The General Economics Thread

There are few if any legitimate economic arguments against minimum guaranteed income. Moral and cultural arguments are harder to argue against, because they are based on subjective values derived from personal ethics and experiences, which cant be reduced to economics. Which is to say that different people have different priorities.

Ah yes, demarquis, I do remember reading a study on how arguments that can't be proven or disproven (such as opinions) often hold sway when fact-based arguments are proven false. You got a point there.

Some other places will need to experiment with this guaranteed minimum income thing, and have people witness the idea working so more will demand it. I want politicians to fight over who will do a better job providing such a service, rather than argue against it.

And to Gabrael, the jobs that people hate will still need to be fulfilled. Who will do the crappy jobs that no-one likes? Although I've seen the argument that paying more will be one possible solution, creating an incentive for people to do said jobs only for the money, but I imagine that could end up raising prices for the services (e.g. fast food charging more because they have to pay workers more).

edited 18th Dec '14 10:34:04 AM by BonsaiForest

The Randian egocentric cult of self is still a major thing in a prominent, influential and wealthy part of society. These people cannot understand how anything other than effort is needed to progress in life, and as such consider any failings to be self-caused and thus entirely the person's own fault.

I was actually raised in such a way, by a well-meaning but misguided mother who taught me that stress, worry and depression were the result of guilt caused by realising my own failings (I wasn't studying enough) but being too lazy to fix them. I think she regretted this once I had a fullblown nervous breakdown and became a suicidal wreck, but the damage was done. I managed to escape the mindset and become the extremely progressive socialist liberal I am today, thanks to long exposure to the harsh reality of life in Glasgow (arguably Europe's most impoverished city) but I'll always remember that past.

And I'll always be conscious that many will never escape such a mindset. Weakness beyond a person's own control is a concept they just cannot and will not understand, and that will completely defeat all logic, facts and rational arguments in favor of reform, especially reforms so huge as MBI.

Yeah, right now it's just that one town in Manitoba in the 70s, which was done under a Liberal federal government and an NDP (blue collar party, pretty much) Provincial government. It turns out that the program was squashed after a recession and due to government officials thinking it was a waste of money and other officials who were scared that an analysis would prove it was useless.

I remember how people would refuse to give money to the homeless beggars we encountered on the way to Philadelphia because, as my mom put it, "they want him to get a job." I was a kid at the time, and the concept that maybe it's impossible for this homeless man to get a job because of his particular situation didn't occur to me. Nor the idea that not enough jobs exist for all people, and that a homeless black man is not who most employers would want to hire.

edited 18th Dec '14 11:25:32 AM by BonsaiForest

Nick Murray says “The ability to distinguish between volatility and loss is the first casualty of a bear market.” (The article goes onto Warren Buffet and how's he weathered Russian financial collapses before.)

Great Irony: The American South is generally experencing the greatest federally backed Keynesian stimulus, but the benefits of that stimulus is at odds with the region's extremely counterproductive politics.

"There are two entrepreneurship problems afflicting the U.S. economy today, and both are bad for the middle class. The country doesn’t have enough of the kind of entrepreneurship that creates jobs, and it has too much of the kind that boosts rich executives at the expense of everyone else." (Basically the way big mega firms are bending tax laws and regulations is harming the creative destruction that usually drives new companies.)

Ed Luce: Too Big to Resist: Wall Street’s Comeback (and how Wall Street isn't prepared for another crisis.)

"Regulators forced up capital requirements after the Global Crisis – triggering fears in the banking industry of dire effects. This column – by former BIS Chief Economist Steve Cecchetti – introduces a new CEPR Policy Insight that argues that the capital increases had little impact on anything but bank profitability. Lending spreads and interest margins are nearly unchanged, while credit growth remains robust everywhere but in Europe. Perhaps the requirements should be raised further."

With Regards to the Fed Meeting and the use of "Considerable Time" with regards to interest rates.

The flip side of that is that individual charity is generally useless at getting a homeless person out of their condition. Even in that social stratum, there's a crab bucket mentality: if you give someone $1,000, it's not enough to push them out of poverty and it will likely end up stolen by those less fortunate*. This is why systematic solutions are required, which means government intervention.

*There have been some notable cases where giving a homeless person something that's indicative of atypical prosperity (like a new pair of nice shoes) causes them to be bullied and/or robbed by other homeless people — or even harassed by police who assume they stole it.

Anyway, on the subject of MBI, it would pay for itself simply in the increase to demand that it would trigger. Imagine 40 million Americans suddenly being able to afford homes, cars, shopping at decent grocery stores, going to the amusement park, etc. The economic boom would be incredible.

edited 18th Dec '14 11:34:37 AM by Fighteer

Bonsai, that's kind of a given.

But if people already have a base wage to help them live, there is more fluidity and transition opportunities.

Yes, people will still be there to take out the trash and clean the floor. But at least people in these jobs will get living wages or maybe only do it on a part time schedule instead of over 40 hours a week.

(Especially since most of the more undesirable jobs get paid nothing.)

I rather people take these jobs because they choose to for whatever reason, not because they have to.

Let me add that forcing employers to pay living wages or higher for those menial, thankless tasks will provide a vast incentive to automate them through technology.

I for one would love to see such jobs automated through technology.

If the jobs that don't require brainpower - or a big chunk of said jobs - get taken over by technology, then that encourages people to learn more in order to get a chance at the jobs still left that require more brainpower. Which in turn would result in people becoming smarter, more knowledgeable, etc. And I think we could certainly use a smarter populace.

edited 18th Dec '14 1:10:51 PM by BonsaiForest

You'll just have to hope that the machinery is idiot-proof, for example dealing with someone putting the wrong item in the recycling bin instead of in the normal bin...

The vast majority of technological development is iterative, not revolutionary. If the need exists, and there's an economic incentive, someone will solve it.

edited 19th Dec '14 9:34:12 AM by Fighteer

12 things that only the working poor will really understand

yep, this is our plight. Spot on.

Well that hit depressingly close to home.

I'm middle class and I share some of those woes. I was recently hospitalized for a life-threatening case of pneumonia (I'm fine now, don't worry) and sweated the heck out of the final bill even with insurance. When it came, I discovered just how extreme the difference between 'retail' healthcare prices and the negotiated amount that insurance pays is.

Get this: the "list price" of my hospital stay was over $130,000. How they expect anybody to pay that is beyond me. I just can't grasp the idea of that kind of charge for anyone who isn't "one-percent" wealthy. But the adjusted price was around $9,000 (before the insurance payment; my actual bill was quite a bit less).

Logically, since the hospital must be able to stay solvent with that $9,000 payment, their retail rates are marked up at least 1400 percent. What other business could get away with that? Who could possibly justify that kind of pricing model? How could they possibly expect an uninsured person who isn't fabulously wealthy to pay it?

Many, if not all, middle-class families are a serious medical condition or a lost job away from joining the folks in poverty who are struggling to choose between birthday presents and food.

edited 19th Dec '14 12:25:43 PM by Fighteer

They get away with it because they can.

Same reason why wall street loans have cheaper interest rates than student loans.

I didn't have health insurance for about 7 years and even the last year I did have insurance, I couldn't afford to use it anyway so I never went to the doctor.

It took several years to pay off the birth of my son, even after insurance. My insurance dropped me for having a child. I couldn't afford new insurance because not only are women charged higher rates, but being pregnant is considered a preexisting condition so I couldn't afford to buy my own insurance.

Thank god the ACA banned preexisting conditions. However they left gaping holes in deductible caps so that's horrible.

I would love to be in that position. If I drop a job, we're homeless.

edited 19th Dec '14 12:35:15 PM by Gabrael

But they could never possibly hope to collect that money from someone who can't afford to buy insurance. It's like they have to establish some kind of moral claim about the value of their services even as they understand they can never realistically obtain the money.

12. The car maintenance struggle

Shit. My 10 and a half year old car had its engine break down. I go to regular checkups, but now apparently it was totally out of oil, despite getting oil changes/refills. It's been good to me otherwise. Talking with my family, I decided to buy a new engine for $3700, and keep the car, instead of buy a new car. I just hope that proves to be the right move.

2. The Christmas struggle

Confession time: I do spend a lot on Christmas. Last year it was a Wii U and 10 games (half were cheap downloads like Super Mario Bros 2, but half were full-priced games like Rayman Legends) for my older brother's family. This year I'm spending less. At least I'm getting a cell phone with a large chunk of its future bill already paid off in exchange.

What are you talking about? They are quick to garnish wages and even seize tax returns until that debt is paid. they don't care how long it takes so long as something is coming in.

Squeezing blood from a stone, that is. Still, it just makes them even more morally bankrupt and fuels the narrative that we need national cost controls on medical prices.

Now, how do we change the national discussion so that people become aware that these are big problems and insist on them being changed? I think that's the big question. We need a critical mass of pissed-off people who demand their politicians do something about all this mess.

I've been that stone. They will bleed you.

Hell, I'm still paying off my graduate school $70 a paycheck. They're even talking about seizing my state tax return, much like how I had to spend several years paying off the excess from having my son.

That's another thing people don't realize, if it's a state institute like a hospital, college or something like that, or even a private institute who asks permission, they can take your tax return with little notice, even if you're already in collections.

We got PPACA, but that's it so far. The national conversation has been completely hijacked by the Tea Party.

edited 19th Dec '14 1:03:10 PM by Fighteer

Things can only get so bad before people are forced to take notice.

I don't know if I've said it in this thread, probably another one, but I've come to the conclusion that problems tend to be ignored until they're too big to ignore.

Why do we care about global warming? Warm winters. Now it's harder to ignore. Why do we care about bullying? Suicide. Parents of those who've committed suicide are speaking out against it. Why do we care about food allergies? Because they're more common and severe enough to cause death.

I imagine when lots of people see their work leading to very little gain, they'll be pissed. I mean, when enough people see it, and those who see it are large enough in number to affect things.

I think it would take more than just being barely able to feed oneself and oneself's kids through shit jobs.

The more I read and watch stuff about the French Revolution, the more I get to the conclusion that the 1% would have to do something completely Stupid Evil and clearly against the interests of the majority of the population before there would be any mass revolt/revolution/insurrection.

And, like the Ancien Regime's nobles and high clergy, there's an extensive network amongst the ones who have most money and/or power. This network allows for tax evasion and off-shoring (looking at you, Juncker), wealth transfer (I'm gonna buy Piketty's book for this Christmas), and other... interests that they have.