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Economics
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None of that addresses the fact the 95% of the work out there needs nothing even *close* to generalized artificial intelligence. The use we put most humans to is very nearly capable of being done by machines even today, and it's not clear that we need very many humans to do very much more than that.
A self driving car doesn't need to be as smart as a person or rely on fantasies about how much DNNs can learn... They are very nearly possible today, and I'll eat my hat if they aren't practical in 20-50 years.
Indeed there's considerable advantage to it being *way* stupider... And most of what happens in a factory or other middling skill workplace is way easier than that task.
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Economics
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Ok but in this example OP had his dream job and lost it, there is no gaining that job, some sort of change is needed. I am for an adequate safety net in the form of cash and retraining but I'm against a lot of current implementation like Germany, where to my experience living there, a lot of people would use it as mandated but a lot will use it to slack off. Saint Pauli a town within a town is notorious for basically living off welfare. I don't want that.
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Economics
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I took your comment as to meaning that engineering/science/creative jobs would be replaced by AI within 50 years. Yes for simple tasks AI can take the place of humans,but it does need human input and maintenance.
AI cars are a sure thing, and I think we will see AI only lanes in the near future on the road but there's still a lot of hurdles ahead. I don't think they've solved the limitations of LiDar, yet.
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Economics
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No, I'm talking about 90% of all jobs. Engineering/science/creative jobs are relatively rare.
Most humans don't even have the capability to be "retrained" for the kinds of jobs that machines will be incapable of in 20-50 years, because most people are relatively stupid compared to the top end of the normal curve populated by those highly skilled jobs.
Of course, one possible outcome of that is that humans just get cheaper and cheaper (and more and more miserable) over that time period, so that machines remain slightly more expensive.
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Economics
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Surgery is now being piecemeal automated - we still have surgeons driving the machines but less and less.
AI is already outperforming people in diagnostics and treatment planning in some domains.
The practice of law and adjudication is a rich target area. As is securities trading.
Our society now produces adequate abundance for all with ample leisure time even for the most necessary workers.
But the wealth is being hoarded. That isn’t sustainable.
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Economics
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I’ve lived in over half a dozen major population centers all over the US - moving for the jobs. I built space craft, phone companies, gem trading networks, and ultimately software. I have a degree in petroleum engineering and when the bottom fell out of that mid 80s there was no help to switch specialties so I do NOT work as an engineer. You have to be full on autodidactic or starve - that’s America
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Economics
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What is NTI? I did a quick search, but it turned up too many things with that acronym.
> In the next 50-60 years we will not see a change where automation will take more jobs than it produces. The solutions we can think now may not be at all applicable to that society.
I think you're right to recognize the difficulty in predicting what society will look like and what solutions will work, but I think the "when" is similarly unpredictable. 50-60 years ago very few people had access to a computer at all, now nearly half of the world's population has internet access. Look at the advances in processing power (10\^3 FLOPS to 10\^15 FLOPS), massive cloud storage and processing that is cheaper by the day, software tools that make computing more accessible to more people, and all of the AI feats once thought impossible that have already been accomplished and can be built upon. Add in the huge financial incentives and I think all of the pieces are in place for this to be a serious problem much sooner than that. Out of curiosity, where did you get the 50-60 number and why do you think it will take that long?
​
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Economics
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Actually, it seems that middle income jobs are eroding.
[https://blogs.imf.org/2016/06/28/rising-income-polarization-in-the-united-states/](https://blogs.imf.org/2016/06/28/rising-income-polarization-in-the-united-states/)
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\> To sum up: income polarization in the United States has seen a significant increase since the 1970s. While initially more middle-income households moved up the income ladder rather than down, since 2000, most of the increased polarization has been towards the low end of the income ladder. **These trends, in addition to the well-documented income inequality trends, have led to a declining income share of the middle-income households.**
​
(emphasis mine)
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Economics
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The days of moore's law are nearing an end, soon we will hit the physical limit of transistors.
NTI stands for negative tax income. To be honest it's NIT but because I was on mobile I started calling it NTI for some reason, haha.
https://en.wikipedia.org/wiki/Negative_income_tax
I'm a theoretical physics Bsc, but I often venture to see what the engineers and AI techs are doing and just by talking to them I don't see how robots are going to overtake the jobs they create. Like for instance the current automation wave was posed to be "the one" to actually do it, but it didn't and it's not even showing signs of doing it.
The 50 year thing was just a number I put forward, can you name a technology being developed right now that you think will revolutionize AI? But it's true we can't predict what will happen in that time. I don't think it's even possible to do a study on the topic, current trends from economic history, point to what I'm suggesting but as all inductive reasoning, it's by no means a law.
Read thru this thread for instance, or ask around on the sub to see if anyone thinks that AI will be the thing that bridges the gap. In economic theory sense increased productivity would lead to resources being used elsewhere which would create new jobs. So I don't really see how robots will automate more than they create.
https://www.reddit.com/r/MachineLearning/comments/6xqty0/d_what_common_misconceptions_about_machine/
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Economics
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Yes, I agree but it should be is my point. The only way to safe the workers out of a job is to retrain them, not just leave them in the dumps to figure it out. You for instance were adaptive enough to survive but not everyone is like that, some help can be good for the society and economy. But you can't help someone who doesn't want help, and that's what we're seeing in the coal workers. I'm not glad to say it but if they refuse help then they should learn to adapt on their own, their profession is nearing a dead end and Republican can stop it.
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Economics
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Retraining almost never happens, though. Just take the TPP, for example. After a lot of pressure, congress agreed to set aside something like $900 million to help retrain the millions of people who would be adversely affected by it. So a couple of hundred bucks per worker. That's not even close to enough to train a person in pretty much anything, and to make matters even worse, the GOP decided against the funding at the last minute so it never would have happened in the first place. Most of the people affected by NAFTA were never retrained, either, and not because they didn't want the help.
You can't just ignore politics when you talk about stuff like this. If retraining is impossible in the current political environment, don't push a policy saying it will be ok because we'll just retrain people. There's a reason most people don't care what economists have to say about just about anything. Your pie in the sky theory sounds great on paper but it doesn't mean shit if it falls apart once it meets reality.
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Economics
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>I think the social cost of these programs should be considered when pushing a specific policy.
Great me too, that's not an actual idea put forward though.
>Assuming that the government will do something that they most assuredly WONT do, in order to make your proposal look more attractive is pretty deceitful.
So my assumption, that the government would see retraining as the most cost effective way to try and help, is wrong because they currently do not provide enough. Did I understand you correctly? And I'm being deceitful how exactly?
POWER+ Plan is a 10 billion initiative to help coal miners. There are less than 630k working in that industry as a whole, out of this number only 50 k are actual miners. Not a lot of people need retraining when moving between energy sectors so most of those people can go somewhere with minimal retraining. But let's say we do some stupid shit and just divide the money across everyone. That's still 16k per person, which is enough for some kind of retraining. When you take in to account that most of these workers don't need a 4 year university degree, and that a local uni costs aroun 18k anyway. You see that it has the potential to actually benefit a lot of them.
So maybe it's not that optimistic to think a similar initiative can be made for other industries. Of course the actual plan isn't about spending all the money on retraining.But some highlights.
Coalfield Development Corporation received $600,000 for a project that will support agriculture production on reclaimed surface mines in West Virginia and provide job training and business incubation services around the local foods sector.
Appalshop in Eastern Kentucky received $275,000 to work in collaboration with community college to implement a one-year IT workforce certificate.
San Juan College received $1.4 million to offer worker retraining services in collaboration with emerging IT, healthcare, and renewable energy sectors
The Chicago Transit Authority (CTA) received $200,000 to train bus diesel mechanics and technicians as part of a plan to transition a retired power plant into a bus storage and service facility.
Department of Labor's (DOL) Dislocated Workers National Reserve — $20 million
Appalachian Regional Commission (ARC) — $25 million Economic Development Administration's (EDA) Economic Development Assistance Program — $6 million
Environmental Protection Agency's (EPA) Brownfields Program — $5 million
United States Department of Agriculture (USDA) Rural Development — $12 million for Rural Economic Development (RED) grants & $85 million for loans
The program was to be expanded but it was stopped by Trump, when the stupid coal miners decided they would rather try and bring back the coal golden age then to try and move forward. That's literally them shooting themselves in the foot.
I ask again what is your idea, what do you think is a better, more cost effective, practical approach?
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Economics
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So long as
1. Human greed is infinite.
2. Somewhere in the chain of command, the robots will need a human to tell them what to do.
I don't think automation will reduce the long run number of jobs in the economy.
If automation gets to the point where on average a single person can produce the same amount as N (where N is any number greater than 1) people today, then in the long run, society will simply produce and consume N times more stuff per capita.
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Economics
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You'd still have a 50 year old competing against a 20 year old. Both have the same level of skill in the relevant field, except the 50 year old has a mortgage to pay and a family to support.
Why would any business hire the 50 year old over the 20 year old? The 20 year old will do it for cheaper.
Thats age discrimination in a nutshell. The 50 year old trying to change careers so late in life is, quite frankly, screwed. None of his past experience will count for his new career.
Starting over is also a huge psychological hit. You've worked all your life to be the best at your field. You may be the best truck driver who has ever driven a truck, but suddenly none of that counts anymore. 30 years of work experience were wiped clean. You're now no more valuable than a 20 year old kid. How do you pay that pile of overdue bills on your coffee table?
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Economics
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I get it, I really do but this didn't happen yesterday, ok. For truck drivers this hasn't happened yet and won't until at least another 10 years. Maybe they should start thinking about changing jobs, right now. It's not all about software, plenty of industries will allow for older people to join the workforce. If you were a coal miner go to renewable energy or gas. Go to night school or start a part time degree, even distanced learning like openuniversity will do. There's gotta be some place you can switch to.
I don't have all the answers but there's no practical alternative. Just paying people to live is not a good solution because as you said the guy/gal lost a 70k job with a mortgage for a 70k wage. No amount of NIT or UBI will help them. So really what do you expect the government or anybody to do? I'm sorry for these people but we can't be held accountable for their bad planning. Coal didn't start disappearing yesterday, factory jobs didn't disappear out of nowhere. There is some responsibility left to the individual, don't you think?
I mean if you have an idea, please share it.
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Economics
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1.) The poster above you makes a point you don't seem to understand. In almost all industries, hiring an older person is not sexy. We don't have a demand for that much clergy.
2.) The # of coal jobs > # of new renewable energy jobs. There are more jobs disappearing than being displaced - that is the key output of modern automation. There's a reason why the textile industry disappeared in the US in the 1980s-90s and it's not foreign workers. We were able to automate it.
3.) The exponential growth of technologies abilities implies that, at a certain point, it will happen "overnight." Hell, wasn't it this past year where you could tell Siri to order yourself a fucking pizza?
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Economics
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With automation new industries have been founded. There are now more jobs than ever before, the renewable industry employs more people than peak coal, peak coal employed 800k miners in 1923, there are 800k+ renewable jobs as of 2017. A new technology does not happen over night. Like literally we are commenting on an article that says that 75 million jobs will be lost to automation and 133 million will be created. Luddites were wrong during the textile automation and they are wrong now. Mechanical engineers such as Henry Maudslay, Richard Roberts, and James Nasmyth, Whitworth pioneered a manufacturing revolution that saw Great Britain transformed from a craft economy to full mechanization in the space of two generations. Without this, the railways could not have come into being, the textiles industry would not have become so dominant, and shipbuilding would not have evolved into a great industry. Jobless rate is lower than any time between 1970 and 2000. Its clear that new jobs and industries have been pioneered thanks to technology.
I ask you, besides retraining or some other social net to help displaced workers transition , do you have any practical, cost effective ideas on how to help them?
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Economics
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Yes, you're right, I misspoke.
.# of nonrenewable old world jobs > # of sexy renewable new technology jobs. The article implies I'm wrong though.
I also worry that the number of jobs doesn't necessarily mean "good jobs." For example, people criticize Luddites that claimed that ATMs would put people out of work with the advent of ATMs. That didn't happen. After ATMs, there were MORE bank teller jobs. Unfortunately, they are shit jobs that pay low and people likely need government assistance if they hold these jobs.
Sure, technology has created more jobs. But many of them are artificial. Think of the "social media marketing guru" jobs that rarely add value (some people are good at it, most are not) and are wasting resources. Or the "Chief Diversity Officer" of American universities that make $100,000+ per year to essentially be glorified training coordinators. And this is in America!
What age are we going into? The technology age? Is everyone going to be a coder? In 2009, we found out [that robots learned to lie without us](https://www.technologyreview.com/s/414934/robots-evolve-the-ability-to-deceive/) and that [computers are better at teaching themselves to code](https://www.newscientist.com/article/mg23331144-500-ai-learns-to-write-its-own-code-by-stealing-from-other-programs/).
Coding in the next ten years isn't going to be "Hello world!" coding. Quite frankly, a lot of people will be unable to learn because they lack the cognitive ability.
Yes, I do have a solution. I'm going to Sofia to drag your ass outta there and come up with a plan for the world. Then I'll drink a Zagorka to your good health with you.
A realistic solution is likely a humane version of execution like in the Four Futures book. Or, if that is not humane, change the system to promote single people. Give tax breaks to people who don't have kids. The wealthy (I assume people with the technical ability for jobs will be wealthy because they'll be paid well for their skill set) will ignore these breaks and raise children. Everyone else would love to get an extra $X (or X lv) each year and will consume for a mere 120 years or so. With that, we can solve this within a generation. :)
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Economics
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Whether a "real economist" uses the term "trickle down", "horse and sparrow", or any one of the other numerous terms used is irrelevant. Trickle down is a term used, in my opinion, mostly as a political economic concept to convince the uneducated that giving more money to the rich is the way to prosperity regardless of how many times it has failed. Economists do use the term, although I doubt any economist considers it a valid theory.
The deficit is a combination of many things, including tax revenues and spending.
In a growing economy, tax revenues will increase. We are in a growing economy. The fact that tax revenues increased, even after a tax cut, just shows how well the economy is doing.
The fact that we have a trillion dollar deficit, in a growing economy with tax revenues increasing should be very concerning. This is the time that deficits should be very low.
Edit: grammar
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Economics
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Depends on your definition of Labour. 'New Labour' - the strategy pioneered by Tony Blair (and watered down by Gordon Brown) was basically 'Compassionate Thatcherism', greater spending on Welfare services, combined with a generous immigration regime but generally not very aggressive taxation/ worker guidelines (although they did bring in some of the more crazy health and safety culture). As a result investment / FDI grew as by comparison to other EU markets it was easy to invest.
​
The Old Labour (which is basically a further left-field socialist with Communist sympathies) is trying to redress what they perceive to be economic injustices (where you are on this is where you stand). It will work with certain workers/voters but, even though the actual introduction guidelines are highly diluted - signal a anti-investment ethos to the wider market. Will it get them elected? Maybe. Will it encourage investment? Probably not.
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Economics
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The only reason why it doesn't encourage investment is because countries are competing in a race to the bottom when it comes to creating the "best possible" investment climate, in order to rake in the cash.
Is it dangerous to be a more socialist country when others are not by paying their investors better through gradually selling their worker population into slavery? Yes, surely.
But if we continue forward on this path, then the rich will only get richer until eventually the worker population starts a real revolution, one that involves a bit more than voting leave in a referendum.
There is only one way out, a political nightmare, but necessary: international agreements on the bottom line division of the wealth that goes to investors and the wealth that goes to labour.
Politically impossible, and therefore, like any great social improvement of our moral behaviour in the history of mankind (think abolishment of slavery), someone needs to take that first (insane) leap of faith. The kind of leap that is seen as suicide beforehand, but can be heralded as the first step towards a better world in hindsight.
I hope the world is ready to follow Corbyn into throwing off the neoliberal dogmatism of the past decades.
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Economics
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As I mentioned, from the comments I read given to Broadsheets by Labour (FT etc) of the new policy, it is to be implemented over a five year period as opposed to immediate and in full effect. There are also exceptions to small companies (<250), foreign companies etc and does not penalise those who don't give it out dividends but invest back in the business. It also does not compel a uniform 'Employee Trust' structure (no uniform structure creates loopholes). Again difficult to say until the legislation is printed. I have had a quick look on the Labour website but can't find it yet.
It is not the policy itself, but rather the perception of it. If decision makers in FDI related companies see a high probability Labour outcome in the election, they will withold investment (if they want to regulate this, then next they will want to regulate that - that type of thinking. This is very real). Now you could turn this on it's head and say 'well they will' as you get into the cat and mouse game of what investment 'doesn't come' to the UK. We can just about keep tabs on what FDI is coming in. Unless it is a mega project/factory it is difficult to say what is lost.
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Economics
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That's not really correct in context. Telling someone to look up something You dont understand and is not particularly relevant? Hmm. You should not be upvoted. Im skeptical it would increase the velocity of money (in the long run certainly probably not) and also increases in MPC only increases economic activity in the short run. In the long run a higher MPC *decreases* economic activity and incomes. Even in the short run, if you are not in/recovering from a recession, an increase in MPC will be absorbed almost entirely in the form of higher prices, not real increases in activity.
You should know this from the keynesian models you learned in intro macro
This is even leaving aside the distortionary cost of whatever his plan is to increase MPC, if that is the goal
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Economics
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>>So what happens when capital seeking returns exceeds investment opportunity?
>The natural rate of interest falls to the equilibrium point.
So say, if the government returned a trillion dollars to the demographics with the highest propensity to save... interest rates were supposed to go down? I hope your understanding of growth economics doesn't rest on this 'insight' because again, the exact opposite is happening.
>you'd have to prove that (excess capital, inequality, and financialization can slow growth and increase the severity of crises)
https://www.sciencedirect.com/science/article/pii/S1572308917304291
https://digitalcommons.bard.edu/senproj_s2017/185/
https://www.tandfonline.com/doi/abs/10.1080/00036846.2017.1420899
The counter arguments, I guess, would require capital to be: homogenous, unrelated to credit growth, and involved in novel investments beyond M&A, property bubbles, unstable PE ratios, and other forms of nominal asset appreciation.
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Economics
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>So say, if the government returned a trillion dollars to the demographics with the highest propensity to save... interest rates were supposed to go down?
Are you aware that the US is not a closed economy, and that return on capital is determined globally? In any event, the nominal interest rate will be whatever the fed wants it to be.
To be clear, I don't consider credit expansion to be akin to a growing capital stock. None of your links relate to the Solow growth model, if anything they showcase support for Austrian business cycle theory. I don't agree with it, but we may not be too far off on that point. The simple point about Solow stands, however.
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Economics
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1. Markets aren’t so simple, a lot of people are investors, workers, business owners all at the same time.
2. you will basically have to re-write our whole financial system probably causing massive conflicts
3. A system so rigid is bound to be a lot worse then what we have.
4. What’s fair? refer to point 1
5. There are many more reasons why this would be a terrible idea but I hope that is enough.
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Economics
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I don't know if you are being sarcastic. If you are, then I completely agree and would like to clarify that I'm only arguing for a form of capitalism that protects their labour force better than it does now, through the use of government legislation.
I am aware that this can have a slightly negative effect on the economic productivity of a country as it means that the market will be less free, but I personally value the health and happiness of people over the speed and volatility of our economic progress (as long as the overall productivity does not gradually decline)
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Economics
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Thanks, I appreciate your reply.
1. True, but there exists a strong correlation between the amount of wealth someone has and the amount he invests.
2. As we know from Piketty's work, the postwar profits gained from labour are less than the profits gained by capital, so if we do not cap/tax capital gains more than we do now, in one form or the other, the financial markets will ultimately extract all wealth from the real economy. So we better try to correct course, even if it is at the cost of short term instability, because if we don't, there will be even greater instability later on.
3. Rigidity is a good argument and a problem that will need to be addressed in one way or the other. I agree.
4. Also a fair point. I believe that there is a point of optimal performance of the real economy where people can also lead a good life. Certainly, the UK and the USA have comparably worse standards of living than the slightly more socialist but still capitalist countries such as the Netherlands, Norway, Finland etc.
5. I'd love to hear them.
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Economics
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I'm not proposing a complete communist society. Socialism and communism aren't the same thing. At least not as far as I know. I'm totally okay with differences in terms of income.
Corbyns proposal isn't entirely communist either, even if he is portrayed in that way by British media. Capping or taxing the income from investment (perhaps in a slightly more intelligent way than Corbyn proposes) is not the same as creating a new Soviet Union.
In my opinion the goal is and should be to make sure that the gains from capital are equal to the gains from labour. (Basically Piketty's vision)
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Economics
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Not semantics... but is it marginal propensity to save that predicts long term growth... or the total savings rate? This may matter when you factor in debt. If the lower income segment of the population is increasing their debt, that's negative savings, right? If shifting income reduces debt... is that the equivalent of increasing savings? This matters if [investment in financing others' debt doesn't provide the same returns as other investments](https://academic.oup.com/cje/article-abstract/35/4/637/1697549). That is... consumer debt is financed by other's savings, which means those savings don't go to capital, technology, or other productive investments.
There's also arguments that the highest returns in developed countries come from human capital... if so shifting income can increase human capital more at the bottom of the distribution than the top (who already have high human capital). [One paper arguing such](http://ftp.iza.org/dp6328.pdf):
>In early stages of industrialization, as physical capital accumulation was a prime engine of growth, inequality enhanced the process of development by channeling resources towards individuals whose marginal propensity to save is higher. In later stages of development, however, as human capital has become a main engine of growth, equality, in the presence of credit constraints, has stimulated human capital formation and growth.
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Economics
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I'm not arguing semantics. Communism is something else entirely than 'worker control over the means of production'. You are arguing for social democracy, not socialism. Karl Marx never said "socialism is when the government does stuff, and the more stuff it does, the socialister it is". Socialism is a specific thing. There is no semantic argument here, there is you using a term wildly incorrectly, and me attempting to correct you. This isn't a matter of opinion. I can't all of a sudden say that the KKK is a pro-diversity, anti-racist organization and not get called out for it.
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Economics
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Models have consequences in so far as their ability to mimic reality. You understand this right? If the model wasn’t accurate in in its assumptions and revelations it wouldn’t be used.
The fact is the Solow-Swan model works pretty fucking well and is the core model used for extensions when you are looking at technological growth, savings, and capital inputs proves this.
Reality hurts. It’s not agenda pushing to say this model is effective. It’s effective in modeling because it’s true. Imagine being afraid of truth? Sad
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Economics
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It would disincentivize both.
The math is just from a standard cobb Douglas production function minus the cost of inputs and optimizing.
What in the world is with people bringing up velocity of money in here? I doubt this would really effect the velocity of money, nor does velocity of money really matter for the economy. Velocity of money should be of no interest to anyone except central bankers digging into very specific details. It's a pretty obscure thing and not interesting.
Also, I believe "giving more to workers" is likely to decrease the overall savings rate, not increase it, even ignoring other effects
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Economics
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>Your assertion that the source of money affects where it is spent/used seems suspect
Its about incentives. Taxing return on capital reduces incentive to accumulate capital. This leads to lower labor productivity, meaning lower real wages for workers.
>Worker productivity has increased massively in the US over the last 30 years but wages have not. What say you?
[Eh, not that cut and dry.](https://piie.com/sites/default/files/realtime/files/2015/07/lawrence20150721-figure5.png) Median wages haven't kept up, but mean wages have. This indicates skew at the top end of income earners, starting around the early 70's. I blame monetary policy, which is a bit old school, but there are a few paper I can refer you to if you actually care to read more about this.
&#x200B;
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Economics
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Look this is really stupid to argue about and I'm not sure why you're erecting all these semantic walls. Investment drives TFP, TFP drives growth.
Obviously inoptimal /centrally planned investment doesn't have a direct link to TFP, but the premise is that investment is market-driven, not nationalized. So if you're trying to obtusely say that a central planner like China can't just raise investment and "buy" growth, you're of course correct, but that is hardly ceteris paribus because it is not even in a competitive market framework.
But at the end of the day (competitive, economically efficient) investment is the only growth driver. If you don't want to take my word and the word of all mainstream economics, then I wish you luck wherever you set yourself adrift.
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Economics
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I already conceded to you that it is fine if "socialism" means what you think it means and you might even be correct in thinking it means that (I wouldn't know if that's what it means without doing research on how people on average use the term, and I don't think it's an interesting topic of research/discussion).
You called me out for my "incorrect" usage of the term, I explained what I meant, but you insisted I was wrong still and even after conceding to use your definition you did not want to comment on the content of what I said.
Therefore, this entire exchange perfectly fits the definition of a semantic argument, but let's not have a semantic argument about the definition of a semantic argument.
What do you think of what I said in my original post?
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Economics
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That's really just semantics. Marginal propensity to save has the implicit of the marginal propensity to spend (because whatever you are not saving is being spent).
The effects of this on demand are what is being pointed out. If more people can afford to spend money because they have an increased disposable income then their demand "increases," or more specifically, they can now afford some need/want that they could not before.
If in aggregate this then creates greater incentive for suppliers to meet that greater demand. Kind of Keynes big famous point... Economies are demand based, not supply based. Raising effective aggregate demand grows an economy.
You can make a billion pencils, that doesn't mean people need/want that many and if they can afford them (demand) it doesn't mean they will buy them.
But if people can afford and need a million cars, then there are going to be a million cars, barring externalities.
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Economics
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It doesn't matter how people on average use it. People 'on average' use quantum mechanics to mean all kinds of bizarre magic/sci-fi shit, but speak to an actual physicist about it and they'll tell you exactly what it means - and why the majority are wrong. The same situation exists here. In the US particular, socialism has come to mean 'when the government does stuff', and that toxic stupidity is spreading to the rest of the globe where even Aussies and Brits are beginning (though not in the majority) to see it that way too.
But that's incorrect. Socialism refers to a specific thing. The elimination of class conflict/wage labour/the capital class is essentially a *necessary condition* for it to be called socialism. It would be semantics if we were quibbling over minor differences in meaning. But we're not, you're saying that black is white, and I'm telling you no, black is black.
I don't really care what you said in your original post, I'm just tired of seeing this bullshit equating any kind of 'government doing stuff' with socialism.
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Economics
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Do you mean to say that the reason Haiti and Angola are so poor is that the people there simply do not demand enough goods? Obviously not true. Productivity grows economies, and the more capital an economy has (think tractors, roads, computers) the more productive its labor force will be. This means greater output per worker, giving us more supply of consumer goods. The only way to grow the capital stock, btw, is if we save so that we fund investment (that is, if we reduce consumption in favor of savings). This is a long run illustration of how economies grow; there are short run changes that occur when an economy reduces consumption, and it takes time for the labor market to shift from consumption production to capital production, but this change has beneficial long run affects for the economy.
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Economics
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Demand is not simply need or want, but the ability to afford need/want.
The reason investment works is because it not only produces to meet a demand, but also puts the affordability into the hands of the people working.
This isn't a hard concept here. If people don't have money to spend, they cannot buy anything, and they drop off the slope of the demand curve entirely. That aspect, increase aggregate demand, is at the foundation of growth.
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Economics
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What if they enact a new tax along with it. 10% on total cash basis incomings for all corporates and private enterprises alike. Your exempt if you don't earn enough or if you choose to give up a 10% shareholding to the government. This share is held by the central bank as collateral for government spending or in a sovereign fund. Give some fixed percentage of dividends to workers to buy their votes and outsource the government's voting rights to employees while keeping the rest as government revenues. Then offer an corporation tax rebate of say 10% to those corporates who gave up the shares. Anti avoidance is the stick, taxation by giving up shares is the carrot.
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Economics
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>Demand is not simply need or want, but the ability to afford need/want.
Again, the problem with Haiti and Angola is not that people don't 'have enough money'. Both of those countries have printing presses, and could hand out plenty of money - do you think this would help their economies? The answer economists give is 'no', because whats at the core of increased economic growth is productivity, which has to come from an increase in the capital stock of a country.
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Economics
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Well the assumption, which given your examples isn't true there, is that if there is a demand someone will try to supply it since there is profit to be made.
If, as a people or society, people just don't want to, I would classify that as an externality.
Increasing capital stock is a way of saying "get more businesses here" like sure, your not wrong, but the whole point with increased demand is that it will trend towards equilibrium yeah? So there isn't a need for that since suppliers would try to meet demand.
Like I'm not sure what your point is. Are you contesting the claim that increasing aggregate demand increases growth?
Because from simple logic that is a given. More people with more money buying more things creates the incentive for more production, barring externalities.
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Economics
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Really?
You must produce food and water before you need it?
Your fooling yourself a bit here. People start by producing what they need, that need comes before production.
People then produce what they want, that want comes before production.
Then people will use surplus production to trade for other things they need/want.
Adding money to that doesn't change that what gets produced RELIES on what people demand (how they use money to meet their needs/wants).
I'm not the one putting the horse before the cart. You are. Demand comes before supply, because lacking demand, there is no reason TO supply.
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Economics
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Again, people demand an infinite amount. Why do some communities in Africa and the Caribbean have poverty and terrible living conditions? Don't they demand better ones? By your logic, they should just then produce better buildings and more food! Yet, that reveals why this whole notion of 'demand grows the economy' is wrong; because it has to be precluded by production! Theoretically, we all demand an infinite amount of consumption, yet the constraint we have is that we are not productive enough to *produce* all it is we want to *demand.*
You switched definitions of 'demand'. Here you are saying it is what people theoretically want, before you said it is what they can afford; you keep switching between the two.
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Economics
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What if we make it simpler. voluntary program, exchange 10% of your shares for a permanent 15% reduction in corporate tax. Shareholder value increases, workers have a say on the board making it more collaborative and the government eventually gets 10% of the market value if the company is sold. Also FDI goes through the roof, as corporation tax is deferred until its paid all at once as sale proceeds making the UK a very attractive place to invest.
Edit: This is the Tory/Labour compromise version.
Edit 2: Smooth out the cash flows by borrowing from the central bank against the share value.
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Economics
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While "demand is infinite" is a require assumption for orthodox models and is taught in basic classes it is easy to tell that reality is not that way. So much so that the externality isn't an exception but a rule.
You don't want an infinite amount of food, so there is a lower willingness to pay for food the more you have, which is then immediately reflected in demand. When looking at everything one's demands there is an upper level that plateaus out. If demand were actually infinite substitution in trade wouldn't exist, you would just demand them all. If demand were infinite there wouldn't be the diminishing marginal utility. Demand isn't infinite, that rule exists to simplify the variables to make the subject manageable enough to teach. Not because it somehow reflects reality.
As for your example, that assumes that their demand isn't met, again, affordability of needs or wants. If they done feel the need or the want, then it wouldn't matter if they can afford it or not.
My definition of the word demand has not changed. It is a representation of what people can afford regarding their needs/wants. It can be used in discussing past, present, or future tense, but it always refers to one's ability to afford what you need and want.
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Economics
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>it always refers to one's ability to afford what you need and want.
Then you finally agree that saying 'demand grows demand' is effectively meaningless and confused? Just use the right words... 'increased consumption has to be precluded by increased productivity, in the long run', which by the way all economists agree on and is not a controversial issue. Just fyi, these debates about "demand grows the economy! No, supply does!" doesn't exist in academic economics; researchers and actual economists are in resounding agreement that the model is as follows; "we have a capital stock which makes labor more productive, increasing our output, thereby enabling greater consumption (demand) in future periods. The capital stock grows when people save their incomes and invest the savings in capital expenditure."
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Economics
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I'm not sure where you are pulling "demand causes demand," that wasn't something I said. Demand is inherent in what someone needs and wants, if they can afford it.
Increased consumption needs to have production come before it, demand comes before production.
In effect, you want something you can afford, it gets produced, you consume it.
As for your claim, you are so wrong. There are dozens of schools of economic thought, both orthodox and heterodox, within the academic community (at least in the US). And if your last claim was true then why not simply do so regarding developmental economies around the world?
They have tried to do so for decades and yet their economies are still not where all those theories say they should be. The fact of the matter is that demand stimulates an economy. Lacking demand, there is no production needed or wanted. You can supply as many pencils as you want, if people don't demand them they are not going to sell, regardless of how much capital stock exists for pencils.
People have to BUY something for profit to be made. Demand is the foundation, supply serves it.
And this debate has been ongoing since at least 1950 that I'm aware of.
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Economics
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&#x200B;
>You can supply as many pencils as you want, if people don't demand them they are not going to sell, regardless of how much capital stock exists for pencils.
**People can only afford to buy more pencils if they themselves are productive, not if they 'demand' pencils.** Homeless/jobless people demand houses, yet they cant afford them because they don't produce enough to exchange for housing. The reason markets don't produce stupid amounts of pencils is because they are limited by the profit/loss system. The reason markets don't produce stupid amounts of pencils is because they are limited by the profit/loss system.
>There are dozens of schools of economic thought, both orthodox and heterodox, within the academic community
Nope. There is a neoclassical synthesis. Marxists, Austrians, 'Georgists' - whatever else- don't have any clout in economic academia. They don't get published, and nobody listens to them. At least in the U.S. This is how I can tell you don't have a background in economics, other than your understanding of how economies grow.
You keep implicitly implying that 'demand grows demand'. It doesn't.
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Economics
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Businesses also won't invest if no one's spending. Look at the record amount of cash corporations are sitting on. Low aggregate demand has plagued much of the recovery.
Taxing the wealthy to directly fund investments in science and infrastructure would do far more for long term economic growth. This is exemplified by the government funding much of the revolutionary technologies we enjoy today like the internet, the microchip, satellites, GPS, touch screens, the research of Larry Page and Sergey Brin, shale gas, MRIs, the Human Genome Project, HIV/AIDS research, early aviation and aeronautics, hybrid corn, Tor, Boston Dynamics, among many others.
Re-distribution to the poor would also probably increase net well-being and reduce a lot of the craziness in politics and society. If people weren't so stressed out over a future of job insecurity and rising education / healthcare / housing costs, then people wouldn't be so eager to elect radicals and populists.
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Economics
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>**People can only afford to buy more pencils if they themselves are productive, not if they 'demand' pencils.**
You are using demand wrong. Let me spell this out with demand as economically defined.
"people can only afford to buy more pencils if they themselves are productive, not if they can afford their want for pencils."
See how that doesn't make any sense?
But yes... People can only demand pencils if they have the income available. To take this back to the initial point you responded to, that was the whole point being made. If more people are making money (based on the presumption the labour party will redistribute income from ultra wealthy to less wealthy) then they will be able to afford more of their needs and wants, which is exactly what I said when I said aggregate demand would increase and grow the economy.
>Nope. There is a neoclassical synthesis. Marxists, Austrians, 'Georgists' - whatever else- don't have any clout in economic academia. They don't get published, and nobody listens to them. At least in the U.S. This is how I can tell you don't have a background in economics, other than your understanding of how economies grow.
Your denial isn't my problem. I've read and learned plenty from the neoclassical school, I've also read from Chicagoan. There are dozens of schools of thought that are published and I've read from them. Institutional thought has been particularly helpful to me in learning how to explain some things that neoclassical doctrine doesn't, but that's not here or there.
>You keep implicitly implying that 'demand grows demand'. It doesn't.
No, I'm not implying anything. I'm only saying exactly what I'm saying. Which is that demand, as in the affordability for needs and wants, is the base for modern economies. It comes before supply and is the reason for supply, and by increasing disposable income of the aggregate you enable more people to afford their needs and wants. Which increases how much is purchased, which creates a greater need for supply.
Demand doesn't somehow create demand, stop trying to straw man.
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Economics
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>What you meant by demand earlier was increased consumption spending, which I think we've established cannot be the basis for economic growth; it has to be increased productivity due to capital accumulation.
If people have more to spend then (at least if their mps is not 100%) consumer spending is increased as a result of more widespread income. I can't really think of an example where demand is increased where consumer spending wasn't.
>Sigh, no, there really aren't any 'schools' of economics anymore, its all pretty much the same thing. Sorry to be a bore, but its true. I should know, I've published in several journals (not to brag).
Again, that simply isn't true.
By and large neoclassical leanings are pervasive in every American Institution and almost all journals choose not to publish things that fall outside that. However, that is not a representation of schools of thought. There are also journals that are themselves outside the neoclassical leanings in many cases.
In any case I think we have come to a conclusion regarding the OP, and even if you don't agree, I believe you understand the meaning I was trying to get across. Have a good one!
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Economics
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Yeah, I was afraid that this would be your next reply. From a debate about the particular semantics of a word, we go to a debate about how the meaning of a word should be determined. I didnt really want to open this can of worms, and still dont, but i guess i am too stubborn to let this go.
You are saying that there is a definite meaning of a word. One that is determined by some expert or group of experts. I'm not denying that this makes sense and is a relatively useful way to think about the meaning of words, but it is not how actual language works. In linguistics, it has been widely recognized thst many words have long histories of semantic change, where at one point it meant one thing, and at the next point something else entirely, sometimes even the opposite of the original meaning. Even experts have changed the meanings of certain technical terminology throughout the ages.
The fact, on top of this, that the word form (spoken or written) associated with a particular concept is often entirely arbitrary and can vary greatly from speaker to speaker and from language to language, has led most linguists to deny that there is a "correct" usage of a word, despite what you and many other people may think. Language is inherently a social phenomenon and can be compared to ethics, where there often isn't a very clear cut objectively "good" way to behave. Instead, what is correct or incorrect is in flux. It changes with the properties of our society and even within one society, there can be disagreement with no way to adjucate.
I am not saying that in this particular case, I am right about "the" meaning of socialism, even if there is no such thing. All I'm saying is that even though you might be very right that experts are siding with you when it comes to the "proper" definition of socialism, it is still the case that - as you have said so yourself - there are many people who use socialism in a different sense. And because of the social dynamics of language use and the arbitrariness of language, there is no absolute right or wrong. There is only communication and miscommunication.
Now, you can try to keep correcting everyone who uses socialism "wrongly". I applaud you for the effort and wish you good luck with that. It will certainly help everyone to communicate better with each other in the future.
But it will probably take you a very very long time and I believe it might be much more efficient and pleasant for everyone involved if we would only correct each other when there is a purpose and an intention to communicate. Since you don't seem to want to add anything to the debate, I would like to thank you for your language lessons today and wish you a good day.
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Economics
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Very interesting post. Would like to get your opinion on the following argument (note throughout the example focusing on the US economy and it's recent history):
You responded to this point: "So what happens when capital seeking returns exceeds investment opportunity?" with "The natural rate of interest falls to the equilibrium point." which makes sense.
However, if the interest rate reaches 0, or slight negative, and there is still an excess of capital returns seeking investment opportunities, wouldn't the interest rate be unable to go any lower, causing it to be unable to reach a market clearing rate?
For awhile the US economy was at this zero lower bound, admittedly though it is not right now. However, if one views the housing bubble of early 2000s as capital investor's response to a lack of investment opportunities (relative to the amount of capital seeking reinvestment) then an interest rate over 0% would only indicate a bubble staving off the eventual crash to 0%. Obviously this is not necessarily the case now, but it would indicate to me at least that an interest rate over 0% does not, in the long run, necessarily indicate a balance between investment opportunities and capital seeking reinvestment.
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Economics
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This is where I’m confused productivity has been increasing (thanks to automation) but wages (especially at the bottom levels) have not been increasing.
So how do economists overcome automation wiping out large segments of the labor pool?
I feel like the answer from economists is always “tough luck”.
How can those who are unable/unfit to hold skilled productive jobs survive?
Liberals say tax the rich spread that money out.
Conservatives say cut business taxes so they can create more jobs.
But how can business sell goods and create jobs when people don’t have enough money to buy those goods? Especially in times where excess captital is often invested in automation and not workers.
I am definitely not an economist I’m just curious because I don’t understand how economists take technology into account, or the large segments of people unable/unfit to learn skilled labor jobs when Unskilled labor jobs are on the decline?
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Economics
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The problem with any quasi-free-market model of interest rates in the US is that US rates are mostly determined by policy. Market forces are merely allowed to tune quantitatively-modest credit and term premiums on top of the Fed policy. If you look at the long-run historical yield of 5% on, say, an intermediate corporate bond, about 80% was set by policy action, 20% by market action. So the answer to "what happens to interest rates when X" is dominated by "whatever the Fed did/does to interest rates when X". Thus investors closely follow and indeed overanalyze their every word.
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Economics
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The argument that the interest rate is what the Federal reserve sets it at, rather than market forces, is not convincing to me at the moment. The primary reason is, while yes the Federal Reserve can push the interest rate to wherever it wants more or less, doing so too far in either extreme would result in either a spike in inflation or a huge drop in investment. In effect the Federal Reserve is constrained in where it can push interest rates by the market reaction and it's dual mandate.
In rare cases the Federal reserve may choose to cause one of the calamities in the short term to resolve long term problems, such as what it did to resolve stagflation. This does not negate that in most cases it is constrained because ultimately such action is to reach its dual mandate. As such in most cases it is still the market pulling the Federal Reserve along, rather than the other way around.
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Economics
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> the highest returns in developed countries come from human capital... if so shifting income can increase human capital more at the bottom of the distribution than the top (who already have high human capital).
I agree with that over the recent past, but it is important to note that human capital development is a process which has some non-economic constraints, and perhaps has already nearly hit them in much of the developed world. Access to a large amount of credit (e.g. to fund higher education) may help propel the average lower-class student into the middle class, but there's no evidence that a nearly-infinite amount of credit will consistently turn the lower classes into ultra-rich titans of large, brand new industries. You can see hints of that in the long-term studies of lottery winners, etc. Access to financial capital is hardly the only important constraint.
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Economics
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I certainly agree that there is *some* constraining range that they are likely to respect & obviously they are almost certain to avoid ludicrous extremes. But their willingness to preserve negative real risk-free rates for (at least) 2011-2015 shows that they can and do diverge significantly from some hypothetical neutral/free-market-clearing rate. They have greatly diminished the power (and returns..) of private low-risk-tolerance money market & fixed-income investors in particular, almost to the point of making them irrelevant to certain borrowers. In so doing they have also pushed a massive sum of private money into higher-risk asset classes such as housing and equities in a desperate search for positive real return. So in at least one important way, the market follows the Fed, not (just) the other way around. But it is true that the relationship is complex and dynamic and not simply unidirectional in either sense.
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Economics
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FWIW I do think they waited too long, and have been increasing rates (and unwinding QE) too slowly. I will stop short of calling their preferred measure of inflation (PCE) cooked or fraudulent, but it clearly does significantly underestimate the actual inflation experienced by the young urban middle class in particular. In some of the largest coastal metros, house prices have been running at 6-8%/yr since 2013, health insurance 10%/yr+, gasoline 10%+ over the past year or so, college tuition 6%+, rent in non-rent-controlled markets 3-4%+, and so on. How many LCD TVs would you have to buy to bring your overall inflation rate down to 0-1%/yr given all of that?
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Economics
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That is just completely wrong. First of all, you can't use the terms like that. They apply to individuals. When you extrapolate to the economy as a whole, you say aggregate demand and aggregate supply. It's fairly obvious that an economy relies on both facets to reach its maximum potential.
And no, you can't just keep pumping capital into the economy and expect more and more growth. That would mean if we gave all our money to 1 person with 100% marginal propensity to save, our economy should be infinitely productive... Yeah, ok.
Obviously there is a certain level of investment the economy needs. Past that point, further investment is wasted. This threshold is positively correlated with consumption. So you increase consumption you increase the need for investment. If you over do it on investment, then that money is no longer going to be used productively. Once aggregate demand is met in an economy, the rest will be used primarily for rent-seeking. Most of our economy is rent-seeking at this point. So we clearly have an issue of oversaving and under redistributing.
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Economics
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Your first point is true, the second is not necessarily true. In a capital rich society, the second is blatantly false. The US has so much capital it exports it. Trillions of dollars worth. The lives of the poor in America could be made much better if capital were not seeking returns in foreign countries. This is a problem of too much investment, not enough demand.
And I know what your argument is going to be, that this is efficient and it increases the livelihoods of people in third worlds. Not so fast I say. You are getting way too into data and theory if you don't understand that suddenly expecting the population in the most advanced economy in the world to happily compete with dirt farmers in SE Asia is gonna fly. You're going to cause unrest. You're going to cause MOB populism, which is much worse than rational populism. That's going to set the economy back decades.
Your theory works on paper, but that's it. In the real world, you cannot have a perfect global market overnight. In the real world, there is no perfect market.
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Economics
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I advocate for greater "self" production. With greater automation and cheaper 3D printing economies of scale will be possible, in some cases. To become decentralized.
Interdependence and trade will change from what we know today (again this is all opinion) to become more independent and self reliant. The answer to the money and jobs question quite honestly is that you just won't need them as much. Combine that with centralized automation given a competitive oligopoly and goods will be really cheap, human service will be expensive and, at least for 20 years post automation, will be a viable means to self employ.
Unfortunately the very concentration of wealth means taxation in upper brackets needs to be higher to sustain public services, if there are no changes to the public sector.
Change is discomfort, people will suffer, that suffering will create motivation for change in the very people who now ignore or are apathetic about the issue. Best advice is get yourself some savings and just wait until it does. Keep saving and if it never happens, retire. If it does you will have your savings to alleviate your suffering.
As for prevention... Well you can't prevent suffering others consent to.
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Economics
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Just because enforcement doesn’t fully prevent illegal immigration doesn’t mean we should fully roll it back and just start handing visas to those desperate enough to break the law?
What about the hundreds of thousands and millions of other people who want to immigrate here legally and have applied but keep getting cut in line by illegal immigrants who are getting free visas for crossing the border illegally?
That makes no sense.
-A legal immigrant to the US
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Economics
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The idea isn’t to give visas to people who cross illegally, the idea is to make the illegal crossing unnecessary in the first place.
I will NEVER understand the “life was hard for me so it should be hard for everyone else” argument when we could be working to make life better for everyone instead. It’s the equivalent of saying a grocery store should not open more checkout lanes when it’s busy because you had to wait in a longer line so everyone else should too.
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Economics
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It makes sense if your goal is harm reduction. Handing out more visas overall would alleviate the problems legal immigrants have with having to wait in a line in the first place, and allow the more "desperate" to have a better legal shot at getting in. Demand far, far outstrips the quotas such that legal immigration takes *years*, which for a host of reasons (economic, humanitarian, legal) is the main driver of illegal entry and visa overstays.
Drastically reducing the time to allow someone to legally enter the country and reside should be a key focus of immigration policy, because it helps both legal and illegal immigrants.
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Economics
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It doesn’t make sense if your goal is fair and equal entry to the US. It’s fundamentally immoral to hand certain people visas choosing over others waiting in line simply because they’re closer to the country and chose to cross illegally.
That’s not counting for how many blue collar jobs these immigrants are taking away from US citizens (more than 10mil), the same blue collar jobs that are being wiped out by the age of machines. If they want a visa, they should go through the legal process of applying and waiting just like everyone else.
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Economics
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>we could be working to make life better for everyone instead
Having more illegal immigrants here, even if it’s on handout visas, doesn’t make this country better. I don’t give a shit about quality of life for people outside the US, especially those willing to break the law to get what they want. The American Dream is supposed to be about working hard for what you want, now if we set the standard that breaking this country’s laws will get people what they desire, what kind of expectations does that set for those immigrants and other immigrants who become aware of this fact?
If stopping illegal immigrants makes life for US citizens better, and it does (Mollie Tibbets, Kate Steinle, Missouri murderer, non-taxpaying illegal workers, etc.), then I’m all for stricter borders than handing out visas.
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Economics
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> If they want a visa, they should go through the legal process of applying and waiting just like everyone else.
Well, they do. That's part of the problem. The line is so long at this stage, due to decades of extremely tight immigration policies that it's something of an impossible task to expect your immigration case to be either 1) heard at all or 2) take less than 4-5 years from start to finish.
Ideally you want to widen the doors (or, as one other commenter said, open more lanes) so that both legal applicants get a speedier judgment and other applicants aren't forced to consider illegal entry in order to immigrate at all. The Bracero program cited in the article was simultaneously a skills-based entry program to fill an economic need, as well as a political need, so in that sense it helped solve two problems at once.
As to the competition between immigrant and native workers, that's been pretty solidly debunked by decades of very careful research. Immigrants compete with other immigrants for the same jobs, and there's actually very little overlap between native workers and immigrant workers in the labor market.
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Economics
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> Having more illegal immigrants here, even if it’s on handout visas, doesn’t make this country better
Let's go over this one again for the slow learners: **IF THEY HAVE VISAS THEN THEY AREN'T HERE ILLEGALLY**
Again, you are saying a grocery store should not open more checkout lanes when it’s busy because you had to wait in a longer line so everyone else should too. It's stupid, it's inefficient, it solves NO problem, and only causes more problems to refuse to increase the bandwidth of the process just out of spite.
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Economics
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Let me rephrase this for you so you can see the hypocrisy. "I think you mean how dare they subvert democracies" - The US has meddled in over 80 elections since WW2. "Assassinate people in Western Europe" - maybe not there, but certainly in many other areas of the world, most notably the Middle East. "attack NATO member election infrastructure including our own." - replace NATO with Russia. It's well known the Americans were involved in meddling in the election of Boris Yeltsin. We have also interfered in the Russian annexation of Crimea, in which 95% of voters in that election chose to rejoin Russia. We then sent Ukraine weapons and money to fend off the Russians. "Attempt to assassinate the leaders of countries in the west" - replace West with East and you'll find the USA, guilty as charged.
Sometimes a look in the mirror is important.
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Economics
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> The US doesn’t pay for The EU’s defence.
What have you been smoking? The Americans don't pay *all* the costs of the defense of the EU but they pay a huge share - and the EU pays nothing beyond lip service towards American defense. For the Americans, defense is a one way street that funnels lots of American dollars into European economies with too little in return. The big question in America is becoming why does Europe think the Americans should be paying *anything* towards European defense?
NATO, for instance, doesn't exist for the Americans benefit, it exists to protect Europe. According to [NATO](https://www.nato.int/cps/en/natohq/topics_67655.htm):
> The combined wealth of the non-US Allies, measured in GDP, exceeds that of the United States. However, non-US Allies together spend less than half of what the United States spends on defence. This imbalance has been a constant, with variations, throughout the history of the Alliance and more so since the tragic events of 11 September 2001, after which the United States significantly increased its defence spending. The gap between defence spending in the United States compared to Canada and European members combined has therefore increased.
> Today, the volume of the US defence expenditure effectively represents some 67 per cent of the defence spending of the Alliance members as a whole in real terms
In fairness, the Americans have defense expenditures far outside the scope of Europe - though it's an easy argument that American dollars being spent in other parts of the world also provide some benefit to European nations. It's not the mighty Danish and German Navies that protect Maersk and Hapag-Lloyd shipping in the Malacca Straits, for instance. Fairness also says that it should be noted that the US pays more than 22% of the total bill for NATO.
The bottom line: of the 29 NATO nations, only 5 have met the agreed defense spending target of 2% of national GDP. The U.S. (3.6%), Greece (2.4%), Britain (2.1%), Estonia (2.1%) and Poland (2.0-ish%) are carrying the load they agreed to. The rest, including Germany (1.2%), France (1.8%) and Canada (1.3%) have grown comfortable living beneath the American skirts and free riding on the good will of the few. We'd like for all y'all slackers to pick up more of the load - it would be nice to spend less of our money keeping the bullies off the backs of Europeans. Who knows, we might even get to spend a little more of our money on the kind of social programs we hear Europeans constantly bragging on.
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Economics
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I’m sorry but do you actually think this? Are you saying the defence funding of nations like the UK or Germany comes from the US not those countries?
NATO has no bill, the members don’t pay anything to it nor do they have to, that 2% spending is a guideline nothing more.
And again the EU country’s defence isn’t funded by the US, only an absolute moron would think that.
And NATO does exist for the American benefit, Europe doesn’t need NATO, but it benefits both of them so why get rid of it?
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Economics
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> Are you saying the defence funding of nations like the UK or Germany comes from the US not those countries?
Not entirely. What I said was the Americans are paying a *portion* of the defense costs of many European nations. And getting little to nothing in return. These payments are in the form of [direct military aid payments](https://www.pbs.org/newshour/spc/multimedia/military-spending/) to individual European nations (2010 = US$210million, 1946 - 2010 = US$190billion), payments to NATO, [ongoing military deployments](https://militarybases.com/overseas/germany/) and other programs.
>
> NATO has no bill, the members don’t pay anything to it nor do they have to, that 2% spending is a guideline nothing more.
You think NATO is free and that it's members don't pay for it? What's the color of the sky in your world? NATO's budget for 2018 is over [€1.5billion](https://www.nato.int/cps/ie/natohq/topics_67655.htm), the Americans are paying [nearly a quarter of that](https://www.cbsnews.com/news/gates-criticizes-nato-how-much-does-us-pay/) amount. Yeah, I know, NATO is supposed to come to the defense of America if the Russians attack but: (a) nobody really believes Russian troops are going to be invading Alaska like they did [Ukraine](https://www.theguardian.com/world/2014/feb/28/russia-crimea-white-house) and [Georgia](https://www.cnn.com/2014/03/13/world/europe/2008-georgia-russia-conflict/), and; (b) even if they did, nobody really believes that the majority of individual NATO nations would actually do much to honor their commitment beyond [cavil and caterwaul](https://foreignpolicy.com/2014/03/18/wheres-natos-strong-response-to-russias-invasion-of-crimea/).
The 2% is a guideline that was based upon what everyone in NATO agreed to as a reasonable and necessary amount for self-defense. Instead, more than a decade after all the nations agreed to [work towards the goal](https://www.nato.int/docu/speech/2006/s060608m.htm), the average amount remains a [dismally low 1.3%](https://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2018_03/20180315_180315-pr2018-16-en.pdf). As you point out, it's an agreement that means next to nothing - about what the Americans have come to expect from Europe. It's perhaps easy to excuse small and economically distressed economies like Slovenia and Albania for not making that goal but powerhouse economies like Germany and France? Especially when Greece and Poland have been able to get the job done? Too many Europeans have been leaning on the [patsy](https://www.dictionary.com/browse/patsy) Americans for so long they've lost their ability to stand on their own.
>
> And again the EU country’s defence isn’t funded by the US, only an absolute moron would think that.
I'm not a moron and I and have shown here in some detail that the EU defense is partially/significantly funded by the Americans. Only an absolute moron can't recognize that.
>
> And NATO does exist for the American benefit, Europe doesn’t need NATO, but it benefits both of them so why get rid of it?
If you think NATO doesn't exist for the benefit of the Europeans and that they don't need it, I'll join you in suggesting it's time is past. Let the Europeans pay for their own defense and we'll pay for ours and the next time the [SHTF](https://youtu.be/Z0GFRcFm-aY) in the Old World, we'll learn to live without Mercedes and Chateauneuf du Pape. Удачи, вам это понадобится. Товарищ.
*edited to replace a reference that contained accurate information but from a source that is prohibited.*
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Economics
|
The US isn't in Europe to pay for our defence:
1. The US operates black sites in Europe. This is because this would be difficult on US soil to do legally. Same with Guantanamo bay and so on.
2. The US has a supply and logistics base in Germany. It's their route into the Persian peninsula and Africa. US soldiers can also receive medical treatment there.
Italy, France and the UK pay for their own defence with their armies and nukes. Germany isn't allowed to have significant military and their citizens were brainwashed by the CIA to not like military. So it's not possible any longer.
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Economics
|
The US isn’t “sending money to Europe,” it has some bases there. That was America’s strategic decision, not Europe’s. The idea is that Russia won’t engage directly either the US militarily, so having the bases means that NATO’s eastern members are safe from invasion as long as US troops are present. You are only counting the costs of NATO to America and ignoring the massive benefits, like a stable market economy of 500 million people in Europe, a bunch of fellow democracies to work with, a contained Russia (this one is big), and NATO encouraging members to buy American weaponry, which is money directly flowing from European governments to the United States.
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Economics
|
Mate, you do realise military bases don’t equal military funding. If the US pays a country to have a military base there then that’s because it benefits the US.
Again NATO doesn’t require its members to pay anything onwards it, and even if it did, if the US pays less than a quarter of that then it’s pretty pathetic as they make up well about 25% of the groups GDP.
Again the 2% guideline doesn’t mean anything, whether nations reach it or not doesn’t matter, but countries have actually set timelines for when they will meet it.
You haven’t show the that US pays for European defence, what you have shown somewhat is that the US pays countries to station troops and put bases there. That is in no way paying for European countries defence.
I said NATO was mutually beneficial, which it is, but it acts more in American interests than European ones.
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Economics
|
Yes, that's why Americans haven't improved their standard of living in 250 years -- all wage increases have been offset by inflation.
Or....the world isn't as simple as your one-sentence Reddit comment.
Since you've staked out this position, why don't you go the extra step and make your comment actually contribute to the conversation by educating everyone on when wage increases do and don't lead to inflation that wipes out all the wage gains.
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Economics
|
I don't think any rational person with an education in economics genuinely believes that, at all. I don't think people with a firm grasp of economics support tariffs for any reason.
The only justification for them (at least in this context) is using them as a stick to motivate other countries to lower their tariffs. Which would be a good outcome for both the US and emerging markets.
The problem is that if the tariffs don't work, Trump probably won't back down for fear of looking weak, so we just end up with higher tariffs as the new normal.
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Economics
|
I'm concerned about that too...the Trump Republicans really seem think that trade deficits are bad, even though it really just means that we have more capital to spend than local supply can economically fulfill...that's actually a good sign for the economy, but still they want to rig the markets unnaturally to offset this natural supply/demand mechanism with taxes. That's not free market capitalism - that's more like state-run corporatism.
Trump Republicans: "We gotta compete with (an emerging industrial market) China by becoming more state-run like China was, except be more nationalist and closed-off to trade with everyone too...yeah, that'll show em who's boss in global trade." /eye roll
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Economics
|
Wrong. The market sets prices. The market doesn’t care if it costs one company twice what it costs another to make an equal product. If they try to charge twice the price as their competitor (for an equal, competing product), they won’t be in business long.
For example, if Ford Motor Co’s manufacturing expenses result in them charging twice the price for a Taurus as Chevrolet does for an Impala or Chrysler does for the 300, guess who’s going to sell far more vehicles?
I don’t understand why this myth won’t die. Cost of production does not ultimately set prices. It sets profit margin.
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Economics
|
Actually, the most straightforward way to raise wages by the government would be for the government to simply hire more people, at the wage level and with the benefits they want to set as a minimum - basically acting an employer of last resort & providing competition for the labor force. The government wouldn't have to mandate anything on private employers that way either, just use the same power to spend money that it already uses.
Of course, the special interests that have a vested interest in preventing the government from growing larger would go ape-shit at such a proposal - not that they like the minimum wage approach either. In fact, they don't really like any proposal that would effectively increase wages - I wonder why?
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Economics
|
More teachers, more fire fighters, more rangers, more law enforcement, EPA testing, FDA testing, CDC agents, etc. Include training as part of the job-hiring. There are perpetual complaints about a lot of these useful agencies being short-staffed, get people used to doing useful things in return for decent compensation.
As far as money is concerned, the government doesn't seem to find much problem finding money to fatten up the wallets of the financial industry, does it - even with lots of reports seeming to indicate that this policy does much, much more good for Wall Street than it does Main Street. Redirecting most of that would probably do the economy much more good than it is doing right now.
Also, you can crank up the highest level marginal tax brackets quite a bit w/o coming even close to affecting individual & small businesses, and by using a lot of that to pay people at the bottom of the socioeconomic ladder, it's a form of feedback against both income inequality & inflation due to over-money-supply.
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Economics
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Well do you actually have some logic behind it to explain why you believe that they have totally different meanings?
Sorry but trickle down is a political term for supply-side government stimulus and it's just as socialist as demand-side government stimulus...it's not some brilliantly different strategy from demand-side economics...the two are more like the difference between QE and QT tools used by the Fed.
Supply-side is a great socialist tool for the government to directly stimulate production from the top, but only in the case where there's existing demand growth in place first that can't be met reasonably without subsidies/stimulus from the government...otherwise it's just promoting new business investment without any demand there to sustain it (or worse - an act of desperation to prolong the inevitable), so then basically the extra capital must be invested back into just the survival of this entity that's already on life support. If the general population doesn't have enough money to buy more stuff, then there's no demand to support this top-down production increase, and promoting more capital gains by cutting taxes isn't going to help businesses to make enough sustainable profit in order to afford to hire people who in turn then have the money to buy from said producers/employers and keep the economic cycle going...the ventures are inherently existing on government welfare without any new demand/growth for them to justify using the capital for more production, and that doesn't make any sense financially.
I like the idea of a balance of fiscal conservatism through socialist policies like regulation to avoid stuff like monopolies, and to avoid systemic risk like zombie banks and corporations that are forced to cannibalize year over year exasperating the systemic risk, and fair progressive gains taxes on private business capital, as long as there are equal socialist protections for those private businesses as well, like general government subsidies on employees (tax-paid basic medical, disability, family leave) to take some of this long-term financial burden off of employers, making employment profitable for both business and working-class. It's interesting for example how Swedish government has become more fiscally conservative than US government despite being more democratic socialist. FDR used some pretty extreme demand-side economics after the Great Depression, and to great success despite being controversial. I think it was Eisenhower who heavily-subsidized private business contracts for military and that was successful too because demand was there and had to be met with some more direct supply-side incentives from the government or something, though it was also considered to be controversial.
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Economics
|
I actually really like your idea. The problem I see is that it relies on the supply of these government jobs to be unlimited so everyone can opt for one of them, which I don't think is realistic. That said, something close to this could be done by creating some number of jobs at a given wage, but it would be very difficult to provide a job of last resort to everyone.
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Economics
|
For additional jobs, we could always treat "retraining" as a government job, where you'll get a working wage & benefits while learning new skills, but you'll be monitored & tested to see if you're taking the training seriously (setting the precedent that you have to work for a living).
Solves the not-enough-jobs problem so people don't end up doing scutwork for a living, and you end up with a large many-skilled flexible workforce used to working for a living. Should also improve probabilities of entrepreneurship, since people won't be so scared to take risks w/o a standard job.
Would probably be quite a bit more expensive than normal welfare, of course, at least in the short run.
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Economics
|
This is like saying credit scores are racist because black people have lower average FICA scores. The truth of the matter is the black population is not well educated in high school, ergo any black college is a riskier proposition. Until the white/black score gap closes it's entirely rational to ask a higher premium for schools dedicated to serving one particular racial demographic. If it were an all Asian school it would be just the opposite, because Asians score better than whites do.
Furthermore, I doubt the self-segregation of these schools is in the student's best long term interests, because it's entirely self-limiting. Even if you collect the best black professors in the world, is it ever going to be comparable to other top schools? No, it won't. Thus, segregation is logically faulty and harmful to student's chances for learning from the top educators in this world.
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Economics
|
Black students have huge default rates on student debt. Something like 300% higher than whites. If blacks are your primary customer and they depend on student loans with a default risk like that, then it is a big future risk.
Any removal of subsidies to the student loan program will have outsized effects on universities that serve primarily blacks as their clients will not receive the funding necessary and thus the university cannot receive it. That should be reflected in their bond price.
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Economics
|
There is data supporting the fact that on the whole all black businesses are on average more risky. It's not just a matter of whether the students pay or not. The long term success of a school and how it grows or doesn't grow (and possibly collapses) is determined by a lot more factors than that simplistic payment analysis. In the end students are paying to get educated so they can get a decent job. If they fail in that endeavor then over time this will erode confidence in the school and enrollment will stagnate or decline. Self-segregation in this regard is a direct risk to ensuring these students get the best education they can for their money.
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Economics
|
Just wow.
Black students disproportionately go to less well funded and lower quality k-12 schools and disproportionately come from poorer and less stable households (arguably even more important than school funding or quality). You're saying that people who are poorer deserve to pay more to get an education.
HBCUs do not segregate, they are historically black because historically they were the only legal institutions of higher education for black people. They do not deny applicants who are not black for either student or faculty positions.
Why did this get any up votes? Its not economics it's racist propaganda.
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Economics
|
I never specified "WHY" their scores are lower, only the fact that they are lower and that has long term consequences for higher education. I am **not** saying poorer deserve to pay more for education. I am saying they're better off applying to a non-racially based college which can draw upon the wide diversity of professors available to educate students. For whatever reason HBCUs have difficulty in hiring talented and diversified faculty, and that's a long term problem for them as well.
>Amelia Smith’s good fortune is Spelman College’s loss. She is a talented and highly coveted black student who had her pick of any college she could get into and afford. But that hard-won freedom comes at a price for historically black colleges and universities. Predominantly white schools are picking off some of black colleges’ best prospects. Fifty years ago, 90 percent of all black college students went to black colleges. Today, 90 percent of black students are at mostly white schools.
This is why these schools are a financial risk, black students are choosing better colleges that they believe better reward their education dollar investments. In a diversified world these schools should logically not exist, and they're in danger of disappearing entirely if they don't diversify, but that means abandoning their status of HBCUs.
>Spelman is one of the richest and most highly regarded of the 101 accredited HBCUs. As are Howard University in Washington and Morehouse College in Atlanta. **They are not in danger because of choices like the one Smith made. But many HBCUs are.** (that's why they paid higher borrowing cost!)
>The AJC analyzed key data measures that relate to the health and stability of 101 schools — among them, enrollment, graduation rates, student retention and core revenue. The newspaper found the usual stars in the HBCU firmament — but also some troubled institutions that have struggled for years.
>**Tiny Paine College in Augusta has lost 46 percent of its enrollment since 2010, and two-thirds of Paine’s freshman class in 2015 didn’t come back for sophomore year.** Meanwhile, the oldest HBCU in America, Cheyney University of Pennsylvania, lost 55 percent of its enrollment during that period. Its six-year graduation rate in 2015? Seventeen percent. At South Carolina State University, enrollment declined 30 percent and core revenue 27 percent.
Perfect example of why many of these schools are doomed to failure and are bad investments or higher risks overall.
>Colleges can’t sustain those kinds of numbers for long — evident in the fact that at least six HBCUs have closed since 1988 and at least two (including one in Atlanta) are now colleges in name only.
Case closed, these schools are higher risks, period, and part of that risk is associated with their lack of diversity and the relatively poor education history of their students. I understand they are from underprivileged school districts, but the facts are the facts, and **facts are not racist**.
>Some college finance experts predict that dozens of HBCUs will disappear in the next 20 years.
>“I use a phrase that got me in trouble. After 7½ years in this space and seeing a decline overall, my phrase is, ‘I am hopeful, but not optimistic,’” said Johnny Taylor, former president of the Thurgood Marshall College Fund, which supports public HBCUs.
>Taylor believes as many as one-quarter of HBCUs will not survive the next two decades.
https://www.myajc.com/news/local/perilous-times-for-black-colleges/EhDuhVHMOjZqmskOeKBHoM/
|
Economics
|
HBCUs are not 'racially based' colleges. They existed before the 1965 and were open for black students who were denied admission to traditional colleges because they were black. They do not discriminate in either student or faculty applications based on race, this is a falsehood you for some reason are perpetuating. They do not particularly serve the black population, they have historically served the black population.
You're parroting racist lies about what the institutions are and who they serve.
|
Economics
|
In a world that didn't treat black people as property unworthy of education and a decent life they wouldn't exist in the first place.
I have not made any comment about the future health of HBCUs. They have never been opposed to diversity, their status as HBCUs is entirely because they were open to black people before the 60s forced desegregation.
What you have done is repeat racist propaganda, with the supposed justification of such racist shit being 'rational'. Pseudo science and the veneer of rationality has been used and continue to be used to justify racist policies and racist attitudes. Which you've propagated by claiming HBCUs are 'racially based' and participate in 'self segregation'. It's disgusting
|
Economics
|
How does that assist those that are not in the stock market. For example I don’t know the exact numbers off hand but there are plenty of Americans not in the market. Then there are even fewer that have actual retirement worthy money. Couple with the fact the majority of stocks are owned by the minority of the population and you start to wonder.
So the economy is booming, my company has had its most profitable year ever, and despite the 200% growth we experienced my bonus was still 5% of my salary. Cool. You can’t eat unrealized gains in your retirement account.
|
Economics
|
> How does that assist those that are not in the stock market. For example I don’t know the exact numbers off hand but there are plenty of Americans not in the market.
Well get in then.
> o the economy is booming, my company has had its most profitable year ever, and despite the 200% growth we experienced my bonus was still 5% of my salary. Cool. You can’t eat unrealized gains in your retirement account.
Unemployment is at a 10 year low. I bet the growth is nice for people who didn't have a fucking job several years ago.
|
Economics
|
Yep the data is just as I remember it being and something you should know too if you want to be snarky.
Unemployment being low is commonly cited. What are those jobs? That data shows the jobs that are being created are shit jobs that don’t pay benefits. Do you want me to spoon feed you that data as well so you can believe it or are a few of your neurons going to fire and help you along.
So follow up question. If we have the lowest unemployment in ten years, why are we not seeing worker wages increase. Genuinely curious because we are more productive today than at any other time in history yet we are seeing some serious social issues stemming from wealth inequality. But the stick market is higher than ever before!
Cited by literally every administration ever.
|
Economics
|
> Unemployment being low is commonly cited. What are those jobs? That data shows the jobs that are being created are shit jobs that don’t pay benefits. Do you want me to spoon feed you that data as well so you can believe it or are a few of your neurons going to fire and help you along.
See response from /u/bobmarles3 and also the constant goalpost moving from your side (not you personally, but people who constantly bitch and moan how bad everything is economically) is extremely annoying. "people don't have jobs!" "ok they have jobs now, but those are shitty jobs" "ok they are not so shitty but the benefits are shitty" "ok the benefits are pretty ok but France has 35 hour work week". Fine, these are all valid concerns. But stops crying about nothing for anybody has improved when millions of peoples lives have clearly improved as a function of HAVING A JOB AND INCOME.
> So follow up question. If we have the lowest unemployment in ten years, why are we not seeing worker wages increase.
https://fred.stlouisfed.org/series/MEHOINUSA672N I must be imagining the increase from 2012?
> Genuinely curious because we are more productive today than at any other time in history yet we are seeing some serious social issues stemming from wealth inequality.
No one is saying there is no inequality and areas to improve. There are huge areas for improvement. But when would you rather be poor, now or 50 years ago?
> But the stick market is higher than ever before!
So what your solution? Tank the stock market so there is less jobs and opportunity for poor people? I can guarantee you rich people will still be fine if growth stops.
|
Economics
|
>How does that assist those that are not in the stock market.
Through underfunded state pensions funds who own a huge portion of the market realize higher gains in order to keep their programs solvent without raising everyone's taxes. Since state taxes are usually more regressive then federal taxes due to the ease of moving between states this disproportionately helps out the lower and middle class. Also through insurance companies that also own a sizable chunk of the market. They invest in the market in between disasters and help the millions of Americans affected every year to recover.
|
Economics
|
Stock holdings are extremely stratified, 10% of Americans hold over 80% of stocks.
http://time.com/money/5054009/stock-ownership-10-percent-richest/
Half of America owns nothing at all.
https://www.npr.org/2017/03/01/517975766/while-trump-touts-stock-market-many-americans-left-out-of-the-conversation
The remainder who hold stocks do so through retirement accounts, which cannot be touched until they are older. And even within that 90% it skews older because they could save previously. Only a third of millennials have any holdings in stocks.
https://www.cnbc.com/2017/10/24/millennials-are-afraid-to-invest-in-the-stock-market-ally-finds.html
Stocks don't matter to most people in real terms. There is a disproportionate attention paid to them because the news has to sell readers and watchers to advertisers and no one likes a poor customer. And there is some weird psychological thing where someone owns some stocks and they think it makes them Warren Buffett. But that's not a consequential part of their lives, much like how their favorite sports team winning or losing doesn't affect whether they can pay their bills.
|
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