 1BR, the difference between clothing from good will and clothing from Walmart, from a $300 phone and a $50 phone. I would not say that someone who lives in a small apartment with a cheap phone and wears used clothing is somehow living an awful life - most of the quality of life is your social network.
I don't think it's open to dispute that rising income is correlated with happyness as well. And you know what makes you feel like shit? Feeling like you're not self sufficient. Feeling like you depend on welfare. Again, plenty of statistics out there.
Yeah, maybe it's the difference between a 300$ phone and a 50$ phone for some. But it's also the difference between a car with a cracked windshield or not. Buying a new mattress because yours is 20 years old. Fixing the lampshade that's been broken since you've moved in. Not to even mention that Walmart tries *very* hard not having to employ people full time. *Half* of Walmarts employees don't work full time, and that's not because they don't want to, or because that's "normal" because of the industry it's in, no, it hasn't always been that way, it hasn't even been that way 10 years ago. And part time workers get less money, less benefits and have a harder time climbing the ranks.
>You don't think Walmart's labor market is governed by supply and demand? How does this strange claim turn SNAP benefits into a subsidy?
I have told you why. Walmart acts as a monopsony, and the workers affected by these issues are very inelastic in their labor supply.
https://www.sciencedirect.com/science/article/pii/S016604621200018X
Another thing is that you *have to work* to get food stamps, if you are able to work. For at least 20 hours per week, too, btw. So, you have a situation where you can't just *not work* but the only place where you *can* work is Walmart. Your options *aren't* working and earning a bit more, or just staying at home and living off benefits. Your options are either working and earning a tiny wage in addition to food stamps, or not having work or food stamps. Do you really think that's a position where the employee can be picky about wages?
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Economics
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Well that’s a bold assertion. I seem to recall a rather large population increase in the 50s and 60s. How stagnant were wages during that time? Also, is there a recent uptick in population growth I haven’t heard about? How about inflation?
So let’s summarize your position here: wages rise when the stock market does well, over the long run, except historically they haven’t. Population and inflation growth causes stagnant wages, except historically the opposite is true. But that’s not really relevant bc population growth and inflation aren’t increasing now anyway.
What am I missing? I think your first point that increasing the coffers leads to reinvestment in growth is completely unsubstantiated, and that when you tried to substantiate it you provided evidence of the exact opposite.
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Economics
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What benefits the world economy ultimately benefits the US. Expanding opportunities and growth in other countries benefits everyone involved. If companies only ever invested in the US we'd be worse off, other countries can do things better than us + we have our own comparative advantages in other areas.
This works the opposite way as well. Levying tariffs harms our consumers and props up domestic industries that underperform vs. foreign producers. Having trade barriers levied against us hurts our producers/industries and hurts foriegn consumers that otherwise would have bought our valued products.
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Economics
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Well cheaper products tend to be worst quality and we know this. There are a fair share of things that don’t matter but most do.
Cheaper housing genuinely means lower quality housing. Cheap transportation such as buses and trains are lower quality forms of transportation.
Cheaper building materials (in a vacuum, so cheap concrete vs regular concrete) tend to be lower quality.
This is true for Razors, tires, and hell, food. Taste excluded, cheaper food is usually made with lower quality ingredients. It’s the reason a burger cost less than a steak does at a steakhouse despite a burger costing more to make.
So no. You’re being intentionally obtuse to justify you wanting to remove a classic example that you can’t answer
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Economics
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> I seem to recall a rather large population increase in the 50s and 60s. How stagnant were wages during that time?
Yes, that was called the Baby Boom. "Baby" being the operative word because they don't really join the labor force until ~20 years later. if you bothered to look at the statistics you'd see that [annual growth in the prime working age population](https://2.bp.blogspot.com/-732Db1_-dWk/VLBDkNWnEhI/AAAAAAAAh6g/Xpx1b9sK66M/s1600/PrimeChange.PNG) averaged only ~0.5% for much of the 50's and 60's, before shooting up well above 2% in the 70's and 80's as the boomers entered the workforce.
And this graph doesn't even look at the effect of significantly higher percentages of women joining the workforce in the 70's, or the unchecked illegal immigration of the 80's and 90's. These influences can easily be seen in a [graph of the labor force participation rate.](https://www.bls.gov/opub/mlr/2016/images/hipple-fig1.png), which shot up beginning in the early 70's and continued to climb in the 80's and 90's.
The rapid increase in the labor force from baby boomers, working women and illegal immigration has absolutely put downward pressure on wages, as would be expected considering that the labor market functions as, well, a market.
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Economics
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>its a race to the bottom, good luck dragging every9ne with you because youre the chosen one
Yea I watched Unions and their benevolent dealings destroy industry in my home town... They dragged the entire rustbelt into the abyss.
I'm not against the idea of unions, nor am I one to say they don't serve a purpose, a certain niche. But they became as corrupt as the 1% a good long time ago.
I work in a field with decent pay (my wife does not have to work) and good benefits. I work 45-50 hours a week but on an extremely flexible schedule with ample time off.
What would a union do for me? really? other than back my employer into a corner where they can't be as flexible with me.
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Economics
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>ok, so now amazon and walmart grind people into the ground.
There is the old adage about Pigs Getting Fat and Hogs get Slaughtered... Unions had the catbird seat in nearly every way but they continued to eat and eat with no regard as to the health of the domestic manufactures.
Walmart should be nothing more than the jobs you get to learn job skills, they should not be a career. But we've chased career level jobs out of the country.
How much is standing at a cash register worth? Because if you think it's worth 15$ an hour for someone just entering the workforce, you're going to see more and more of those stupid auto checkout stations.
> behavioral economics supports your decision to be relatively more rich than your neighbor
See this is the mistake you're making... I don't care what my neighbor is making, or my co-worker. I look at the value of my position and find was that I go above and beyond that for my employer. I try to find a place where I am getting fairly compensated for my output.
It's not about what other people make, beyond me using the average salary as a baseline.
>your ceiling is shrinking
Of course it is... I'm now 20 years into the field. When I started I was getting 10-20% pay hikes with every jump, now it would be unreasonable for me to ask for that much on a jump, because I'm near the top of my positions pay scale.
So I am taking my skills and training to move from Engineering to architecture, that's the next move.
In the mean time we are going to force out the low paying entry level jobs that people use to \*start\* learning jobs skills and climbing the ladder.
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Economics
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Yes, but the US has enjoyed the "exorbitant privilege" of being the world reserve currency for some 70+ years. Under that system, a growing world economy will demand more US Treasurys to serve as reserve asset. Those dollars rarely come home to roost.
If the world stops stockpiling USTs, then the debt starts to matter again.
If the world switches to a different reserve asset altogether and redeems their USTs, then the dollar will be toast.
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Economics
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>Yeah, maybe it's the difference between a 300$ phone and a 50$ phone for some. But it's also the difference between a car with a cracked windshield or not. Buying a new mattress because yours is 20 years old. Fixing the lampshade that's been broken since you've moved in.
Are a broken lampshade and an old mattress really evidence of a "subpar existence?" You're shifting the goalposts - first you said that low income implies you can't live a decent life, now you're reducing the claim to "rich people are happier."
>Not to even mention that Walmart tries very hard not having to employ people full time. Half of Walmarts employees don't work full time, and that's not because they don't want to, or because that's "normal" because of the industry it's in, no, it hasn't always been that way, it hasn't even been that way 10 years ago. And part time workers get less money, less benefits and have a harder time climbing the ranks.
Do you think Walmart wants to employ people part time? The reason for this is because the government, in its infinite wisdom, has layered on mountains of regulation and additional cost on full time work.
>I have told you why. Walmart acts as a monopsony, and the workers affected by these issues are very inelastic in their labor supply.
If workers are inelastic in their labor supply, SNAP will have little impact on the price they are willing to work for, and thus will have little impact on the wage Walmart pays. You are trying to have it both ways - you claim that (A) Workers would refuse to work for Walmart at low wages in the absence of SNAP and (B) Workers have inelastic supply so rarely refuse to work for Walmart at any wage.
>Your options aren't working and earning a bit more, or just staying at home and living off benefits. Your options are either working and earning a tiny wage in addition to food stamps, or not having work or food stamps. Do you really think that's a position where the employee can be picky about wages?
Yes. Many people will seek informal jobs (like house cleaning) that produce cash income that doesn't impact your W-2 or 1099 income and therefore doesn't reduce benefit eligibility. These people can be very picky about Walmart jobs. SNAP has work requirements but much larger programs like section 8 basically penalize you for earning money. Food stamps are a tiny fraction of the benefits out there.
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Economics
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Lol what? Only if you're spending it all on processed junk food and Lobster. The SNAP benefit for a single individual with zero income is $192/month. This is enough for roughly 20 lbs of staple grains, 30 lbs of stew meat/chicken thighs/etc, and $80-100/month to spend on fresh fruits, vegetables, spices, whatever else you want. This would also put you well ahead of the average American who eats roughly 200 lbs of meat per year.
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Economics
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>Do you think Walmart wants to employ people part time? The reason for this is because the government, in its infinite wisdom, has layered on mountains of regulation and additional cost on full time work.
Why not?
>If workers are inelastic in their labor supply, SNAP will have little impact on the price they are willing to work for, and thus will have little impact on the wage Walmart pays. You are trying to have it both ways - you claim that (A) Workers would refuse to work for Walmart at low wages in the absence of SNAP and (B) Workers have inelastic supply so rarely refuse to work for Walmart at any wage.
Where do I say they would refuse to work for low wages?
>Yes. Many people will seek informal jobs (like house cleaning) that produce cash income that doesn't impact your W-2 or 1099 income and therefore doesn't reduce benefit eligibility. These people can be very picky about Walmart jobs. SNAP has work requirements but much larger programs like section 8 basically penalize you for earning money. Food stamps are a tiny fraction of the benefits out there.
But we aren't talking about these other programs.
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Economics
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>Why not?
Why not what?
>Where do I say they would refuse to work for low wages?
When you say we should "not reward companies that utilize these programs as a pillar of their entry-level compensation equation." Saying that benefit programs are a "pillar" suggests that the equation wouldn't work without them (i.e. they wouldn't get enough workers).
>But we aren't talking about these other programs.
So you are claiming that only SNAP is a subsidy to Walmart, but other transfer programs are not? My original claim was about poverty assistance programs generally - SNAP is just an example.
The basic point is that the idea that welfare programs like SNAP are a "subsidy" to Walmart is dead wrong for all of the reasons I have outlined.
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Economics
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Why wouldn't Walmart employ people part time?
>When you say we should "not reward companies that utilize these programs as a pillar of their entry-level compensation equation." Saying that benefit programs are a "pillar" suggests that the equation wouldn't work without them (i.e. they wouldn't get enough workers).
I never talked about any pillars.
>So you are claiming that only SNAP is a subsidy to Walmart, but other transfer programs are not? My original claim was about poverty assistance programs generally - SNAP is just an example.
No, I'm not claiming only SNAP is a subsidy. I'm just saying that these programs can act as a subsidy. I don't know the ins and outs of every poverty assistance out there and frankly can't be bothered to argue technicalities with half a dozen of them. If SNAP acts as a subsidy, other programs can act as one as well, I think that's a reasonable assumption.
>The basic point is that the idea that welfare programs like SNAP are a "subsidy" to Walmart is dead wrong for all of the reasons I have outlined.
Which reasons? I'm not seeing any.
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Economics
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There was a time where Unions and the companies had a balance between them, then the Unions started asking for too much and the company's, not thinking ahead, relented.
There is no union in my industry yet our salaries have, for the most part, kept up or even surged ahead. And when there was collusion between several silicone valley companies we didn't need a union to address it, a class action suit seemed to take care of it.
Again, not saying unions are a bad thing, outside of government unions... They are always bad.
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Economics
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My whole problem is that saying "oh, the market will fix it," is just avoiding solving a much larger issue. The markets are rigged and youre either a moron or a liar if you say otherwise. We know where wages or buying power should be in the "ideal" conditions and they're not at those levels. So either the economic theories for these ideas are broken or the market itself is broken. Pick one because we are past a point of getting it both ways. Wages are not being driven by market forces or our concept of market forces need to be reexamined.
The sheer amount of poverty in the US should be much lower if all the economists in this sub were right. It's just stupidity that's saying everything is fine and this is just how it works. This isn't working, it's going to collapse soon, and then what will people in this sub say? "Market forces" or some stupid shit.
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Economics
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> unions suck
Never said that... I said that they overstepped and it ended up shredding the industries they were in and employment suffered.
My father was a Union man all his life, told me if I crossed a picket line to pay a tax bill at City Hall that "I deserved to get punched in the face".
Then one year he said he was done, because rather than the UAW holding their convention in flint (where it could have really benefited their membership) they went to vegas so the Union big wigs could have a good time.
The Unions became just as bad as the corporate bosses.... More interested in squeezing out every penny and less about fair and equitable wages/working conditions.
In the private sector that's all well and good.
But in the public sector you have the union buying politicians who then give the unions more sweetheart deals and burden the tax payer with what as become a completely un-payable pension system.
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Economics
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While there is luck involved in everyone's life, to blame everything on luck is to remove any and all personal responsibility. Yes you can do everything right and still fail, but the vast majority of people fail not simply because of bad luck, but also due to lack of effort, or at least lack of knowing where to apply their effort.
The poster above obviously worked hard to get where he is. There must have been some luck involved, but don't discount the work he did to get there.
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Economics
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>Why wouldn't Walmart employ people part time?
Because it allows them to spread fixed costs over a larger amount of labor. Labor/hour costs are much lower if their hiring/training costs are spread over 2000 hours/yr instead of 500 hours/yr.
>I never talked about any pillars.
Oops that was someone else / lost in the list of replies.
>No, I'm not claiming only SNAP is a subsidy. I'm just saying that these programs can act as a subsidy. I don't know the ins and outs of every poverty assistance out there and frankly can't be bothered to argue technicalities with half a dozen of them.
Okay that's fine I just wanted to establish we are talking about benefit programs generally, many of which don't have work requirements.
>Which reasons? I'm not seeing any.
I have said it a bunch of different ways but I'll lay it out here;
- Benefit programs reduce the cost of unemployment
- Reduced cost of unemployment makes workers less desperate to find a job and improves their ability to say no to specific jobs
- This will require that Walmart raise wages to get enough workers to say yes to a specific job
If this isn't obvious, consider a situation with UBI of $15k/year. Do you think people would work at Walmart for $2/hour because they are receiving so many benefits?
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Economics
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>I have said it a bunch of different ways but I'll lay it out here;
>- Benefit programs reduce the cost of unemployment
>- Reduced cost of unemployment makes workers less desperate to find a job and improves their ability to say no to specific jobs
>- This will require that Walmart raise wages to get enough workers to say yes to a specific job
Yes, but the problem with this, at least with SNAP is, that you are required to work to get those benefits. That means they *don't* reduce the cost of unemployment, since they are tied to being employed. In fact, I'd argue that it can do the opposite.
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Economics
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If they are loaning the money, then the money gets spent. It is not hoarding cash.
> Only $8.3bn of Apple's stash is actually in hard cash.
That's simply not true. A bank deposit is not held as cash, it is loaned out to people who spend it. There is no $8.3bn in a Scrooge McDuck cash vault somewhere.
The only people who actually hoard cash are crazy people and drug dealers, and the latter only because if they deposited it in a bank the government would confiscate it. They'd love to be able to deposit it. And then the bank would loan it out.
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Economics
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> A NEED FOR A BUSINESS TO COMPETE WITH ANOTHER BUSINESS
You aren't entitled to two businesses mutually undercutting themselves back and forth until they are in the poorhouse, businesses regularly hike their prices in unison because they know the market will bear it. Not that it has anything to do with any of this.
> JUST TAX CORPORATIONS AT 100%, THEN TTHEY'LL JUST REINVEST EVERYTHING
Yeah, yeah, that sounds a lot like "if we set the minimum wage to a billion dollars".
[Corporations aren't pulling their weight](https://upload.wikimedia.org/wikipedia/commons/f/fa/Share_of_Federal_Revenue_from_Different_Tax_Sources_%28Individual%2C_Payroll%2C_and_Corporate%29_1950_-_2010.gif) and [we are going broke on account of it](https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287).
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Economics
|
> You're the idiot who suggested that we should tax corporations at 100% and you dont' even realize it.
So in your mind the suggestion that you have some vegetables in your diet is fully equivalent to eating a half ton of vegetables with every meal?
> A libertarian
Well, [there was an attempt](https://www.reddit.com/r/therewasanattempt/top/).
> doesn't believe in free market competition
There is such a thing as competition, you just aren't entitled to free shit falling out of the sky on account of it.
What any of your tangets have to do with whether or not tax cuts cause growth is completely beyond me. Could it be that you are attempting to change the subject because you are wrong?
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Economics
|
Spare me the blogosphere ideology, theres no such thing as free money. What you assume falls for free out of the sky with the laffer curve, is actually the leftovers from growth that isn't happening.
If you are going to say that money that investors have cashed out of a company is as good as money being in a company because investors just can't help but reinvest it in our economy, then it stands to reason that taxing that money instead, and giving it to the investors who had put their money into t-bills is completely equivalent, as those investors would have nothing better to do with it than invest it in those very same objectively superior places to invest.
It's a little thing you might have heard of, called fiscal responsibility?
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Economics
|
I'm sorry this isn't true. You may want to compare wages to inflation and double check, [graph](https://fred.stlouisfed.org/graph/fredgraph.png?g=l6Vv)
You can also look at median [personal income](https://fred.stlouisfed.org/graph/fredgraph.png?g=ljPl)
Or you can look at median [weekly earnings](https://fred.stlouisfed.org/graph/fredgraph.png?g=ljPt)
Or you can look at median [household income](https://fred.stlouisfed.org/graph/fredgraph.png?g=ljPx)
Or you can look at the [total employment cost](https://fred.stlouisfed.org/graph/fredgraph.png?g=ljPD) compared to inflation
These all show generally positive growth after the last recession. There's really no support for what you're saying
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Economics
|
The same can be said for people not in the labor force who want a job.
Unfortunately I can't figure out how to directly link BLS datasets, but the number of people not in the labor force who want jobs has ranged from ~4.7 million - 5.7 million in 2018 compared to 4.5 - 5.5 million in 2008. Here's the graph:
https://imgur.com/CgTeSVb
Honestly you should really check the data before you form the opinion.
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Economics
|
Just because a person doesn't desire to work *at the moment* doesnt mean they are not discouraged workers.
For example. Person was laid off in 2011. They decided since the job market was tough, so they decided to become a stay at home parent. Right now they dont want a job because wages are still low, but as soon as wages start to tick up slightly they suddenly "want a job".
Thats where the Job market slack comes in. They arnt considered U-6 (long term discouraged) nor they really want a job because conditions are bad. Doesnt mean they wont work when wages tick up and the work environment gets slightly better.
And again, This is the reason why there inst a shortage of workers. Theres still plenty of these types of people around not working.
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Economics
|
It has nothing to do with discouragement, discouraged workers came back.
There are a lot of people not in the labor force for various reasons. Might be disability, a type of addiction, stay at home parent, don't need to work for income, etc.
Workers are scarce, positions can't be filled. I know of a manufacturing plant that in addition to raising pay, busses people in from 60 miles away, waived drug testing requirements, covers relocation expenses, and a myriad of other tactics to find workers, and they can't fill positions.
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Economics
|
If someone is long term discouraged in this economy they're being irrational, unless there's a massive barrier to employment for them such as a criminal record. If you put your resume up on a job board you'll literally get dozens of calls from recruiters.
Yes, some people might not be able to find the perfect job. Some fields are oversaturated. But most people should be able to find work of some sort.
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Economics
|
>BLS does count persons not in the labor force who would like a job.
If you look at the graph, 63% of those "not in the labor force who would like a job" have not searched for work in the past 12 months. The remaining 37% have not looked for work in the past 4 weeks.
Only 434,000 cite discouragement as their reason for not being in the labor force. Most of the other reasons are circumstances that prevent working, such as:
- Being in school
- Family responsibilities
- Illness/disability
Do people expect to magically be offered a job just by wishing for it?
If you have an economy with record low unemployment, and people aren't looking for work because of discouragement, can you really cite them as "available to work"?
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Economics
|
For an individual company, if you can afford to raise salaries, then yes, you might have an easier time finding workers.
At an industry level, if the entire industry raised wages, it might attract new workers to that profession and pull workers away from other professions.
But at the macro level, such as the entire country raising wages across all industries, at that point it creates wage-spiral inflation. Input costs rises, which requires an increase in prices to break even.
Raising wages isn't always an option either. A lot of companies have razor thin margins, but their customers aren't willing to accept price increases. It's not just "being picky", for some businesses higher wages simply aren't an option.
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Economics
|
Sure, but the number of individuals on a high salary that are retiring early doesn't sound like it would be a high number, nor does it sound like an area that would be of most concern. My understanding has been that a lot of Baby Boomers have recently been staying in the workforce longer and longer, holding on to their positions rather than retiring, which has kept these positions away from younger individuals who would have otherwise had the opportunity to move up into them by now (along with other factors). I'm not saying that older individuals shouldn't be able to work as long as they want, but, practically speaking, we've got to find ways to allow younger individuals a way to gain experience, take on more responsibility, and move up the ranks. The following sorts of articles are a dime a dozen: [https://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/why-millennials-are-delaying-marriage-home-buying-and-having-kids/article37472363/](https://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/why-millennials-are-delaying-marriage-home-buying-and-having-kids/article37472363/)
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Economics
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If they only take high cash clients (sophisticated investors) I can't see them going for a negative return. That's why their money isn't in a bank account to begin with. Knowing the Fed fully intends to surpass this rate of return this seems fragile. The bank just becomes a temporary segway basically charging people money to exist in a vacuum with no hope of business continuity.
The only people who make any real money will be the bankers themselves.
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Economics
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1. Well essentially they are asking the Fed to be their business partners but then openly having no business continuity. You wouldn't go for that personally right?
2. It isn't arbitrage because the Fed doesn't suffer and the only people being ripped off are the folks dumb enough to play. We are discussing it here as laymen so there is no way it is particularly clever enough to be a strategy of note. It is just a quick buck looking for suckers.
3. To be honest the Fed likely doesn't care relating to the actual practice. It is the abuse of people's gullibility that's the problem. It is like this conversation; there is this deep cleverness you seem to see that I just can't. You're not breaking the universe by earning, instead of 1.75%, 1.9%. It just isn't happening.
4. It isn't illegal. But stupid rarely is. Now is it ethical? That's the real question.
As for what the Fed should do I don't see that here: the difference in rate is .2%. Again you can do better with a basic CD.
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Economics
|
1. The fed isn't really a business in the normal sense. Its really an arm of the government. When the government operates a program all citizens should be allowed to participate equally. What reason does the Fed have to deny them entry to this program?
2. Goes to my point that the Fed needs a reason to deny them and doesn't have one.
3. ditto
4. Not sure why ethics matter here. It clearly is a question of the law. Is the Fed required to allow licensed entities access to its borrowing window? And on what grounds may they deny access to their borrowing window?
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Economics
|
1. Because it has a fiduciary duty to the citizens. The only people who would maintain a balance after the inflation rate outpaces would be the ignorant and that's why it is a scheme to begin with. The bankers make money no matter what the inflation rate is at zero risk. The bank is thus failing it's fiduciary duty through essentially false representation of the entire system and their plan.
2. Fiduciary duty.
3. -
4. Business ethics matters everywhere. The fact of the matter is that this is without a doubt a simple get rich quick scheme based on what may be a temporary measure. By the way "returning the money" if inflation eats it won't be as simple as it sounds over prolonged time and I'm certain there will be someone who gets the brunt of this really basic scheme. And he is likely poor and financially uneducated.
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Economics
|
I think I'll just explain the problem:
It isn't "we will beat inflation" that's the problem claim.
It is "we are risk free" that's the problem claim.
All other banks offer loans and partake in investments which carry risk. TNB won't. This means that they can only invest in the riskless asset of US Treasury bonds and hold money with the Fed.
The model is required to beat inflation specifically because if, even without fees, the bank holds your money without any investments greater than inflation all the money declines in value meaning that giving your money back to you essentially becomes an impossibility. If you put in $100 after inflationary adjustment they can only give you $1.95 back at that rate but the cost to hold was really $2 so you make -$.05. That's without fees.
However even with the fee without any means to produce a profit greater than inflation, because the fee is part of an already underwater system, the cost to operate goes beyond culpability and then we end up with a naturally insolvent system.
So "stupid" people like me are why you're not scammed all the time because "smart" people like you don't know what too focus on.
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Economics
|
Now level 2.
FDIC. The money in an openly insolvent bank is insured by Fed. So the Fed gets shafted for raising its own rates by a run on this bank because it is naturally insolvent to begin with. No one with a brain would put more than the secure amount less interest believed to be made on the deal in the bank so that they don't get burned.
Insert common consumers like you who don't get it and lost money on the deal meanwhile the bankers lose nothing because it is wholly legal.
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Economics
|
Because employment has increased so much. People aren't spending much time jobless at this time. If you had a job it's fairly easy to get another one. And people aren't being laid off right now which is primarily how you get on unemployment which is what this measures.
Poverty issues are people that won't show up on this list. Those who never really had a steady job or who are fired. Or those who quit without prospects of a new job. And of course underemployment.
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Economics
|
Labor markets were less efficient back then. The internet is a real game changer in matching people together - those looking for work with those looking for labor (labor markets). You see this in a ton of other areas: those looking for a particular kind of food (spicy soft shell crab roll) with those serving a particular kind of food (yelp); those wanting to drive from A to B with those wanting to go from A to B (ride hailing companies); etc etc.
Online dating is odd tho - more people are single than ever. But maybe that’s actually a success metric and marriage is giving up?
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Economics
|
ITT: People who don't seem to understand what the new jobless claims number represents.
I also think this is something that hasn't really gotten a lot of attention when it is bizarrely low. As a percentage of employment we've been in unprecedented territory for [three straight years](https://fred.stlouisfed.org/graph/?g=liyI) and it's only continuing to decrease.
My guess is that it has a lot to do with the so-called "gig economy" and rise in contracting and temporary workers, but I don't have any solid numbers to that effect. There's a lot of questions about [how to measure it](https://www.npr.org/2018/06/07/617863204/one-in-10-workers-are-independent-contractors-labor-department-says).
|
Economics
|
A person retiring early, forgoes tens if not hundreds of thousands dollars in revenues and thus spending. This reduction in spending reduces the need for employees at the places the money would have been spent. It also reduces the amount of taxes collected by government and thus reduces governments' ability to provide services, to spend and to create jobs. The early retiree is also more likely to need financial help from children and family raising the burden even further on those poor young underemployed people and their underfunded government.
The longer people work, the less they directly or indirectly rely on the younger generation to provide for them.
|
Economics
|
It's both really. It used to be a cultural taboo to get divorced, people were expected to find someone and settle down, and (and this goes quadruple for women) you were expected socially to settle down earlier. Now, it's no longer weird for a guy or gal to say "I don't wanna ever get married or have kids." Nobody bats an eye at a 50 year old who says he's happy, and also isn't married with kids.
That said, if you do wanna get married/find love, there are more obstacles to settling down than ever. Going to college, constantly moving to find a job, ect.
I'll only add one more thing onto this, people today have more choices than ever, simply because they have the tech to see who they can match with in their area, so you can see 50+ potential mates. Now, ironically, when you have too many choices you wind up being less likely to actually pick one because there is a lot more vetting to do, and you are allowed to be pickier. On the other hand, if this were 50 years ago I'd have just a few choices and I'd go with the best option I could realistically get. (The phenomenon is called choice overload.) So that could be a hypothetical factor.
EDIT: I have to say too, that choice overload bit is a social psychology finding, and social psych is having something of a replication crisis right now, so feel free to take that with a grain of salt. That's why I made a point to call it a *hypothetical* factor.
|
Economics
|
I would argue against this. Obviously, it depends on where you live, but in a lot of areas in America it is perfectly acceptable to be single, and to remain single. The only places where I could see it being a problem is maybe in rural religious areas. Perhaps I should rephrase the argument though. It is now *more* acceptable to be single on a permanent basis. Not totally acceptable everywhere, and with everyone.
|
Economics
|
Sure, til some oligarch like Putin steals the wealth of the nation and then you have no laws and you can all be at the rise and fall of revolution and corruption. We don't need a robber baron economy where they think the world's their personal oyster. Otherwise, that shit can be decided by who's the most violent.
If we can't even fine companies to affect their behavior effectively, I don't think this broken system will last while everyone dreams of someday winning the lifestyle of the rich and famous, they're getting looted while they daydream.
The US government has kept a war on drugs for fifty years, it can do what the will of the people decide or like I'm told by so many conservatives, find a new place to live where mobsters thrive.
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