The Americans are not buying, they are taking with a promise to buy. Buying means trading, printing and using printed paper to take is not trading.
LOL.
Money has been around for thousands of years.
Americans cannot afford Chinese products otherwise, that is what the 500,000,000,000 USD a year trade deficit is showing. Chinese are perfectly capable of consuming their own products and they have the money (productive output) actually to pay for the purchases.
But "enough places to rent" and "enough rentable places" are quite different things.
If you want to play semantics, yes.
The fact is that there're a lot of rentable places that just don't go into the market despite price spiking for those that in fact are rented (or sold). This points to shelter not being a true offer/demand market but one pushed by speculative forces outside of the market. I am not going into the long wired argument of why is that the case, but that is obviously the case.
Your example is of specific regions. Not all have property bubbles, high rents and failed markets (though it is common in the western world due to systemic regulatory capture and widespread rent seeking ).
Food is even more interesting since all hope for it even resembling a free market is lost. If not, please explain how is it possible that processed food is cheaper now than in the past but, at the same time, raw producers need greater subsidies to even stay in business.
Er, because overseas producers using near-slave labour, comically lax environmental standards, etc, etc can produce their food cheaper ?
* You can buy a rubbish t-shirt for a dollar but try to buy a nice made-to-measure suit and see what happens (not to talk about bespoke).
I am quite confident a bespoke suit can be had for less today than, say, a hundred years ago.
* You can buy a rubbish pair of shoes by almost nothing (which you'll need to replace twice a year), but try to find a good pair of goodyear-welted which would last you two decades and tell me they are cheaper now than thirty years ago on a straight face.
I don’t know. Can you tell me price of such a pair of shoes today compared to thirty years ago ? How about fifty years ago ? A hundred ?
What do those numbers look like as a percentage of a median income of the day ?
* You can buy a pound of frozen croquettes for a dime, but try to buy a fresh orange or a non-processed sirloin.
Again, let’s go back a hundred years and see if the typical median-wage family could afford fresh oranges and sirloins.
Cars are probably the best example. Even a basic car today is vastly more capable, reliable and cheaper than a basic car from as little as thirty years ago, let alone fifty or more.
Please tell us how long you would stand at the end of a production line spitting out widgets nobody can afford shouting "MAKE MOAR WIDGETS, CONSUMPTION IS A TRIVIAL CONSEQUENCE OF PRODUCTION SO WE'LL DEFINITELY SELL THEM ALL".
That's not because excess of offer but because opening lower markets. In fact, look around you: while the entry-level TV set is cheaper now than, say, in the 80's, which means more people owns now an entry-level device, the "premium for the masses" [...]
You have not defined "premium for the masses" so the term is meaningless. Since pretty much everything you write subsequently is built around this meaningless term, you haven't really made any argument at all.
Back to the point: If rents go up with incomes, it means that there are too few places to rent. If there were enough, landlords would not raise prices because tenants would simply go elsewhere.
If prices always increased with incomes, as the post I responded to asserted, then food would still cost 75% (or whatever it was historically - I can't be bothered looking it up - huge) of a family's income. It doesn't, because there is sufficient (well, really a vast over-) supply of food. Similarly with TVs, cars and most consumer goods.
I suggest you consider that markets have not expanded at "the bottom", but at "the top" and in "the middle".
Well, he is wrong, but my argument against a basic income is different from any he mentioned. Simply its this: the world doesn't owe you a living, get over yourself and suck it up. Live or die on your own efforts, not mine.
Says someone who probably went to a public school, drives on public roads and expects a voice on the other end of the phone when he dials 911.
In a couple of generations, half the population - probably more - will be literally unemployable because there is nothing they can do a robot can't do cheaper, faster and better.
Why the fuck would you want more people ?
You don't need more people to produce more wealth anymore. The Industrial Revolution was centuries ago. Though judging by your use of idiotic statements like "cultural marxists" and "primacy of the family", centuries ago is probably where your mind is stuck.
The point stays: you inject more money into the systems, prices go up accordingly.
Which is why you remove money from the system. With taxes.
This is even more true for whatever is considered "basic" (homes, obviously, but also cars or food). I haven't seen a reasonable argument about why in the case of basic rent it isn't going to happen the same (in the sense that the arguments I had, fail to explain why they didn't work in the cases we *already* know).
You only have rising prices in the face of insufficient supply. Why do you think TVs and cars and food are so cheap today compared to the past ?
Whatever the 'basic income' level is set at, rent at the cheapest, crappiest, bug-infested dump will go to 90-95% of this number. And you won't be able to save by splitting the rent, as they will write it into your rental agreement that every recipient of the basic income living there will have to pay the full amount.
Indeed. Much like cars, TVs and food haven't gotten any cheaper over time, why would housing ?
If a legitimate business meal deduction was on a Republicanâ(TM)s tax return, you can bet that Sanders would be railing against it as just another âoefat catâ ripping off the U.S. Treasury. So why is he deducting almost $9000 worth of business meals himself?
Wow. That's about as textbook a straw man as you could ever hope to see. "We're just going to make up something we think someone else would say and then criticise them for it".
If the worst thing they can find in Bernie's tax return is that, he practically deserves a sainthood.
Both conservatives and liberals are right about some things, but conservatives seem to have a better grasp of basic economics, hence flat tax proposals come from the conservative side.
No, conservatives have no grasp of economics at all. Hence the reason they believe in silly ideas like taxes funding expenditure, flat taxes and gold standards.
Conservatism is the politics of faith, top-down authoritarianism, inherited privilege and class society. So it's continually trying to get back to the good old days of theocracy, feudalism and "royalty". It's just that these days the peasants are enslaved with debt and the kings and queens are businessmen and bankers. Conservatism is wrong about pretty much everything.
On the face of it that sounds like a system that will put the bulk of the tax burden on the middle classes and serves neither the conservative "taxes fund expenditure" nor modern "taxes are for controlling inflation, wealth distribution and behaviour" objectives. It appears to be aimed at serving "elites" - either those who have inherited large amounts of wealth (so do not need high incomes to live in luxury), or who are able to easily hide their wealth outside the system (ie: highly-mobile, highly-paid expatriate types) while leaving the average grunt to pay all the tax.
Ideally, I think you would aim to tax primarily wealth, with a relatively high tax-free threshold, relatively low rate throughout the middle-income range (say, up to about 5x median where most white collar professionals start to top out), then a steady increase to very high (75%+) marginal rates at the top end (say, 25x median and upwards).
The predictable "granny can't pay her taxes because she's on the pension so she'll get kicked out of her house" complaint is trivially addressed by accruing the taxes payable against the estate to be paid out after death.
This is one of the points of confusion for me. Mostly because I don't count "surplus" as being related to demand at all. Is this just saying that the lack of disposable income for the non-wealthy is preventing them from ever-increasing their spending?
It's preventing them from maintaining their consumption. For some, this is starting to impact consumption of essentials like food. For most, it's just eating into disposable income otherwise spent on general consumer goods - ie: the engine house of the economy. A larger and larger portion of people's incomes is going into essentials (food, shelter, etc) and debt repayments.
We'll have to disagree on land-value taxes and mortgages though. I have problems with any tax system that will force people to relinquish their property if they don't pay that tax (that's one thing I like about income tax over property tax).
But you previously suggested wealth taxes ? This principle would apply to any wealth tax (if you can't pay the tax you may need to sell assets to be able to do so).
For mortgages - the problem with them is large fixed payments for such a long period of time [...]
Historically, most people (who haven't over-extended) have paid their mortgages off in ca. ten years. This should be doable with affordable, 3x-median-multiple housing. They frequently don't any more due to a combination of a) aforementioned decades of wage suppression and b) the property bubbles that have engulfed most of the western world driving up the cost of property.
I just had a realization: are you talking about excess supply and inadequate demand for labor?
There is certainly a massive oversupply of labour in developed economies, but there's also a general supply surplus of goods. TVs, cars, food, etc.
What I don't agree with is the terminology that is a "demand problem". I still say it is a supply problem, and from the rest of your post I think you agree: the people that own the capital aren't producing things (and selling it) to the people that need the things that capital can produce "at affordable prices" or any other.
No, I don't agree it's a supply problem because it's not. There's plenty of stuff. There's plenty of idle capacity (un- and under-employment are huge, for example).
The problem is on the demand side. People don't have any surplus because that surplus has been systemically taken away from them in the form of suppressed incomes and increasing debt burden.
Or, put more simply, most but the wealthiest are broke. They can't consume, to stimulate production, to drive growth and productivity and innovation and living standards and all that good stuff because they don't have any money.
Minimum wage puts more money in people's pockets, which should allow them to save and not live desperate paycheque-to-paycheque lives. It also acts against business owners, who have demonstrated time and time again propensity to try and drive down wages to increase profits. Income taxes are there to soak up excess money, which inevitably rises upwards. Wealth taxes also need to play a part (land-value taxes are one of the best wealth taxes known). There's nothing wrong with mortgages, the problem has come from the dangerous games played behind the scenes. The solution is a simple, publicly-funded banking system to handle core needs of savings, transactions and homeloans.
As I said, this is only a taste. The "problem" of excess supply and inadequate demand is only going to continue increasing as more jobs are automated, wages are driven further and further down, and wealth continues to concentrate.
If there is enough stuff out there and people aren't buying it, prices would drop so it is all sold and/or producers would stop producing so much (unsold goods are expensive!) so there would no longer be any excess.
This is a religious statement.
People are buying - though fewer and fewer every day, hence the economic stagnation - but they have been funding it for the last couple of decades with a massive run-up in debt due to stagnant incomes, increasing unemployment, decreasing job stability, etc, etc.
Even without that - simply giving people more money (increasing demand) is not going to magically increase supply, although in the short term it might allow people to purchase existing inventory before the prices inevitably rise.
We are suffering from a demand deficit, not a supply deficit. Like I said, nobody is going hungry because there’s not enough food. Nobody is walking because there aren’t enough cars. Nobody is sleeping on the street because we don’t have - or can’t build - enough houses.
All the excess that should be “buying” these things is being funnelled into the top percent, and even more so into the top fractions of a percent. Hence the massive increase in their incomes and wealth. Hence the increase wealth gaps. Hence the massive shift of GDP share from labour to capital.
I will be clear - I'm all for making things more affordable for everyone but I strongly believe that simply mandating people be paid more isn't sufficient to provide sustainable affordability - and I think history proves this out.
Reality shows we have a demand problem. It is being caused by the wealthy - particularly the finance industry - suppressing wages and sucking up what little remains with rent-seeking behaviours.
Fundamentally we need to return bargaining power to workers. The minimum wage is but one aspect of this. Some others are strengthening wrongful dismissal laws, strong publicly funded healthcare so workers are not bound to employers, strong publicly funded education to give people opportunities at highly productive labour, high income taxes to soak up all the excess money that inevitably bubbles to the top and is hoarded or used to pump up asset prices, reduced immigration to decrease unemployment, etc, etc.
All the shit that got done in the 40s, 50s, and 60s in capitalism's golden age before the neoliberal psychopaths took over in the seventies and parasitised everything. When the objective was to get everyone a job. Increase everyone's incomes and living standards. Give everyone a chance.
But the experience of the western world today is just a small-scale taste of what's to come - at some point in the not too distant future, half the population (at least!) is going to be literally unemployable because there is simply nothing they can do that a robot or computer can't do better. When billions of people want stuff, and we have the capability to make it for them, how is it moral or ethical to not do so because of some absurd idea based in religios belief about them not deserving something they haven't worked for ?
While I do agree that western societies do have kind of messed up food distribution issues, I'm not sure I understand how that applies to the assertion that increasing minimum wage affects only the demand curve.
Food was a random example. Cars would have worked just as well.
The point is that the problem is not that we do not have enough stuff for people, it's that people can't afford the stuff because most of them are on the wrong side of decades of wage suppression. Minimum wage earners are simply the bottom end of that scale.
If you look at how successful a bunch of uneducated bearded guys with AKs and some explosive training were against US military in the Middle East, why do you think motivated and technically-inclined Western population won't be even more successful?
They're only "successful" (WTF is "successful" in your book - those countries and their people have been devastated) because the US military isn't playing to win.
If they were they would have just glassed the whole place and walked away.
It never makes economic sense to pay someone who produces $10/h in value $15/h in salary.
Yep. Minimum wage is set so that the value of base jobs is implicitly sufficient to meet minimal living standards.
If you can't make enough money to pay someone minimum wage, then either your business model is fundamentally broken, you're not charging enough or, the primary problem for the last few decades, you're taking too much in profit.
If that's the only option, people will simply not "want to run a business", or they will run a different business, or they will simply invest their money overseas.
The first is irrelevant, the second is perfectly reasonable, the third is addressed by legislation.
Doubtlessly, when your hare brained economic schemes fail [...]
My economic schemes worked just fine. They powered post-WW2 America into the greatest and broadest increase in living standards and wealth humanity has ever seen.
Yours are the ones that took over in the seventies and have been failing for the last thirty years.
The only way to decrease the cost of something with constant or increasing demand is to increase supply faster than demand (through competition or productivity or legal fiat), and generally this is the part "society" forgets when it tries to improve standard of living through minimum wage increases.
Not in the slightest. The western world has a supply surplus of just about everything. People aren't going hungry in America because there isn't enough food for them.
Nobody "needs" anybody to do any work: not hiring someone and not starting a business is always a perfectly good option. Furthermore, I could pay them enough to live, but I won't if they aren't worth it. Call me a big meanie, but minimum wage laws aren't going to change that.
You will hire them if you want to run a business and make money. Psychopaths who aren't prepared to pay decent wages are exactly why minimum wage laws exist.
Your implication is that the existence of a minimum wage law somehow guarantees that the economy will be productive enough.
No, it’s not.
I didn’t say anything about whether the economy _could_ support everyone. I said if you are arguing against a minimum wage, you are implicitly stating it cannot.
It may well be the economy cannot support everyone to a particular minimum standard. In which case either the standard has to drop, people have to leave, or productivity needs to increase.
Certainly, tinkering with whether the minimum wage is a measly $7/h or a paltry $12/h doesn't change anything meaningful, and practically nobody thinks it is viable to make it what it actually needs to be to actually serve a useful and fair purpose - say $30/h.
For something that doesn’t change anything meaningful, it sure draws a lot of opposition.:)
$30/hr is sixty-ish grand a year for a full-time job. I'm not American but from memory that's above median _household_ income there. I think it might even be above per-capita GNI. So that’s probably too high for a job flipping burgers or cutting lawns.
It is evident that the economy IS productive enough to support everyone. Not just participants, but everyone. The problem is profit and greed, the skewed distribution of the proceeds. I.e., the problem is capitalism. Not free enterprise, but capitalism. The warped entitlement that having money gets you more money. Scads and oodles of money.
Yes, and that illustrates the problem. First, you assume that society can actually determine what is "satisfactorily minimal for survival", across the country, for everybody.
I don't assume it, I think it's one of the key aspects of having a civilised society.
Yet, a 16 year old kid living with their parents, a retired person with retirement savings, and a single 20-something immigrant all have entirely different needs.
Not entirely different, but certainly somewhat different.
Second, no law is going to change someone's productivity. If someone isn't productive enough to make it worthwhile to pay them minimum wage, they'll simply not get hired.
The shittiest, simplest, lowest-skilled, full-time job should provide sufficient income for someone to live on. Otherwise, as mentioned, you are implicitly telling people that they are disposable - you need them to do some work, but you can't pay them enough to live.
You can calibrate upwards from that baseline.
Actually, that is the question you should be asking, because with policies like the minimum wage, you create a large class of jobless poor, people who you prevent from working by law.
No, that class of people is created by those unwilling to pay decent wages.
That is exactly the "race to the bottom" we are experiencing in our society. Just look at cities like DC or Detroit.
I'm not American, so I don't know what those cities look like today. But the whole western world has been circling the drain as the kind of barbaric and destructive policies you advocate have become more and more commonplace, siphoning wealth upwards away from its creators (as they are designed to do).
America didn't get rich by impoverishing its people.
Slashdot Mirror
The Americans are not buying, they are taking with a promise to buy. Buying means trading, printing and using printed paper to take is not trading.
LOL.
Money has been around for thousands of years.
Americans cannot afford Chinese products otherwise, that is what the 500,000,000,000 USD a year trade deficit is showing. Chinese are perfectly capable of consuming their own products and they have the money (productive output) actually to pay for the purchases.
Then why aren't they ?
Tell us how long you think all those Chinese factories would keep pumping out stuff if Americans stopped buying it.
When a glut (too many widgets nobody can afford) occurs, prices fall until they are affordable.
Not implicitly.
Substitute "don't want" for "can't afford" if that helps you understand.
Unless artificial factors like governments handing out tons of money happen first.
Banks hand out most money, not Governments.
But "enough places to rent" and "enough rentable places" are quite different things.
If you want to play semantics, yes.
The fact is that there're a lot of rentable places that just don't go into the market despite price spiking for those that in fact are rented (or sold). This points to shelter not being a true offer/demand market but one pushed by speculative forces outside of the market. I am not going into the long wired argument of why is that the case, but that is obviously the case.
Your example is of specific regions. Not all have property bubbles, high rents and failed markets (though it is common in the western world due to systemic regulatory capture and widespread rent seeking ).
Food is even more interesting since all hope for it even resembling a free market is lost. If not, please explain how is it possible that processed food is cheaper now than in the past but, at the same time, raw producers need greater subsidies to even stay in business.
Er, because overseas producers using near-slave labour, comically lax environmental standards, etc, etc can produce their food cheaper ?
* You can buy a rubbish t-shirt for a dollar but try to buy a nice made-to-measure suit and see what happens (not to talk about bespoke).
I am quite confident a bespoke suit can be had for less today than, say, a hundred years ago.
* You can buy a rubbish pair of shoes by almost nothing (which you'll need to replace twice a year), but try to find a good pair of goodyear-welted which would last you two decades and tell me they are cheaper now than thirty years ago on a straight face.
I don’t know. Can you tell me price of such a pair of shoes today compared to thirty years ago ? How about fifty years ago ? A hundred ?
What do those numbers look like as a percentage of a median income of the day ?
* You can buy a pound of frozen croquettes for a dime, but try to buy a fresh orange or a non-processed sirloin.
Again, let’s go back a hundred years and see if the typical median-wage family could afford fresh oranges and sirloins.
Cars are probably the best example. Even a basic car today is vastly more capable, reliable and cheaper than a basic car from as little as thirty years ago, let alone fifty or more.
Please tell us how long you would stand at the end of a production line spitting out widgets nobody can afford shouting "MAKE MOAR WIDGETS, CONSUMPTION IS A TRIVIAL CONSEQUENCE OF PRODUCTION SO WE'LL DEFINITELY SELL THEM ALL".
That's not because excess of offer but because opening lower markets. In fact, look around you: while the entry-level TV set is cheaper now than, say, in the 80's, which means more people owns now an entry-level device, the "premium for the masses" [...]
You have not defined "premium for the masses" so the term is meaningless. Since pretty much everything you write subsequently is built around this meaningless term, you haven't really made any argument at all.
Back to the point: If rents go up with incomes, it means that there are too few places to rent. If there were enough, landlords would not raise prices because tenants would simply go elsewhere.
If prices always increased with incomes, as the post I responded to asserted, then food would still cost 75% (or whatever it was historically - I can't be bothered looking it up - huge) of a family's income. It doesn't, because there is sufficient (well, really a vast over-) supply of food. Similarly with TVs, cars and most consumer goods.
I suggest you consider that markets have not expanded at "the bottom", but at "the top" and in "the middle".
The problem is that the majority of people will not work if they get free money [...]
Of course they will. Being poor sucks, and few people choose to be when they have better options.
They won't work, however, if there aren't any jobs. Which is the real problem.
Productivity growth is down because output is down.
Output is down because consumption is down.
Consumption is down because everyone is broke.
Growth is driven by demand. Stop the demand and the growth will stop as well.
Well, he is wrong, but my argument against a basic income is different from any he mentioned. Simply its this: the world doesn't owe you a living, get over yourself and suck it up. Live or die on your own efforts, not mine.
Says someone who probably went to a public school, drives on public roads and expects a voice on the other end of the phone when he dials 911.
In a couple of generations, half the population - probably more - will be literally unemployable because there is nothing they can do a robot can't do cheaper, faster and better.
Why the fuck would you want more people ?
You don't need more people to produce more wealth anymore. The Industrial Revolution was centuries ago. Though judging by your use of idiotic statements like "cultural marxists" and "primacy of the family", centuries ago is probably where your mind is stuck.
The point stays: you inject more money into the systems, prices go up accordingly.
Which is why you remove money from the system. With taxes.
This is even more true for whatever is considered "basic" (homes, obviously, but also cars or food). I haven't seen a reasonable argument about why in the case of basic rent it isn't going to happen the same (in the sense that the arguments I had, fail to explain why they didn't work in the cases we *already* know).
You only have rising prices in the face of insufficient supply. Why do you think TVs and cars and food are so cheap today compared to the past ?
Whatever the 'basic income' level is set at, rent at the cheapest, crappiest, bug-infested dump will go to 90-95% of this number. And you won't be able to save by splitting the rent, as they will write it into your rental agreement that every recipient of the basic income living there will have to pay the full amount.
Indeed. Much like cars, TVs and food haven't gotten any cheaper over time, why would housing ?
If a legitimate business meal deduction was on a Republicanâ(TM)s tax return, you can bet that Sanders would be railing against it as just another âoefat catâ ripping off the U.S. Treasury. So why is he deducting almost $9000 worth of business meals himself?
Wow. That's about as textbook a straw man as you could ever hope to see. "We're just going to make up something we think someone else would say and then criticise them for it".
If the worst thing they can find in Bernie's tax return is that, he practically deserves a sainthood.
Both conservatives and liberals are right about some things, but conservatives seem to have a better grasp of basic economics, hence flat tax proposals come from the conservative side.
No, conservatives have no grasp of economics at all. Hence the reason they believe in silly ideas like taxes funding expenditure, flat taxes and gold standards.
Conservatism is the politics of faith, top-down authoritarianism, inherited privilege and class society. So it's continually trying to get back to the good old days of theocracy, feudalism and "royalty". It's just that these days the peasants are enslaved with debt and the kings and queens are businessmen and bankers. Conservatism is wrong about pretty much everything.
On the face of it that sounds like a system that will put the bulk of the tax burden on the middle classes and serves neither the conservative "taxes fund expenditure" nor modern "taxes are for controlling inflation, wealth distribution and behaviour" objectives. It appears to be aimed at serving "elites" - either those who have inherited large amounts of wealth (so do not need high incomes to live in luxury), or who are able to easily hide their wealth outside the system (ie: highly-mobile, highly-paid expatriate types) while leaving the average grunt to pay all the tax.
Ideally, I think you would aim to tax primarily wealth, with a relatively high tax-free threshold, relatively low rate throughout the middle-income range (say, up to about 5x median where most white collar professionals start to top out), then a steady increase to very high (75%+) marginal rates at the top end (say, 25x median and upwards).
The predictable "granny can't pay her taxes because she's on the pension so she'll get kicked out of her house" complaint is trivially addressed by accruing the taxes payable against the estate to be paid out after death.
This is one of the points of confusion for me. Mostly because I don't count "surplus" as being related to demand at all. Is this just saying that the lack of disposable income for the non-wealthy is preventing them from ever-increasing their spending?
It's preventing them from maintaining their consumption. For some, this is starting to impact consumption of essentials like food. For most, it's just eating into disposable income otherwise spent on general consumer goods - ie: the engine house of the economy. A larger and larger portion of people's incomes is going into essentials (food, shelter, etc) and debt repayments.
We'll have to disagree on land-value taxes and mortgages though. I have problems with any tax system that will force people to relinquish their property if they don't pay that tax (that's one thing I like about income tax over property tax).
But you previously suggested wealth taxes ? This principle would apply to any wealth tax (if you can't pay the tax you may need to sell assets to be able to do so).
For mortgages - the problem with them is large fixed payments for such a long period of time [...]
Historically, most people (who haven't over-extended) have paid their mortgages off in ca. ten years. This should be doable with affordable, 3x-median-multiple housing. They frequently don't any more due to a combination of a) aforementioned decades of wage suppression and b) the property bubbles that have engulfed most of the western world driving up the cost of property.
I just had a realization: are you talking about excess supply and inadequate demand for labor?
There is certainly a massive oversupply of labour in developed economies, but there's also a general supply surplus of goods. TVs, cars, food, etc.
What I don't agree with is the terminology that is a "demand problem". I still say it is a supply problem, and from the rest of your post I think you agree: the people that own the capital aren't producing things (and selling it) to the people that need the things that capital can produce "at affordable prices" or any other.
No, I don't agree it's a supply problem because it's not. There's plenty of stuff. There's plenty of idle capacity (un- and under-employment are huge, for example).
The problem is on the demand side. People don't have any surplus because that surplus has been systemically taken away from them in the form of suppressed incomes and increasing debt burden.
Or, put more simply, most but the wealthiest are broke. They can't consume, to stimulate production, to drive growth and productivity and innovation and living standards and all that good stuff because they don't have any money.
Minimum wage puts more money in people's pockets, which should allow them to save and not live desperate paycheque-to-paycheque lives. It also acts against business owners, who have demonstrated time and time again propensity to try and drive down wages to increase profits.
Income taxes are there to soak up excess money, which inevitably rises upwards. Wealth taxes also need to play a part (land-value taxes are one of the best wealth taxes known).
There's nothing wrong with mortgages, the problem has come from the dangerous games played behind the scenes. The solution is a simple, publicly-funded banking system to handle core needs of savings, transactions and homeloans.
As I said, this is only a taste. The "problem" of excess supply and inadequate demand is only going to continue increasing as more jobs are automated, wages are driven further and further down, and wealth continues to concentrate.
If there is enough stuff out there and people aren't buying it, prices would drop so it is all sold and/or producers would stop producing so much (unsold goods are expensive!) so there would no longer be any excess.
This is a religious statement.
People are buying - though fewer and fewer every day, hence the economic stagnation - but they have been funding it for the last couple of decades with a massive run-up in debt due to stagnant incomes, increasing unemployment, decreasing job stability, etc, etc.
Even without that - simply giving people more money (increasing demand) is not going to magically increase supply, although in the short term it might allow people to purchase existing inventory before the prices inevitably rise.
We are suffering from a demand deficit, not a supply deficit. Like I said, nobody is going hungry because there’s not enough food. Nobody is walking because there aren’t enough cars. Nobody is sleeping on the street because we don’t have - or can’t build - enough houses.
All the excess that should be “buying” these things is being funnelled into the top percent, and even more so into the top fractions of a percent. Hence the massive increase in their incomes and wealth. Hence the increase wealth gaps. Hence the massive shift of GDP share from labour to capital.
I will be clear - I'm all for making things more affordable for everyone but I strongly believe that simply mandating people be paid more isn't sufficient to provide sustainable affordability - and I think history proves this out.
Reality shows we have a demand problem. It is being caused by the wealthy - particularly the finance industry - suppressing wages and sucking up what little remains with rent-seeking behaviours.
Fundamentally we need to return bargaining power to workers. The minimum wage is but one aspect of this. Some others are strengthening wrongful dismissal laws, strong publicly funded healthcare so workers are not bound to employers, strong publicly funded education to give people opportunities at highly productive labour, high income taxes to soak up all the excess money that inevitably bubbles to the top and is hoarded or used to pump up asset prices, reduced immigration to decrease unemployment, etc, etc.
All the shit that got done in the 40s, 50s, and 60s in capitalism's golden age before the neoliberal psychopaths took over in the seventies and parasitised everything. When the objective was to get everyone a job. Increase everyone's incomes and living standards. Give everyone a chance.
But the experience of the western world today is just a small-scale taste of what's to come - at some point in the not too distant future, half the population (at least!) is going to be literally unemployable because there is simply nothing they can do that a robot or computer can't do better. When billions of people want stuff, and we have the capability to make it for them, how is it moral or ethical to not do so because of some absurd idea based in religios belief about them not deserving something they haven't worked for ?
While I do agree that western societies do have kind of messed up food distribution issues, I'm not sure I understand how that applies to the assertion that increasing minimum wage affects only the demand curve.
Food was a random example. Cars would have worked just as well.
The point is that the problem is not that we do not have enough stuff for people, it's that people can't afford the stuff because most of them are on the wrong side of decades of wage suppression. Minimum wage earners are simply the bottom end of that scale.
If you look at how successful a bunch of uneducated bearded guys with AKs and some explosive training were against US military in the Middle East, why do you think motivated and technically-inclined Western population won't be even more successful?
They're only "successful" (WTF is "successful" in your book - those countries and their people have been devastated) because the US military isn't playing to win.
If they were they would have just glassed the whole place and walked away.
It never makes economic sense to pay someone who produces $10/h in value $15/h in salary.
Yep. Minimum wage is set so that the value of base jobs is implicitly sufficient to meet minimal living standards.
If you can't make enough money to pay someone minimum wage, then either your business model is fundamentally broken, you're not charging enough or, the primary problem for the last few decades, you're taking too much in profit.
If that's the only option, people will simply not "want to run a business", or they will run a different business, or they will simply invest their money overseas.
The first is irrelevant, the second is perfectly reasonable, the third is addressed by legislation.
Doubtlessly, when your hare brained economic schemes fail [...]
My economic schemes worked just fine. They powered post-WW2 America into the greatest and broadest increase in living standards and wealth humanity has ever seen.
Yours are the ones that took over in the seventies and have been failing for the last thirty years.
The only way to decrease the cost of something with constant or increasing demand is to increase supply faster than demand (through competition or productivity or legal fiat), and generally this is the part "society" forgets when it tries to improve standard of living through minimum wage increases.
Not in the slightest. The western world has a supply surplus of just about everything. People aren't going hungry in America because there isn't enough food for them.
Nobody "needs" anybody to do any work: not hiring someone and not starting a business is always a perfectly good option. Furthermore, I could pay them enough to live, but I won't if they aren't worth it. Call me a big meanie, but minimum wage laws aren't going to change that.
You will hire them if you want to run a business and make money. Psychopaths who aren't prepared to pay decent wages are exactly why minimum wage laws exist.
Your implication is that the existence of a minimum wage law somehow guarantees that the economy will be productive enough.
No, it’s not.
I didn’t say anything about whether the economy _could_ support everyone. I said if you are arguing against a minimum wage, you are implicitly stating it cannot.
It may well be the economy cannot support everyone to a particular minimum standard. In which case either the standard has to drop, people have to leave, or productivity needs to increase.
Certainly, tinkering with whether the minimum wage is a measly $7/h or a paltry $12/h doesn't change anything meaningful, and practically nobody thinks it is viable to make it what it actually needs to be to actually serve a useful and fair purpose - say $30/h.
For something that doesn’t change anything meaningful, it sure draws a lot of opposition. :)
$30/hr is sixty-ish grand a year for a full-time job. I'm not American but from memory that's above median _household_ income there. I think it might even be above per-capita GNI. So that’s probably too high for a job flipping burgers or cutting lawns.
It is evident that the economy IS productive enough to support everyone. Not just participants, but everyone. The problem is profit and greed, the skewed distribution of the proceeds. I.e., the problem is capitalism. Not free enterprise, but capitalism. The warped entitlement that having money gets you more money. Scads and oodles of money.
Agreed.
Yes, and that illustrates the problem. First, you assume that society can actually determine what is "satisfactorily minimal for survival", across the country, for everybody.
I don't assume it, I think it's one of the key aspects of having a civilised society.
Yet, a 16 year old kid living with their parents, a retired person with retirement savings, and a single 20-something immigrant all have entirely different needs.
Not entirely different, but certainly somewhat different.
Second, no law is going to change someone's productivity. If someone isn't productive enough to make it worthwhile to pay them minimum wage, they'll simply not get hired.
The shittiest, simplest, lowest-skilled, full-time job should provide sufficient income for someone to live on. Otherwise, as mentioned, you are implicitly telling people that they are disposable - you need them to do some work, but you can't pay them enough to live.
You can calibrate upwards from that baseline.
Actually, that is the question you should be asking, because with policies like the minimum wage, you create a large class of jobless poor, people who you prevent from working by law.
No, that class of people is created by those unwilling to pay decent wages.
That is exactly the "race to the bottom" we are experiencing in our society. Just look at cities like DC or Detroit.
I'm not American, so I don't know what those cities look like today. But the whole western world has been circling the drain as the kind of barbaric and destructive policies you advocate have become more and more commonplace, siphoning wealth upwards away from its creators (as they are designed to do).
America didn't get rich by impoverishing its people.