From James Hamilton's blog, Econbrowser. Hamilton is the professor of economics at University of California, San Diego.

Quote :

"Barack Obama gave a fine speech at the Democratic National Convention on Thursday. But I'm troubled by what I see as its underlying economic philosophy. As I listened to the speech by Barack Obama accepting the nomination of the Democratic Party for the U.S. presidency, I felt I was listening to a very gifted orator. I also thought I heard a cash register go ca-ching every time he finished a sentence. I will eliminate capital gains taxes for the small businesses and the start-ups that will create the high-wage, high-tech jobs of tomorrow. I will cut taxes-- cut taxes-- for 95% of all working families. Because in an economy like this, the last thing we should do is raise taxes on the middle-class.... I'll help our auto companies re-tool, so that the fuel-efficient cars of the future are built right here in America. I'll make it easier for the American people to afford these new cars. And I'll invest 150 billion dollars over the next decade in affordable, renewable sources of energy-- wind power and solar power and the next generation of biofuels.... I'll invest in early childhood education. I'll recruit an army of new teachers, and pay them higher salaries and give them more support.... Now is the time to finally keep the promise of affordable, accessible health care for every single American. If you have health care, my plan will lower your premiums. If you don't, you'll be able to get the same kind of coverage that members of Congress give themselves.... Now is the time to help families with paid sick days and better family leave.... As the list of things Obama promised to do grew ever longer, I found myself increasingly wondering, What is the underlying understanding of how the economy works that would motivate such a list? All these steps require a commitment of resources. If we are to have more of these things, we must be planning to divert the resources to pay for them from somewhere else. Evidently there is a notion of some kind of existing inefficiency or misallocation of resources-- money is currently being spent on things it shouldn't be, and should instead be devoted to objectives on the above list. But how is the bill for all these nice things supposed to be paid? Fortunately, in his speech Obama anticipated this natural question, and provided the following answer: Now, many of these plans will cost money, which is why I've laid out how I'll pay for every dime-- by closing corporate loopholes and tax havens that don't help America grow. But I will also go through the federal budget, line by line, eliminating programs that no longer work and making the ones we do need work better and cost less-- because we cannot meet twenty-first century challenges with a twentieth century bureaucracy. I'll discuss that second point about government waste in a moment. But here's my understanding of Obama's central thesis-- if funds could be diverted from corporate profits into the above wish list, then America would be better off. According to Table F.102 in the Federal Reserve's Flow of Funds Accounts, domestic nonfarm, nonfinancial corporate profits amounted to $1,037 billion in 2007. A third of that ($310 billion) is currently being paid as corporate profits taxes, and $487 billion is devoted to dividends, which are taxed directly as income of the shareholders. But doesn't that leave $240 billion sitting around doing nothing worthwhile? Not exactly. Those same institutions also spent $460 billion on net fixed investment in 2007 ($1045 in gross investment minus $585 billion capital consumption allowance), which was financed by a combination of the $240 billion in retained earnings and corporate borrowing. If after-tax corporate profits were lower, the only way to have the same level of investment is with greater corporate borrowing. Recalling Menzie's recent picture on the empirical relation between the growth rates of corporate profits and investment, it seems unlikely that investment spending would remain the same if corporate profits were lower. And if it somehow did happen, I doubt that increased corporate indebtedness is a wise outcome to insist upon. bfi3.gif I raise this issue because I regard nonresidential fixed investment as the single most important economic variable that will influence America's future prosperity. As for the second part of the paragraph above indicating Obama's plans to pay for his proposals, I agree with the senator that there is some waste in the federal budget. However, I'd caution against overstating the magnitude of what we should expect to achieve, and I would urge that any dollars saved be used to reduce the deficit before beginning any new programs. At the top of my personal list of current expenditures that could be cut would be ethanol and agricultural subsidies. What's on your list, senator?"

http://www.econbrowser.com/archives/2008/08/obamas_acceptan.html


[Edited on August 31, 2008 at 10:11 AM. Reason : .]

8/31/2008 10:07:30 AM

Quote :

"At the top of my personal list of current expenditures that could be cut would be ethanol and agricultural subsidies."

I can't disagree with that.

8/31/2008 10:17:40 AM

Quote :

"I found myself increasingly wondering, What is the underlying understanding of how the economy works that would motivate such a list?"

The underlying "understanding" is that one man, Barack Obama, and a handful of advisors and bureaucrats in Washington, know better than millions of entrepreneurs and investors, know better than hundreds of millions of consumers, how our money should be spent, and to what ends it ought to be put to in order to best secure our welfare.

Fuck you Mr. Obama. I'm calling you on your shit. You haven't the slightest inkling of real understanding on how to "help our auto companies re-tool", "make it easier for the American people to afford these new cars", "keep the promise of affordable, accessible health care for every single American", "help families with paid sick days and better family leave." or any of the other crap you promise.

Most important of all, you haven't the right. What you promise isn't yours to promise.

Leave it to the experts sir. Leave to the consumers the job of figuring out what we want, leave to the producers the job of figuring out how to get it to us.

Quote :

"Government never furthered any enterprise but by the alacrity with which it got out of its way. - Henry David Thoreau"

8/31/2008 11:36:51 AM

No shit. If he had a good idea as to how to save the auto industry (or carry out / pay for most of his shit) he would be spelling it out to us. He cant read through all the govt documents. He cant make it loop-hole free. All of his solutions involve throwing money at things. And if youre a group, you want money being thrown at you. So while everyone is focusing on the money theyll be getting (via healthcare or 'tax cuts') they fail to realize its incredibly expensive

[Edited on August 31, 2008 at 12:14 PM. Reason : poopin]

8/31/2008 12:13:43 PM

Wake up guys. This is great. Taxes on the other 5% weren't mentioned in the article but they will be increased enough to create funding for this. Investors companies and consumers deciding isn't goign to end in whats best its only going to end in what makes the most profits. Thats pure capitalism which is an ugly thing. Obama 08!

wethebest man

8/31/2008 12:18:41 PM

I know. those other 5% don't need what they earned. Fuck them for working hard and succeeding! FUCK CAPITALISM, the very thing that has brought us the prosperity we have today!

typical class warfare

8/31/2008 3:04:17 PM

Uh, Obama ain't actually threatening capitalism.

I wish he were, but he's not.

Markets will continue to function despite higher taxes on the wealthy.

8/31/2008 3:33:49 PM

As I've tried to explain to you on many occasions, that depends on your definition of "function".

8/31/2008 4:05:36 PM

Look, we're not talking about taxing the rich out of existence here. Far from it. Obama's plan might well reduce economic growth, but it's no radical shift. The country's messy mixture of state and market would continue much as a before.

8/31/2008 4:22:56 PM

right. you are talking about taxing the middle-class out of existence. You know, basically the Democrats' unspoken party platform.

8/31/2008 4:40:44 PM

Here is my question for democrats and republicans....are income taxes legal?

Heres my say.

I think it should be illegal for the government to tax income. Income taxes are ridiculous. I have no problem with taxing food, clothing, or anything else....but to tax you because you work and want to make money is absurd.

I say we do this......get rid of income taxes all together. This gives workers more money...workers are around 66% of the countrys population. Could you imagine how much economic growth the country would have if 66% of the population all of a sudden got a free 25% income boost? Could you imagine the increase in donations, not handouts like the current system.

Seriously, there used to be a sense of honor, respect, and pride among working class and upper class citizens in this country. If you ask me, we need to get back to those principles instead of promoting mediocraty and in some cases laziness.

8/31/2008 6:02:05 PM

the middle class still exists?

8/31/2008 6:06:43 PM

as a member of the upper middle class, yes. yes it does.

8/31/2008 6:19:42 PM

oh...i just see rich and poor

8/31/2008 6:25:21 PM

^^^^yes but money isn't grown on trees and the government needs money

8/31/2008 6:38:25 PM

There is nothing fair about an income tax.

I mostly agree with you bigun

8/31/2008 6:38:28 PM

Quote :

" Could you imagine how much economic growth the country would have if 66% of the population all of a sudden got a free 25% income boost? Could you imagine the increase in donations, not handouts like the current system. "

Thinking people will just start donating if they have a little more money is as bad as thinking people could actually work selflessly for the common good. You're just on the opposite side of the coin of stupidity.

Not to mention the numerous other problems we'd have with your system.

8/31/2008 6:51:53 PM

Quote :

" I will eliminate capital gains taxes for the small businesses and the start-ups that will create the high-wage, high-tech jobs of tomorrow."

Don't have a problem with this

Quote :

" I will cut taxes-- cut taxes-- for 95% of all working families. Because in an economy like this, the last thing we should do is raise taxes on the middle-class...."

I do not support the manner in which he does this. I don't really give a shit if Lebron James or Warren Buffet have to pay more taxes. What does bother me is the "regressive" tax cut he is creating in which those already paying the least taxes get the largest tax decrease (both by percentage and in real dollars). Yet he wants to give the lower class more social services to which the paying burden will be those in the working class and middle classes.

Quote :

" I'll help our auto companies re-tool, so that the fuel-efficient cars of the future are built right here in America."

If they are not competitive than they are SOL. I do not like corporate welfare even more than i hate Tashika popping babies to live on welfare longer

Quote :

" I'll make it easier for the American people to afford these new cars."

Last time i checked we do not have a right to a new car. Perhaps if people purchased only that which they can afford there would not be so much of an issue with children w/o health insurance or people "lacking" money for food and thus require food stamps.

Quote :

" And I'll invest 150 billion dollars over the next decade in affordable, renewable sources of energy-- wind power and solar power and the next generation of biofuels...."

support

Quote :

" I'll invest in early childhood education."

Why don't we put more concern in fixing our rotting school system; or making college more affordable for those who may otherwise not be able to attend

Quote :

" I'll recruit an army of new teachers, and pay them higher salaries and give them more support...."

If this is what the market salary is than fine, but Mr. Obama shouldn't be playing wage maker over the natural forces of the market.

Quote :

" Now is the time to finally keep the promise of affordable, accessible health care for every single American. If you have health care, my plan will lower your premiums. If you don't, you'll be able to get the same kind of coverage that members of Congress give themselves...."

8/31/2008 7:05:32 PM

I think this is a great topic.

Any more constructive analysis of the economics involved with his proposed policies? Short & especially long term implications & effects?

8/31/2008 7:13:14 PM

Here's an interesting issue from CEPR that I hadn't even heard about. Obama supports the Employee Free Choice Act, a bill that could return unions to place of importance in the country and thus finally increase real wages.

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/employee-free-choice-act-could-be-biggest-reform-since-new-deal/

8/31/2008 7:24:12 PM

Recently i've started to think that unions are an anachronism that need to be replaced by better regulations.

An airport baggage loader shouldn't be making $65k a year.

8/31/2008 7:26:22 PM

Quote :

"Recently i've started to think that unions are an anachronism that need to be replaced by better regulations."

Well, something needs to happen to increase real wages. The numbers are ridiculous.

Quote :

"An airport baggage loader shouldn't be making $65k a year."

Why not? As far as problems with inflated incomes go, that wouldn't be near the top of my list.

8/31/2008 7:29:51 PM

^^ if they are working their asses off and making those tips then more power to them. They def do not have any easy line of work. Better this than sitting at home watching the jefferson's while collecting welfare checks.

8/31/2008 9:27:04 PM

Quote :

"Here's an interesting issue from CEPR that I hadn't even heard about. Obama supports the Employee Free Choice Act, a bill that could return unions to place of importance in the country and thus finally increase real wages."

Unions can only increase compensation by bidding up unemployment. As those working in unionized industries tend to earn far more than the average, you are sentencing the poorest among us to homelessness and death in order to make the rich even richer.

Today's real wages are growing, just not as fast as they historically should, but it is because non-wage compensation continues to grow at double digit percentages every year. If we do not contain healthcare costs somehow, either through nationalization or deregulation, then real wages will continue to stagnate until the baby boomers finally start dying off.


[Edited on August 31, 2008 at 9:38 PM. Reason : img]

8/31/2008 9:37:08 PM

is the spike in 2008 from the stimulus check?

8/31/2008 9:47:22 PM

As I understand it, yes.

8/31/2008 10:01:25 PM

HUR picked a great username, because whenever he talks all I think of is "HURRRRRRRRRRR "

8/31/2008 11:12:53 PM

Quote :

"Unions can only increase compensation by bidding up unemployment. As those working in unionized industries tend to earn far more than the average, you are sentencing the poorest among us to homelessness and death in order to make the rich even richer."

So you claim. Various economists disagree. (Including the folks at CEPR, obviously.) Using actual data from this country, it's hard to argue for unions increasing unemployment. There's plenty of reason to believe greater unionization would benefit low-wage workers. In fact, it would benefit them more than high-wage workers:

http://www.cepr.net/documents/publications/quantile_2008_05.pdf

9/1/2008 12:29:15 AM

^^aaaaaaahahahhahahaha same here

9/1/2008 12:37:24 AM

By the way, LoneSnark's claims about the minimum wage killing poor folk aren't particularly supported by the data either. According to conventional economics, increasing the minimum wage only causes problems if wages are at equilibrium level. If they're below equilibrium, increasing the minimum wage will actually help everybody. Some studies have shown exactly this effect, that an increase in the minimum wage increases employment.

[Edited on September 1, 2008 at 1:00 AM. Reason : loan]

9/1/2008 1:00:20 AM

Quote :

"Here is my question for democrats and republicans....are income taxes legal? "

You'll be happy to know that the founding fathers thought income taxes were reprehensible. Unfortunately, our friends the liberals convinced us the founding fathers were fools.

9/1/2008 3:28:39 AM

^^^g.viper. that post killed me.
minimum and near minimum wages are at or slightly above market value. thats why there are so many jobs at the minimum and none under, duh. If the wages were supposed to be higher, businesses would hire more and more until the wage would meet equil at a higher point. There have been no market shocks so Im going to say that after X decades, wages are around equil for the minimum wage workers.

Almost all reputable studies show that it leads to a decrease in employment -- always when you hold other factors constant. Sometimes hours are cut, prices are raised, the 'lesser' workers are replaced by 'better' workers that come into the market place for the now higher wage.
--------------

Obama basically is just shifting the public expenditure down and increasing the government expenditure. Its an equity vs efficiency tradeoff. All taxes take some loss. The loss in consumption (market distortion from original desire) has some dead-weight loss. It takes about 1.20 worth of taxes to spend 1 for the govt -- and 10 cents of that dollar going to paying off interest. So when we pay 1.30, we get .90 back to society. Multiply that by billions of dollars and you can see why less taxes are preferred by those in finance.

I personally dont like it but I think its a tradeoff and no one is 'right'. It depends on who you are and what you think the priorities should be. Some think that this policy focuses too much on splitting the economic pie instead of growing the economic pie (which would in turn, increase each respective share -- why Im in favor of less tax).
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There are just some flaws in Obamas plan. He is going to raise corporate taxes. He is going to add substantial taxes onto the wealthy, who often own or dictate corporations. So they now have an added cost. Theyre going to react. They can raise prices, cut dividends, cut employment, etc...people often forget that we make up companies, we rely on companies for retirement and we buy g&s from companies. This is more traditional liberal thinking which Im not a huge fan of. They want to tax more. And then use my dollar, and give me back an inefficient (less than a dollar) return. No thanks.

Let the market naturally move. I know what I want. You know what you want. Collecting all of our money and deciding what we want is not the right thing to do. We all look our for our own best interest, the govt doesnt need to do it will taking a portion away and having it disappear into interest or admin.
-----------------
His green policies. Im all for the idea. But. It is rarely the case that the cutting edge technology is the best choice. It doesnt matter what is possible, it matters what we can do on a large scale. Solar energy would be about 10x as expensive as what were paying now. I personally dont want to pay for that. I dont think were at the point where we need to pay 10x for energy. Additionally, there are huge infrastructure costs to that.
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I might sound a bit right wing and Im not trying to say the market should dictate everything and there should be no taxes. We obviously need them for the sick, the poor, the roads, the police, other common goods, courts, laws, etc. I just think theyre a bit high at the moment and over-reaching.
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Politicians run on the platform of get-elected-first. Theyre not going to have smart policy if their voting base is not smart. Ron Paul was a really intelligent guy, the smartest guy hands down for economics but was given little credit.

Too often people look at economics as opinion or chess. There really is a science behind it. You wouldnt question a doctor or chemist when he tells you what he think might happen. Youd take their word. But everyone puts their two cents in for economics and disagrees with time-trued facts. The 'i dont believe it' or 'well that didnt work' drives me off the wall.
---------------
Its late and Im rambling, HURs stuff was good earlier.
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About the 95% cuts thing. Real quick. Thats such BS. The actual given percentage will go down for 95% but he is planning on taking out allllll sorts of deductions, exceptions, etc so that about 2/3 will face higher taxes. If youre classified as a dependent, then you will pay your parents tax bracket -- my friend is voting mccain strictly because of this. She hates him but if she is being taxes at 50% she cant afford to attend school. High taxes distort incentive. It makes people more reliant on the government and gives them less incentive to work more.
-------
His 'national healthcare plan' that the government will offer. If Im paying through private insurance and my tax dollars are going to reduce the cost of a national plan. Im going to drop my private plan asap. I already paying for the national plan through taxes, so why would I pay double. This is another reason why his cost figures are too low. So many people are going to drop their private insurance and buy the national plan, because theyre already partially paying for it through their taxes. This will kill the insurance business. Their client number will decrease and those left will be paying a much higher premium (stat, less N, greater variability, they charge more). Also, employment through insurance will drop.

9/1/2008 4:45:59 AM

Quote :

" You'll be happy to know that the founding fathers thought income taxes were reprehensible. Unfortunately, our friends the liberals convinced us the founding fathers were fools."

any civilized modern society must have a progressive income tax in a post industrial-revolution world.

Quote :

"So when we pay 1.30, we get .90 back to society. Multiply that by billions of dollars and you can see why less taxes are preferred by those in finance."

the price we pay to make sure hte money goes to the right places and not just to the maximum profit.

Quote :

"instead of growing the economic pie (which would in turn, increase each respective share -- why Im in favor of less tax). "

and important things simply wouldnt get done. your idea is analogous to adding new rooms onto a house that has a roof needing repair, termites and no landscaping.

Quote :

"Collecting all of our money and deciding what we want is not the right thing to do. We all look our for our own best interest, the govt doesnt need to do it will taking a portion away and having it disappear into interest or admin."

Nobody is saying it is what you want. obama never said hes goign to take the money and keep in mind the selfish interest of the rich while spending it. the whole idea is to accomplish things that aren't in the best interest of the people with the purchasing power but are still in the best interest of the nation

Quote :

"You wouldnt question a doctor or chemist when he tells you what he think might happen. "

Nobody is questioning the economic consequences but we can't just abandom america citezens for the sake of higher profits anymore. its gotten old.

Quote :

"This will kill the insurance business. "

Good. Its an evil business but thats not true as most insurance companies still have auto, home and life insurance to rape people with

[Edited on September 1, 2008 at 7:09 AM. Reason : ok]

9/1/2008 6:58:36 AM

I know I am waiting on my fat retirement check from SS, hooray for no personal responsibility... oh wait

9/1/2008 7:37:01 AM

Quote :

"All these steps require a commitment of resources. If we are to have more of these things, we must be planning to divert the resources to pay for them from somewhere else. Evidently there is a notion of some kind of existing inefficiency or misallocation of resources-- money is currently being spent on things it shouldn't be, and should instead be devoted to objectives on the above list. But how is the bill for all these nice things supposed to be paid?"

Well, eliminating the Iraq war would free up 12 billion per month.

9/1/2008 9:09:18 AM

Unions, like other organizations, were much needed at one point in our history. they fought for better working condidtions, wages, and discrimination. Now they do little more than push thier companies overseas(if possible) or to layoffs.

Anyone remember the NYC transit strike? I remember them striking and saying that the ticket seller makes almost 70k...and wanting more. They have outlived thier time and hurt companies in a gloabal market. IMO.

9/1/2008 9:23:45 AM

Quote :

"According to conventional economics, increasing the minimum wage only causes problems if wages are at equilibrium level. If they're below equilibrium, increasing the minimum wage will actually help everybody. Some studies have shown exactly this effect, that an increase in the minimum wage increases employment."

Yes they did, and then other studies came out explaining why. The most publicized study suffered the problem of only consisting of data from large corporations (McDonalds, Wendy's, etc). As such, when the higher minimum wage caused a market shift away from small companies which tend to be labor intensive to big companies which tend to be capital intensive, the data showed a significant growth in employment in those big companies due to the law making labor more expensive while leaving capital prices the same. The data did not exist for the small companies in the region but was being collected by the big companies. As such, in the study, that small companies shed far more jobs than the big companies gained could not be demonstrated.

But the question is "how"? Life is not a bundle of random responses, we know why things happen, the only uncertainties are by how much. As such, how the hell would higher wages produce more jobs? That money comes from somewhere, it comes from customers which now have less money to buy the goods and services of other laborers, it comes from employers which now have an incentive to employ fewer workers. There is no known incentive for anyone in this process to say "higher wages? I should hire more people!".

Similarly, we are left with the question of HOW labor markets got to be below equilibrium? Employers do not have a monopoly and therefore have no incentive to under-employ. However, think about what it would mean for wages being below equilibrium. That would mean that jobs are available for anyone that wants to switch at the drop of a hat. How is this a bad thing? If prices were exactly at equillibrium, that would mean for every worker there was only one job; if you quit that job then you would stay unemployed until you gave up and went crawling back to your old employer. As such, I believe it is a natural form of labor markets to operate below equilibrium and that it is utility maximizing to do so. A slightly higher wage may help most workers a little bit, they can buy a slightly larger TV, buy a slightly larger house. However, for those unemployed and seeking a job, or those wishing to get away from an abusive employer, a slightly lower wage (and therefore a week long job search instead of a six month search) could mean not going hungry. similarly, prices fluxuate. If participants are seeking equilibrium then fluxuations will drive them above equilibrium at least some of the time, meaning hunger for the unlucky ones until the market fluxates back.

As such, if I am right then that would suggest that a small rise in the minimum wage may not decrease employment, but it would reduce the over supply of jobs, with predictable results (long periods of unemployment, a fear of losing ones job, etc.), all which are borne by the poorest among us just to make you feel better.

9/1/2008 10:00:37 AM

Diddy: Lower oil prices so I can fly on private jet
http://www.cnn.com/2008/SHOWBIZ/Music/09/01/people.sean.combs.ap/index.html

Story Highlights
Sean Combs asks for free oil from "Saudi Arabia brothers and sisters"
"I'm actually flying commercial," Combs says


LOS ANGELES, California (AP) -- Fuel prices have grounded an unexpected frequent-flyer: Diddy.

Sean "Diddy" Combs complained about the "... too high" price of gas and pleaded for free oil from his "Saudi Arabia brothers and sisters" in a YouTube video posted Wednesday.

The hip-hop mogul said he is now flying on commercial airlines instead of in private jets, which Combs said had previously cost him $200,000 and up for a roundtrip between New York and Los Angeles.
"I'm actually flying commercial," Diddy said before walking onto an airplane, sitting in a first-class seat and flashing his boarding pass to the camera. "That's how high gas prices are. I'm at the gate right now. This is really happening, proof gas prices are too high. Tell whoever the next president is we need to bring gas prices down."

_______________



somebody call him up and tell him to make sure and vote for obama, b/c he'll bring in all kinds of jet fuel for cheap.

[Edited on September 1, 2008 at 10:31 AM. Reason : link]

9/1/2008 10:31:21 AM

Quote :

"somebody call him up and tell him to make sure and vote for obama"

Do you really think that is necessary?

9/1/2008 10:36:27 AM

Quote :

"Almost all reputable studies show that it leads to a decrease in employment -- always when you hold other factors constant."

I don't belive you. Show me. The theory says that, yes, but only if assume wages to be at equilibrium level.

Quote :

"Life is not a bundle of random responses, we know why things happen, the only uncertainties are by how much."

No, I'd say it's entirely possible that your economic models fail when applied to the real world. We're not a bundle of well-informed, rational actors. We're closer to random responses than that.

Quote :

"Similarly, we are left with the question of HOW labor markets got to be below equilibrium?"

They theory I've read was a minimum wage increase can act as free advertising for workers, basically. Before the increase, there might be folks would work for $6 an hour but not $5.15. Places offer $6 but these folks don't know. It's not worth it for employers to spend money to publicize their wages, so the folks who would be willing never get hired. Once the minimum wage goes up, though, the potential worker know they'll be paid $6 an hour, so they apply.

Quote :

"As such, I believe it is a natural form of labor markets to operate below equilibrium and that it is utility maximizing to do so."

Well, I'm impressed. Perhaps I've misjudged you. I thought you cared most about your models. Now it's looking like you'll do anything to support your desired result, models or no. If minimum wage could push wages up to equilibrium, then equilibrium wages must be a bad thing. Listen to yourself.

Quote :

"As such, if I am right then that would suggest that a small rise in the minimum wage may not decrease employment, but it would reduce the over supply of jobs, with predictable results (long periods of unemployment, a fear of losing ones job, etc.), all which are borne by the poorest among us just to make you feel better."

Then I guess we should include generous unemployment benefits along with attempts to increase the minimum wage, huh? That way workers do well and those out of work don't suffer too much. If you're really worried about the poorest among us, that is. You know, maybe mainstream liberals aren't as clueless about economic as often claimed. They just have a different goals.

9/1/2008 1:05:22 PM

Quote :

"We're not a bundle of well-informed, rational actors. We're closer to random responses than that."

Really? closer to random? I think you have overstated your position which this sentence.

Quote :

"might be folks would work for $6 an hour but not $5.15. Places offer $6 but these folks don't know. It's not worth it for employers to spend money to publicize their wages, so the folks who would be willing never get hired. Once the minimum wage goes up, though, the potential worker know they'll be paid $6 an hour, so they apply."

That is the argument against raising the minimum wage: even if it does increase overall employment by bringing new workers into the productive economy, it renders unemployable those they replace that were willing to work for $5.15 an hour but, due to some disability such as poor language skills, are less desirable to employers than the new entrants.

As such, your mechanism boosts the income of workers that only desire a job by 85 cents an hour by taking $5.15 an hour from those that actually need the job.

Quote :

"Well, I'm impressed. Perhaps I've misjudged you. I thought you cared most about your models. Now it's looking like you'll do anything to support your desired result, models or no. If minimum wage could push wages up to equilibrium, then equilibrium wages must be a bad thing. Listen to yourself."

No, I care about getting at least close to the truth, and you have yet to offer any mechanism by which those most in need are helped by men with guns enforcing an arbitrary price floor. Which is odd, there is a real mechanism you just have not yet given it...

Quote :

"Then I guess we should include generous unemployment benefits along with attempts to increase the minimum wage, huh? That way workers do well and those out of work don't suffer too much. If you're really worried about the poorest among us, that is. You know, maybe mainstream liberals aren't as clueless about economic as often claimed. They just have a different goals."

Nope, they are far more clueless than that. They say what you said: "claims about the minimum wage killing poor folk aren't particularly supported by the data either" and then don't bother creating the obviously needed safety net and then play dumb when the teenage unemployment rate jumps or illegality increases.

But, even with your latest plan, what you have done is driven up (at the point of a gun) the wage of a million people and dumped tens of thousands onto welfare rolls. There was a deadweight loss in this behavior, as the production of all those now on welfare was lost. If you had instead jacked up the Earned Income Tax Credit, you would get the same wage boost, greater production instead of less as more join the workforce, and done it all with about the same cost to the government. Especially since one's earning potential improves with employment, allowing the poor and young to gain work experience and improve their future earning potential, potentially even working their way out of poverty.

Just to be clear, it has always been my position that the EITC is too low. It is similarly my position that income taxes should not take a single dollar until $20k a year or so. But it is rather unnecessary to condemn Peter to eith death or even life-long government dependent poverty to satisfy the goal of helping Paul.

9/1/2008 2:19:48 PM

Quote :

"any civilized modern society must have a progressive income tax in a post industrial-revolution world."

What is your economic reasoning for this?

Quote :

"the price we pay to make sure hte money goes to the right places and not just to the maximum profit."

What about private, non-profit organizations?

Quote :

"and important things simply wouldn’t get done."

How do you explain the 1920s where plenty was done by free individuals, without the need of the government doing it all? I have relatives who came to the U.S. with nothing but the clothes on their backs and still managed to produce a life for themselves. (and they were the rule, not the exception) Private charities provided health care when they could not afford it, food when times got tough and shelter during their first several months in the U.S. Why do we have the false-notion that if government did not do something, it would not get done? I think that view vastly discounts the inherent sense of community humans share, which presides in the absence of a government inefficiently providing such needs.

Quote :

"we can't just abandom america citezens for the sake of higher profits anymore. its gotten old."

Nobody is advocating this. Most who oppose the government robbing peter to pay paul do so for two reasons: the immorality of theft and the efficiency and efficacy of allowing free individuals to allocate resources to the needy (as was widely done prior to FDRs New Deal)

On the contrary, conservatives, statistically, donate more to charities than liberals. (my intent is not to suggest liberals are greedy or not generous, but rather to suggest conservatives are not misers who do not care about the well being of his/her fellow citizens)

“Although liberal families' incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household ($1,600 per year vs. $1,227)”

http://townhall.com/columnists/GeorgeWill/2008/03/27/conservatives_really_are_more_compassionate

Quote :

"Its an evil business but thats not true as most insurance companies still have auto, home and life insurance to rape people with"

Firstly, the insurance industry has an unnatural lack of competition induced via the government's own regulations. So this is not a good example of a competitive, free market.

Secondly, insurance providers are not "raping" people:

Insurance industry profit margins: life insurance = 6%, Property and Casualty = 6.5%

Profit margins of various, other industries: Networking & Communication Devices = 16.5%, Healthcare Information Services = 16.6%, Security Software & Services = 10.6%


[Edited on September 1, 2008 at 2:29 PM. Reason : .]

9/1/2008 2:22:10 PM

Quote :

"As such, your mechanism boosts the income of workers that only desire a job by 85 cents an hour by taking $5.15 an hour from those that actually need the job."

I love it. In these debates, you only care about your mythical poorest of the poor. Again, according to economic theory, employment will increase if wages are below equilibrium when the minimum wage goes up. It'll help more people than it hurts, if it hurts anybody. Some studies support this idea. Mainstream economists say the effect of a minimum wage increase depends on a whole host of factors.

I'm most amused by your suggestion that anyone making over minimum wage doesn't really need the job. If you're worried about those assholes making $6 an hour, I can only imagine what you think of CEOs and the like. How about we steal from them to help the poorest of the poor?

Quote :

"No, I care about getting at least close to the truth, and you have yet to offer any mechanism by which those most in need are helped by men with guns enforcing an arbitrary price floor."

Let's put your most in need to side for the moment. (Capitalism has been doing that for decades now.) Does increasing wages and employment really sound like such a bad thing to you?

Quote :

"If you had instead jacked up the Earned Income Tax Credit, you would get the same wage boost, greater production instead of less as more join the workforce, and done it all with about the same cost to the government."

Don't assume, buddy. I'm not opposed to more economically sound ways to help the poor out. I'm no crusader for the minimum wage. I attack your claims because I find them excessive and poorly supported by actual data.

9/1/2008 4:02:35 PM

I think the big problem behind Obama's economic proposals is that Obama doesn't understand economics. Anyone who thinks that a tax on something will lower its price is a complete fool.

9/1/2008 4:15:13 PM

Quote :

"Again, according to economic theory, employment will increase if wages are below equilibrium when the minimum wage goes up."

Again, it is the wrong workers being added to the statistics. Not only would employment increase but worker composition would change, with the higher skilled (but previously alternatively engaged) replacing the lower skilled workers. And yes, forgive me for not being impressed that someone that had alternatives at $5.15 has displaced someone that didn't.

Quote :

"I'm most amused by your suggestion that anyone making over minimum wage doesn't really need the job"

They clearly do not. The individuals in question are those that refuse minimum wage work at $5.15 but are eager participants at $6. Clearly they had alternatives better alternatives at $5.15, why not leave them with them?

Quote :

"Let's put your most in need to side for the moment. (Capitalism has been doing that for decades now.)"

Yes, that's why those classified as living in poverty enjoy lifestyles beyond the reach of most Americans just two generations ago.

Quote :

"Does increasing wages and employment really sound like such a bad thing to you?"

No. That's why I want to increase the EITC to boost both income and employment. However, sending people to die in the street at great expense to society always sounds like a terrible idea.

Quote :

"Don't assume, buddy. I'm not opposed to more economically sound ways to help the poor out. I'm no crusader for the minimum wage. I attack your claims because I find them excessive and poorly supported by actual data."

And I find you poor in logic. You don't know how the things you say could be true, beyond some advertisement effect which would seem to have the reverse results from those you claim. Well, I have heard most arguments on this issue, and while a price fixing is not always disasterous, better outcomes can usually be had by doing anything else.

9/1/2008 5:55:50 PM

EITC is a wayyy more effective way to help the poor than raising the min wage

The increase in employment due to rising min wage is simply giving less hours to more people so they pay less benefits. People need to look into the numbers theyre spouting off here.

Insurance does not 'rape' people. It protects people against catastrophic events that they cant pay for. Without insurance, totaling your car would be disastrous, some medical expenses would be disastrous, etc. Yes, they make a profit like any other company. But their entire business is based off some unknown risk, so they cant really operate on the margin because they could go under if they did. I think theyre a necessary part in the modern economy.

9/1/2008 9:07:15 PM

well, the point of insurance is to cover catastrophic things, yes. Unfortunately, we've made health insurance cover the human equivalent of an oil change.

9/1/2008 9:25:26 PM

Obamas economics in a nutshell:


INTEL should be punished for making a better product and selling more processors.
AMD has the right to catch up even though they currently blow, and we should all pay for it.



that's great. i bet AMD people would LOVE that.

9/1/2008 9:47:03 PM

Gah, tl;dr.

This thread was fine until about halfway through. You all had to start writing novels about this. Fine, I'll throw my verbose dog into this fight.

I will say that it seems like the usual bit of tripe politicians pitch (I'm going to fix everything!) without any details on how some of the more questionable fixes will be carried out.

For now I think I'd be happy if he promised to fix the tax loopholes that let some of the wealthiest people in this country pay less in taxes than the people just a bit below them. Same with tax loopholes for large corporations, mostly because I think the IRS should make sure that tax loopholes don't exist (having sketchy accounting practices shouldn't make you exempt from paying your share).

The automobile comments are mostly crap. He should leave the free market to do whatever here, and he shouldn't make promises about making it easier for people to afford the cars. I'm not a liberal or a hippie nutjob, but if you're going to push a more eco-friendly sustainable lifestyle (as he is with the renewable energy sources) you shouldn't, at the same time, encourage the sale of automobiles (even if they are more efficient). Pushing for sustainable energy sources and more efficient vehicles will only make a decent impact on our energy usage and growth if some effort is made to end our love affair with the personal automobile. Otherwise we'll just be throwing money at the problem, boosting sustainable energy sources, and then wondering why we are still importing so much oil ten years down the road.

People talking about education is a good thing, but unless the solution is something beyond "throw money at the problem" I'm not putting any stock in his ideas. However we're spending our money right now, it seems like it's really damned ineffective and still turning out wave after wave of idiot children that are not prepared to enter the workforce, let alone take care of themselves and function as adults.

ignore this rant They should work to make the educational process more standardized and set more aggressive goals having kids learn the basics by the time they get to high school. When they get to high school, maybe we should consider teaching them more about things like personal finance, family planning (SERIOUSLY fucking important), and giving them opportunities to take courses that prepare them for a post-secondary education or that prepare them to enter the workforce (i.e. have job fairs at the local high schools just like we do in college and let kids work at internships or in co-ops or work-study programs that give them real experience). This would be better than teaching our kids a bunch of garbage at what is at best an average rate (and what is remedial for everyone else) and then setting them off in the world without a damn clue of what they want to do or how to take care of themselves as adults. ok i'm done ranting

Affordable accessible healthcare will simply make it more expensive for everyone to get said healthcare. The stuff he's promising sounds damned expensive (extending an affordable health care plan to all the people that don't have it, along with lowering everybody else's premiums, is going to be very very expensive). Whatever though, it sounds like whoever we elect is going to do something to crap on the healthcare or health insurance system, so I don't think bitching about it is going to help.

We don't need to help families with anything as far as paid sick days and family leave. Again, going back to the family planning comment in my rant, if most people who were going around starting families these days had a financial and personal plan for having children and either abstained from sex or used protection to avoid getting pregnant, there wouldn't be all this boohoo bullshit about suffering families and single mothers and so on. People are fools and don't realize how expensive a kid REALLY is until they have one. They then realize that not only do they have less time to work, but they also have to spend a lot more money on this kid than they had originally thought. Again, everybody that goes through the public education system needs to take a personal finance and family planning class their 9th or 10th grade year that spells out the expected costs for stuff like this and that teaches them how to plan for families, retirement, and a tolerable existence that is within their means. I just don't see the need for companies to be required to pay for absent days for some workers just because they irresponsibly had a child outside of marriage (or a binding personal commitment) and are unable to commit to a 40 hr/wk work schedule and to raise their kids. Crack down on the deadbeat dads or help prevent the problem from occurring in the first place, but don't just make it easier for people who have made an easily avoided mistake to make that same mistake again in the future (by giving them mandatory paid benefits, which is what this sounds like).

Oh yeah, this ranting shit is fun. I hope you all realize I'm not coming back in here to reply to any of this because I was just looking for a way to run the clock down until bedtime.

Oh yeah, I'd also like to see Obama fight every special interest in this country all at once with his budget scheme. I'd love to see agricultural subsidies go to hell since they are more or less proving entirely unnecessary these days in a highly industrialized country like ours. Cutting worthless pork from the budget is a noble idea. I'm just pretty sure the people backing him (in the legislative branch) don't have the stones to go and sell out all of their financial backers by cutting all the programs they lobbied for in the first place. I don't think he has enough connections with all the existing power players in Washington that he could make a significant dent in what is undoubtedly a large amount of uncontrolled (and unnecessary) government spending.

Hoo, if you read all that you're a real trooper. You get 5 points for every spelling or grammatical error you find in my post as well.

9/1/2008 10:39:23 PM

^so what you are saying is:

not only would he heavily tax INTEL for being better than AMD, but obama'd probably make a law to prevent INTEL from inventing a new chip for 2 years so AMD could catch up

9/1/2008 10:43:01 PM