The future of the North American economy

[skepticalbip]

The problem is that life is not fair. The best solution for any real or perceived unfairness will still not be fair. This leaves trying to find a system that provides the least suffering not an idealized but impossible system that eliminates all "unfairness". The world currently has many different government/economic systems and has had many others in the past. None have been "fair" to everyone. The question should be which has the least suffering for the poorest and the most opportunity for individuals. It should be recognized that the poor in the industrial/capitalistic western nations have a higher standard of living than the middle class in nations that have tried centrally controlled economies.

I have no disagreement with you there. I don't expect that someone who is unable to contribute to their economy is necessarily going to live a life to the standard of someone who is. My point is only that if you have a member of society who, by definition, is unable to contribute to that society, and only a small number of that society's members are profiting, then you have a moral obligation to help those members who are unable to contribute, because they were born with no alternative.

Automation is going to happen, and it's going to put a lot of people out of work. If you don't move the surplus production value back into their hands, and they're living in poverty, then you are a part of a broken system, or at least not a world that I want to live in.

So there is a victim of automation, unless you're content letting people go hungry.

No argument with most of your post. However your "letting the people go hungry" is a bit of hyperbole. Safety nets in a capitalist economy are certainly reasonable and desirable. That's why capitalistic industrialized nations have safety nets.

The problem is that too many argue for ideal Utopias that ignore reality and human nature. Such idealism has been proven many times to be unworkable in the real world and have caused a great deal of unnecessary suffering for the population of the countries that have attempted to institute them.

 

[Canard DuJour]

It should be recognized that the poor in the industrial/capitalistic western nations have a higher standard of living than the middle class in nations that have tried centrally controlled economies.

Why, who was suggesting a centrally controlled economy?

It should be recognised that industrial/capitalistic western nations have big central governments that intervene heavily in the economy, unlike third world capitalistic basket cases. It should be recognised that industrial/capatalistic nations achieved that status by protecting nascent industries from foreign competition. It should be recognised that capacity utilisation and productivity growth wthiin industrial/capitalistic western nations are negatively correlated with inequality.

 

[Canard DuJour]

Safety nets in a capitalist economy are certainly reasonable and desirable. That's why capitalistic industrialized nations have safety nets.

The problem is that too many argue for ideal Utopias that ignore reality and human nature. Such idealism has been proven many times to be unworkable in the real world and have caused a great deal of unnecessary suffering for the population of the countries that have attempted to institute them.

Indeed the problems we have now in industrial/capitalistic nations stem from idealist utopians who believe, despite abundant evidence to the contrary, in a self-regulating economy and do indeed want to slash or eliminate our safety nets.

 

[skepticalbip]

Safety nets in a capitalist economy are certainly reasonable and desirable. That's why capitalistic industrialized nations have safety nets.

The problem is that too many argue for ideal Utopias that ignore reality and human nature. Such idealism has been proven many times to be unworkable in the real world and have caused a great deal of unnecessary suffering for the population of the countries that have attempted to institute them.

Indeed the problems we have now in industrial/capitalistic nations stem from idealist utopians who believe, despite abundant evidence to the contrary, in a self-regulating economy and do indeed want to slash or eliminate our safety nets.

Except for the extremists on both ends, the argument is over how much is needed. Too little will cause unnecessary suffering and too much will kill the incentive to become a productive worker. The extremists on one end say "fuck 'em" and on the other end want no disparity of wealth between those working and those not working.

 

[Loren Pechtel]

Since I can't see a victim I can't see how you are arguing that this is unfair.

Small point here.

It's not unfair for a business to automate, but it is unfair for a person born dependent on an economy to not have any opportunities afforded to them.

Modern capitalist economies make it necessary for people to earn wages, dependent on a business owner. If a society has made it possible for business owners to thrive, but not individuals, then there is an imbalance that needs to be fixed.

I would argue that it's government which needs to rectify the problem, not business, but there is still a victim involved.

Eventually the low-skill jobs will be automated out and society will have to step in.

However, we have not reached that point yet. The only people who are permanently unemployed are those who are disabled (for which other systems exist) and those whose behavior makes no employer want them.

 

[Loren Pechtel]

Subsidizing low wage jobs will not make them continue to exist if better jobs show up.

Subsidising low wage jobs will stop better jobs showing up because low wage employers can undercut better employers. Now this wouldn't be so if profits were maximised by producing until marginal costs = marginal revenues, but you've just established that they aren't.

You're assuming they're all in the same industry. That's generally not the case.

 

[Loren Pechtel]

And you are correct, but only partially. Profits that are reinvested into business capital investments in the economy circulate in the economy. Money spent on capital machinery and production facilities for example. But we have gone from corporate profits being twice the amount of business investment in 1980 to them being over five times the amount of business investment today. This excess doesn't circulate in the economy.

Some of it has been absorbed by the stock market due to the decline in inflation. To the extent that it actually does not circulate the Fed will replace it with new money. The Fed's control over the economy is to a large degree by controlling the amount of money circulating. Individuals and businesses choosing to save vs spend thus has basically zero effect on the overall amount of money circulating.

You are saying that the rich spend all of their incomes. Come on Loren, that is going over the top with your situational statements. Do you you really believe that or are you so conditioned to argue with everything that I write that it is simply a reflex now?

Note how I said with many layers in between. If the rich guy sticks it in the bank the bank loans out most of it and whoever took the loan spends the money. It's spent, not sitting under a mattress. Whether the rich guy himself actually spent it is irrelevant.

Fundamentally, all interest is because someone puts money to productive use and is willing to pay

The vast majority of deposits in banks are in commercial demand accounts that don't pay interest. Do you believe that this money isn't put to productive use by the bank? That it isn't loaned out?

Providing bank services costs money. If it's sitting at 0% the bank still needs to make some money on it. Furthermore, why would they choose not to make money if they could?

You avoided this question. The rich save most of the money that they earn. The non-rich spend most of the money that they earn. Do you agree with this?

This should be an easy "yes." If you are undecided about your answer perhaps these will help.

The problem is that you are looking at only a single event rather than the whole cycle.

Our economy has changed, lest you think that the minimum wage is for teenagers. The average age of a fast-food worker is 28. And minimum wage jobs aren’t confined to a small corner of the economy. By 2040, it is estimated that 48 percent of all American jobs will be low-wage service jobs. We need to reckon with this. What will our economy be like when it’s dominated by low paying service jobs? What proportion of the population do we want to live on food stamps? 50 percent? Does this matter? Should we care?

The use of the 28 figure makes me question everything they're saying. What I see in fast food places is a bunch of students and some seniors, not a curve running from teen to ~40. The average value of a double-humped curve is all but meaningless.

Businesspeople tell me they cannot afford higher wages. Not true. They can adjust to all sorts of higher costs. The minimum wage is much higher here in Seattle than in Alabama, and McDonald’s thrives in both places. Businesses adjust to higher costs, even when they say they can’t. ...

And what's the price of their products?

And it is this proposition that makes the income distribution so important to the economy. Because savings don't circulate in the economy. They sit in bank accounts, in Treasury Bills, in the stock market and in certain bonds.

Just because the analysis gets more complex is no reason to stop it and declare it doesn't happen. That money in the bank account? You think the bank is simply storing it out of the goodness of their hearts? No--they're loaning most of it out, putting it to productive use. T-Bills are the government putting it to use. Bonds are companies putting it to use.

The analysis isn't complex.

But you're not doing it.

The amount of money that a bank loans out isn't determined by the amount of money that it has in deposits. It is limited by the demand for loans from qualified borrowers and the bank's capitalization.

And it sets it's interest rates to make these values match.

If the demand for loans is low then the money just sits in the bank. If the demand for loans is greater than the amount of deposits in the bank then the miracle of fractional reserve banking kicks in and the bank creates the money that it needs to loan out. If the bank still doesn't have enough deposits to fulfill the reserve requirement, the Fed will loan the bank the amount needed and the loan will be made.

You just flunked banking 101. Go back to square 1 and figure out what fractional reserve banking really does. Hint: It does not let banks loan out money they do not have. That's conspiracy theory crap.

But this will disappear when we grant yours and the banks' wishes to be deregulated. Then anyone can call themselves a bank and loan out however amount of money that they want to. How do we know this? Because of the savings and loan fiasco of the Reagan administration when it happened. Because of the lessons of the Great Depression and the Great Recession, because of the Glided Age and because of Adam Smith's warnings against rentier banks and a thousand other times when when we have been taught that unregulated and poorly regulated banks cause financial instability.

I have no problem with reserve limits. They act as a very necessary firebreak and should be kept. 2008 was basically the failure to build such firebreaks into new areas of finance.

You can't understand the economy unless you understand this. What it means is that money isn't a scarce resource. The economy's job is to ration scarce resources. There is no need to treat money as a scarce resource. The money supply grows and shrinks with the economic activity. The more activity that we have the more loans are made and the more money there is circulating in the economy. If economic activity drops there is more money paid back for outstanding loans than are written in new loans.

No. Money represents effort--it's a scarce resource. If you pretend that money isn't scarce the result is inflation until either you destroy the economy (Zimbabwe) or you come to your senses (Brazil.)

I am not sure what your point is. Yes, the stock market provides liquidity to the stockholders. But it doesn't affect anything to the market or to the economy as money available to invest. For every seller of stock there is a buyer of stock. The money doesn't leave the stock market. If there is any profit it is provided by the buyer to the seller and the amount of the profit decreases the money available to invest to buy the stock and then is paid to the seller to increase the money available to invest. Net effect, zero. Yes, it provides liquidity, but I am sure that it doesn't mean what you think that it means beyond this. It certainly doesn't increase the creation of new businesses.

Hint: Money does flow in and out of the stock market. Money flowing in causes stock prices to rise, money flowing out causes stock prices to lower. (It's not 1:1, though.)

The stock market has almost zero impact on the creation of new businesses or on business investment. We know this because we track both in the real world.

No. It's just there is no relationship between how they move.

IPOs, initial public offerings are invariably for private businesses that are already operating successfully who want to go public. Then they are subject to the net effect zero above impact on the funds available for investment. It is almost unheard of today to have an IPO for an idea of a business, a new business.

Because the investment came from investors that got in earlier, hoping to make a pile when the stock went public. Without the stock market these guys couldn't cash out and thus wouldn't have nearly as much to invest.

A UBI is intentional redistribution. But I disagree with a UBI. Even though you are going to send a check to Warren Buffet I am certain that he will realize that he is actually paying for it and a whole lot more of them going to other people.

I believe that it is better for all and for the economy if everyone who is able works to earn money that they and their families need and want. This work to live rule should apply to the wealthy too.

So you want to be a luddite and hold society back so those who can't be productive in a future society still have jobs??

If you support an UBI which is intentional redistribution why do you have so much problem supporting redistribution by intentionally pushing up the wages of the say lower 25% of the workers? And letting the economy do what it does best, adapt to the higher wages to lower profits. Instead of taxing profits and high incomes to redistribute the money through a complex new government program.

Something a little meatier than "this bad for the economy."

What you are missing is that the ladder to success is connected to those wages. When you push those wages up you're pushing the bottom of the ladder up, also. The higher you push it the more people who won't be able to grab it in the first place.

Places with high minimum wages recognize this and try to overcome it with training wages. Never mind that it doesn't always work, they have plenty of people stuck on welfare for life.

 

[Canard DuJour]

Indeed the problems we have now in industrial/capitalistic nations stem from idealist utopians who believe, despite abundant evidence to the contrary, in a self-regulating economy and do indeed want to slash or eliminate our safety nets.

Except for the extremists on both ends, the argument is over how much is needed. Too little will cause unnecessary suffering and too much will kill the incentive to become a productive worker. The extremists on one end say "fuck 'em" and on the other end want no disparity of wealth between those working and those not working.

I'm afraid it's far from over. The neoliberal, self-regulating market, "fuck 'em" crowd is still arguably winning - not least by pretending the alternative is "a centrally planned economy" and "no disparity of wealth between those working and those not working"

 

[Canard DuJour]

Subsidising low wage jobs will stop better jobs showing up because low wage employers can undercut better employers. Now this wouldn't be so if profits were maximised by producing until marginal costs = marginal revenues, but you've just established that they aren't.

You're assuming they're all in the same industry. That's generally not the case.

I'm not assuming they're all in the same industry.

 

[Horatio Parker]

At it's core the philosophical underpinnings of democratic communities, and maybe even communities in general, are that people are born into an interdependent, and supportive network and everyone works together for the benefit of the community as a whole. As you mention, this isn't always how it works out in practice, but there are examples of societies that are better at it than the US. At that, the US is probably a good example of how not to accomplish this goal.

I think where the problem lies is that the global economy has become so complex that no one knows how to control it, even economists don't seem to have produced much coherent macro. And even if they did would our political systems be forward enough to do what they needed anyway? Probably not.

But if idealism is our ideal (and I think it is) then the end goal of politics at this point is that all of our citizens live dignified lives, and probably to keep life on earth sustainable. So if too many people start moving toward poverty in a society that's still productive, this is going to need to be rectified politically. The solution probably won't be perfect, but once automation breaks everything I'm confident it will be attempted.

All that said, predicting the future is hard so who knows what will actually happen in the next couple decades to century. Luckily, the problem will resolve itself when we inevitably bite it.

It doesn't work out in practice because it's planned that way.

There is coherent macro out there. But not in the mainstream.

And no question our political establishment isn't up to it.

But the first question is, does govt exist to further the public interest? Or to enable business?

 

[skepticalbip]

At it's core the philosophical underpinnings of democratic communities, and maybe even communities in general, are that people are born into an interdependent, and supportive network and everyone works together for the benefit of the community as a whole. As you mention, this isn't always how it works out in practice, but there are examples of societies that are better at it than the US. At that, the US is probably a good example of how not to accomplish this goal.

I think where the problem lies is that the global economy has become so complex that no one knows how to control it, even economists don't seem to have produced much coherent macro. And even if they did would our political systems be forward enough to do what they needed anyway? Probably not.

But if idealism is our ideal (and I think it is) then the end goal of politics at this point is that all of our citizens live dignified lives, and probably to keep life on earth sustainable. So if too many people start moving toward poverty in a society that's still productive, this is going to need to be rectified politically. The solution probably won't be perfect, but once automation breaks everything I'm confident it will be attempted.

All that said, predicting the future is hard so who knows what will actually happen in the next couple decades to century. Luckily, the problem will resolve itself when we inevitably bite it.

It doesn't work out in practice because it's planned that way.

There is coherent macro out there. But not in the mainstream.

And no question our political establishment isn't up to it.

But the first question is, does govt exist to further the public interest? Or to enable business?

That is a false dichotomy. Without productive businesses, GDP collapses - terrible for the public interest.

 

[Horatio Parker]

It doesn't work out in practice because it's planned that way.

There is coherent macro out there. But not in the mainstream.

And no question our political establishment isn't up to it.

But the first question is, does govt exist to further the public interest? Or to enable business?

That is a false dichotomy. Without productive businesses, GDP collapses - terrible for the public interest.

I don't think so.

The point is this: an unemployed person is in the public sector.

Business interests would like to see govt social spending decreased, if not eliminated. That's where all the morality tales about families hanging together during the depression, low divorce rates, and the rest of that baloney. What that viewpoint misses is that social spending is an investment. Do you prefer, an uneducated, unskilled, inexperienced, unhealthy public, or the opposite? Well, the opposite costs. Which means that the private sector will have to make do with less control, if not less money.

It's the conventional wisdom that's brought us to where we are, brought us Brexit and Trump. It will break the EU.

But that CW is based on lies. The truth is that we have plenty of resources to educate, employ and keep the population healthy. But that would make life more difficult for business interests, because workers would not be so desperate. And that's what it's about.

 

[skepticalbip]

That is a false dichotomy. Without productive businesses, GDP collapses - terrible for the public interest.

I don't think so.

The point is this: an employed person is in the public sector.

Business interests would like to see govt social spending decreased, if not eliminated. That's where all the morality tales about families hanging together during the depression, low divorce rates, and the rest of that baloney. What that viewpoint misses is that social spending is an investment. Do you prefer, an uneducated, unskilled, inexperienced, unhealthy public, or the opposite? Well, the opposite costs. Which means that the private sector will have to make do with less control, if not less money.

It's the conventional wisdom that's brought us to where we are, brought us Brexit and Trump. It will break the EU.

But that CW is based on lies. The truth is that we have plenty of resources to educate, employ and keep the population healthy. But that would make life more difficult for business interests, because workers would not be so desperate. And that's what it's about.

This seems to assume that wealth is simply a fixed commodity and it is government's job to figure out how to distribute it. Reality is that wealth is created and consumed every day. If someone works x hours they will have amassed x dollars in wealth. When they use those x dollars to buy a meal, they have consumed that wealth and no longer have that wealth amassed. The same applies to the resources the government has. Those resources come from taxes on wealth created by business' production like business tax, income tax from the jobs maintained, tax on the goods produced. Once government spends those tax resources, government no longer has it. The resources government uses vanish without businesses continuing to provide the tax base.

ETA:
If you want a real world example, look at towns and cities in the rust belt. Business left so the tax base dropped. Local governments lost their resources (the tax base) so can no longer provide the extent of social programs they did before business left.

 

[bilby]

I don't think so.

The point is this: an employed person is in the public sector.

Business interests would like to see govt social spending decreased, if not eliminated. That's where all the morality tales about families hanging together during the depression, low divorce rates, and the rest of that baloney. What that viewpoint misses is that social spending is an investment. Do you prefer, an uneducated, unskilled, inexperienced, unhealthy public, or the opposite? Well, the opposite costs. Which means that the private sector will have to make do with less control, if not less money.

It's the conventional wisdom that's brought us to where we are, brought us Brexit and Trump. It will break the EU.

But that CW is based on lies. The truth is that we have plenty of resources to educate, employ and keep the population healthy. But that would make life more difficult for business interests, because workers would not be so desperate. And that's what it's about.

This seems to assume that wealth is simply a fixed commodity and it is government's job to figure out how to distribute it. Reality is that wealth is created and consumed every day. If someone works x hours they will have amassed x dollars in wealth. When they use those x dollars to buy a meal, they have consumed that wealth and no longer have that wealth amassed. The same applies to the resources the government has. Those resources come from taxes on wealth created by business' production like business tax, income tax from the jobs maintained, tax on the goods produced. Once government spends those tax resources, government no longer has it. The resources government uses vanish without businesses continuing to provide the tax base.

Government spending is independent of taxation.

If the government had to collect money in taxes in order to spend it, then the US would have stopped working long ago. To date, the US government has spent about $19 Trillion more than it has collected in taxes. Clearly the idea that the resources spent by the government come from taxation is wrong.

Taxation is a way to offset some of the inflationary effect of government spending. It doesn't in any sense enable that spending, which can happen with or without taxation. Quite why this very obvious fact is denied so frequently, I don't know. Particularly as it is necessary that taxation and spending be decoupled in order for an economy with a variable total value to work.

The lower the overall tax rate is, the less money is worth; But there is no sense in which the resources used by government vanish without taxation 'income'. Money collected in tax simply ceases to exist. Money spent by government is created by the act of spending. Money is debt; A dollar bill is a transferable certificate that says 'The US economy owes the bearer a dollar's worth of goods and services'. Taxation is the government saying 'Not any more, it doesn't'. Government spending is the government saying 'The people we gave this money to are now owed this amount'. There is no reason at all why the amount spent needs to be strongly (much less perfectly) correlated with the amount raised in taxes.

Wealth is not a fixed commodity; But it is nevertheless the task of government to remove some of it where too much has built up, and to add more of it in places where it is needed. You can pretend that it is 'redistribution' if you like. But it's not a particularly useful way to think of it. Better to consider taxes to be the elimination of excess wealth, and government spending the creation of wealth where it is lacking. The aim being to keep the total wealth roughly in balance with the actual value of the economy (which varies a lot), ideally with a small but positive decline in the value of money over time (ie a small but positive rate of inflation); and to ensure that sufficient imbalance of wealth can occur to provide incentives to trade; while avoiding such dramatic imbalance as to cause hardship, poverty, and (if taken to the extreme) revolution.

Current policy entails deficits that are too small (as evidenced by the currently very low rate of both inflation and interest rates); And inadequate 'redistribution', as evidenced by repeated formation of asset bubbles, and the existence of poverty. The solution is to increase the deficit (until inflation rises to a sensible range, say 2-3%pa), to increase the taxes charged to the top income earners, and to increase the amount of money spent on the poor (either by giving poor people government jobs, for example building infrastructure; or by encouraging businesses to employ poor people at decent wages; or, if no productive work can be found for them, simply handing them some cash - the best answer is likely a mixture of all three of these options).

 

[skepticalbip]

This seems to assume that wealth is simply a fixed commodity and it is government's job to figure out how to distribute it. Reality is that wealth is created and consumed every day. If someone works x hours they will have amassed x dollars in wealth. When they use those x dollars to buy a meal, they have consumed that wealth and no longer have that wealth amassed. The same applies to the resources the government has. Those resources come from taxes on wealth created by business' production like business tax, income tax from the jobs maintained, tax on the goods produced. Once government spends those tax resources, government no longer has it. The resources government uses vanish without businesses continuing to provide the tax base.

Government spending is independent of taxation.

If the government had to collect money in taxes in order to spend it, then the US would have stopped working long ago. To date, the US government has spent about $19 Trillion more than it has collected in taxes. Clearly the idea that the resources spent by the government come from taxation is wrong.

Taxation is a way to offset some of the inflationary effect of government spending. It doesn't in any sense enable that spending, which can happen with or without taxation. Quite why this very obvious fact is denied so frequently, I don't know. Particularly as it is necessary that taxation and spending be decoupled in order for an economy with a variable total value to work.

The lower the overall tax rate is, the less money is worth; But there is no sense in which the resources used by government vanish without taxation 'income'. Money collected in tax simply ceases to exist. Money spent by government is created by the act of spending. Money is debt; A dollar bill is a transferable certificate that says 'The US economy owes the bearer a dollar's worth of goods and services'. Taxation is the government saying 'Not any more, it doesn't'. Government spending is the government saying 'The people we gave this money to are now owed this amount'. There is no reason at all why the amount spent needs to be strongly (much less perfectly) correlated with the amount raised in taxes.

Yes, governments have tried that and it works but only in the in the short term. Check Zimbabwe.

 

[Horatio Parker]

This seems to assume that wealth is simply a fixed commodity and it is government's job to figure out how to distribute it. Reality is that wealth is created and consumed every day. If someone works x hours they will have amassed x dollars in wealth. When they use those x dollars to buy a meal, they have consumed that wealth and no longer have that wealth amassed. The same applies to the resources the government has. Those resources come from taxes on wealth created by business' production like business tax, income tax from the jobs maintained, tax on the goods produced. Once government spends those tax resources, government no longer has it. The resources government uses vanish without businesses continuing to provide the tax base.

I don't think you understand wealth or commodities. You certainly don't understand money or monetary operations.

Govts are not dependent on tax revenues. That is the central lie of macroeconomic conventional wisdom. The monetary system is a product of the human mind, and money is created ex nihilo. It's a societal score keeping system.

Wealth is your stuff; your home, belongings, as well as your knowledge, your skills, capabilities, family and your health. Plus your financial assets, savings, investments etc.

Private enterprise is valuable because it allows people to realize their potential. But the technological revolutions of computers, telecommunications and globalization, has empowered the business and investor class to the detriment of the larger portion of society.

This has to be addressed and corrected. And we can begin with the assertion that govt's purpose is to further the public interest.

(stepping off soapbox)

 

[bilby]

Government spending is independent of taxation.

If the government had to collect money in taxes in order to spend it, then the US would have stopped working long ago. To date, the US government has spent about $19 Trillion more than it has collected in taxes. Clearly the idea that the resources spent by the government come from taxation is wrong.

Taxation is a way to offset some of the inflationary effect of government spending. It doesn't in any sense enable that spending, which can happen with or without taxation. Quite why this very obvious fact is denied so frequently, I don't know. Particularly as it is necessary that taxation and spending be decoupled in order for an economy with a variable total value to work.

The lower the overall tax rate is, the less money is worth; But there is no sense in which the resources used by government vanish without taxation 'income'. Money collected in tax simply ceases to exist. Money spent by government is created by the act of spending. Money is debt; A dollar bill is a transferable certificate that says 'The US economy owes the bearer a dollar's worth of goods and services'. Taxation is the government saying 'Not any more, it doesn't'. Government spending is the government saying 'The people we gave this money to are now owed this amount'. There is no reason at all why the amount spent needs to be strongly (much less perfectly) correlated with the amount raised in taxes.

Yes, governments have tried that and it works but only in the in the short term. Check Zimbabwe.

Inflation is a problem that the current US economy could do with a little more of right now.

The fear of inflation should not be allowed to lead to deflation. Zimbabwe is not an example of what happens when sensible deficit spending is allowed; If you want an example of that, check out Sweden (or for that matter, the USA. $19 Trillion in debt, and no inflation. Think about that. Why is the US not seeing Zimbabwean levels of inflation?)

Check my edit; I have added a fair bit to my post.

 

[skepticalbip]

This seems to assume that wealth is simply a fixed commodity and it is government's job to figure out how to distribute it. Reality is that wealth is created and consumed every day. If someone works x hours they will have amassed x dollars in wealth. When they use those x dollars to buy a meal, they have consumed that wealth and no longer have that wealth amassed. The same applies to the resources the government has. Those resources come from taxes on wealth created by business' production like business tax, income tax from the jobs maintained, tax on the goods produced. Once government spends those tax resources, government no longer has it. The resources government uses vanish without businesses continuing to provide the tax base.

I don't think you understand wealth or commodities. You certainly don't understand money or monetary operations.

Govts are not dependent on tax revenues. That is the central lie of macroeconomic conventional wisdom. The monetary system is a product of the human mind, and money is created ex nihilo. It's a societal score keeping system.

Wealth is your stuff; your home, belongings, as well as your knowledge, your skills, capabilities, family and your health. Plus your financial assets, savings, investments etc.

Private enterprise is valuable because it allows people to realize their potential. But the technological revolutions of computers, telecommunications and globalization, has empowered the business and investor class to the detriment of the larger portion of society.

This has to be addressed and corrected. And we can begin with the assertion that govt's purpose is to further the public interest.

(stepping off soapbox)

Right..

Then the problems in areas like Detroit and Flint are due to only some evil conspiracy, not because the local governments have lost much of their tax base when businesses left.

 

[Horatio Parker]

I don't think you understand wealth or commodities. You certainly don't understand money or monetary operations.

Govts are not dependent on tax revenues. That is the central lie of macroeconomic conventional wisdom. The monetary system is a product of the human mind, and money is created ex nihilo. It's a societal score keeping system.

Wealth is your stuff; your home, belongings, as well as your knowledge, your skills, capabilities, family and your health. Plus your financial assets, savings, investments etc.

Private enterprise is valuable because it allows people to realize their potential. But the technological revolutions of computers, telecommunications and globalization, has empowered the business and investor class to the detriment of the larger portion of society.

This has to be addressed and corrected. And we can begin with the assertion that govt's purpose is to further the public interest. Imagine a round of quantitative easing buying
local or state govt debt.

(stepping off soapbox)

Right..

Then the problems in areas like Detroit and Flint are due to only some evil conspiracy, not because the local governments have lost their tax base when businesses left.

Can you stay focused for even one reply?

The evil in what happened to the rust belt was the assumption that labor is as mobile as capital. IOW, fine, move the factories, but don't write off the people. But the people there were, or are, written off. Which is one of the most painful things I experience whenever I visit: people simply cannot accept the extent to which they've been written off.

What should be done? Give the people jobs and share revenue with local govt.

 

[skepticalbip]

Right..

Then the problems in areas like Detroit and Flint are due to only some evil conspiracy, not because the local governments have lost their tax base when businesses left.

Can you stay focused for even one reply?

I was on topic. You said, "Govts are not dependent on tax revenues. That is the central lie of macroeconomic conventional wisdom." If this were true then why the hell could the loss of much of their tax base cause any problems in their continuing to provide the services they did before businesses left?

The evil in what happened to the rust belt was the assumption that labor is as mobile as capital. IOW, fine, move the factories, but don't write off the people. But the people there were, or are, written off. Which is one of the most painful things I experience whenever I visit: people simply cannot accept the extent to which they've been written off.

What should be done? Give the people jobs and share revenue with local govt.

And who the hell is going to give the people jobs if not businesses? And what is sharing revenue with local government if not taxes?