Endorse a Drama-Free Solution to High Unemployment

[Misaki]

SIGN and SHARE!
___

The United States has no skills problem, and does not lack wealth. All we need to fix unemployment is an innovative and sustainable way for people to choose to work less time.

The U.S. has plenty of scientists, many of whom have been forced to go into finance to find jobs.

The rich are spending all they can: http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html

In order to fix high unemployment, wasteful government spending and inflation, we should encourage people in high-income occupations to work fewer hours while still retaining most of their responsibilities and earning a reasonable income. This will allow companies to hire more workers using the resulting payroll savings to do the remaining work.

http://wh.gov/cVNr

 

[onecut39]

SIGN and SHARE!
___

The United States has no skills problem, and does not lack wealth. All we need to fix unemployment is an innovative and sustainable way for people to choose to work less time.

The U.S. has plenty of scientists, many of whom have been forced to go into finance to find jobs.

The rich are spending all they can: http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html

In order to fix high unemployment, wasteful government spending and inflation, we should encourage people in high-income occupations to work fewer hours while still retaining most of their responsibilities and earning a reasonable income. This will allow companies to hire more workers using the resulting payroll savings to do the remaining work.

http://wh.gov/cVNr

If the rich are spending all they can, why do they keep getting richer?

 

[EdwardBaiamonte]

This will allow companies to hire more workers

Of course thats liberal and idiotic since there would be no incentive to hire more workers if the top workers were doing the same work for less pay.

You can't mess with the free market unless you have a very low IQ and so can't understand the ramifications

 

[eflatminor]

SIGN and SHARE!
___

The United States has no skills problem, and does not lack wealth. All we need to fix unemployment is an innovative and sustainable way for people to choose to work less time.

The U.S. has plenty of scientists, many of whom have been forced to go into finance to find jobs.

The rich are spending all they can: http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html

In order to fix high unemployment, wasteful government spending and inflation, we should encourage people in high-income occupations to work fewer hours while still retaining most of their responsibilities and earning a reasonable income. This will allow companies to hire more workers using the resulting payroll savings to do the remaining work.

http://wh.gov/cVNr

Not the dumbest idea I've ever heard, but close. For the love of God, stop thinking you can meddle with a free market to direct a particular outcome. Central planner wannabes...it's sickening.

 

[Misaki]

If the rich are spending all they can, why do they keep getting richer?

Because when they spend money, it goes right back to corporate profits and the rich (edit: the top 10% in wealth) already own 83% of all financial assets (such as stocks which pay dividends).

Step 1: billionaire buys $10,000 brand-name shirt.

Step 2: store worker is paid $15/hour... maybe CEO is paid a few million over the year... the rest goes to profits, which means to this guy who already has $41 billion:

[Wikipedia] Christian Dior, the luxury goods group, is the main holding company of LVMH, owning 42.36% of its shares, and 59.01% of its voting rights. Bernard Arnault, majority shareholder of Dior, is Chairman of both companies and CEO of LVMH.

Ok, maybe that was a bad example. Instead of buying a $10,000 shirt, the billionaire puts their money into a hedge fund or seeks advice from an investment bank.

Step 1: pay fees to consultant.

Step 2: the consultant plans to suck the client dry while calling them a muppet.

Ok maybe that was also a bad example. Many clients do benefit from the relationship... but Wall Street always sets up it up so it wins no matter what happens, and of course someone has to pay for that.

I guess the answer is mostly easily summed up by the fact that Apple has between a 30% and 50% gross margin on the iPhone and iPad, and people are willing to pay for it because it's "cool", despite that other companies sell products which are functionally very similar at a lower price.

Apple and Samsung Claim 99% of Profits Among Top Mobile Phone Vendors - Mac Rumors

 

[Misaki]

Of course thats liberal and idiotic since there would be no incentive to hire more workers if the top workers were doing the same work for less pay.

They would be doing LESS work which is why they would also be paid slightly less. From the petition:
while still retaining most of their responsibilities

You can't mess with the free market unless you have a very low IQ and so can't understand the ramifications

Germany is already using this system to keep unemployment low, except there's a government contribution too so it's a bit like welfare: Why Americans should work less

 

[Misaki]

Not the dumbest idea I've ever heard, but close. For the love of God, stop thinking you can meddle with a free market to direct a particular outcome. Central planner wannabes...it's sickening.

Overtime was enacted in ~1937 specifically to limit the amount of work people were forced to do. If that wasn't an attempt to "centrally control" the supply of labor by reducing what a business would demand from a single worker what else would you call it?

This isn't about forcing anyone to work less though, it's about giving them the choice to by telling people that it's ok to do... nothing more.

 

[eflatminor]

Not the dumbest idea I've ever heard, but close. For the love of God, stop thinking you can meddle with a free market to direct a particular outcome. Central planner wannabes...it's sickening.

Overtime was enacted in ~1937 specifically to limit the amount of work people were forced to do. If that wasn't an attempt to "centrally control" the supply of labor by reducing what a business would demand from a single worker what else would you call it?

This isn't about forcing anyone to work less though, it's about giving them the choice to by telling people that it's ok to do... nothing more.

That's exactly what I'd call it: central planners screwing with a free market. Your ideas are even worse. Sorry comrade, nobody, including you, knows what's best for everyone else.

 

[Misaki]

That's exactly what I'd call it: central planners screwing with a free market. Your ideas are even worse. Sorry comrade, nobody, including you, knows what's best for everyone else.

True, some people might be happier if the US government informed everyone it had decided to destroy the world with nuclear weapons.

But statistically, the evidence is that this suggestion would fix unemployment, which is the top issue in the Presidential race and, coincidentally, what people say is the most important issue for the United States.

 

[Widdekind]

If the rich are spending all they can, why do they keep getting richer?

Because when they spend money, it goes right back to corporate profits and the rich

Overall, undistributed corporate profits (i.e. profits not paid right back out, to stockholders, as dividends) are about 15% of overall retail revenues (GDP). Of that amount, most is accounted as "depreciation" (of machines & factories); inexpertly, most is set aside for purchases of replacement parts & new equipment, next year. Official corporate "profits" are only a couple percent of total revenues (GDP).

If the rich simply paid themselves their own money, they wouldn't be earning more & more money. Overall, incomes in America are increasing, for all "walks of life", because more & more products are being sold (real GDP, "Q", quantity of output), raising more & more revenues from sales (nominal GDP, "P x Q", quantities times prices). Overall, the only way to earn more money, is to sell more products (goods & services), i.e. do more, for more people (that they are both willing ["demand"] and able ["demand with money"] to pay you for).

Overtime was enacted in ~1937 specifically to limit the amount of work people were forced to do.

In the Great Depression, work hours (hours per worker) were reduced, even more than the number of workers (employment rate). Thus, employment fell by a quarter (-25%), whilst output fell by half (-50%). Many workers were retained, at part-time. The total number of labor-hours (workers times hours per worker) fell much more than the number of laborers (workers).

You seem to be suggesting similar -- hire more workers, part-time, instead of fewer workers, full-time.

 

[Misaki]

Overall, undistributed corporate profits (i.e. profits not paid right back out, to stockholders, as dividends) are about 15% of overall retail revenues (GDP). Of that amount, most is accounted as "depreciation" (of machines & factories); inexpertly, most is set aside for purchases of replacement parts & new equipment, next year. Official corporate "profits" are only a couple percent of total revenues (GDP).

I am not sure what your definition of official corporate profits is, but according to the U.S. Treasure after-tax corporate profits were about $1.6 trillion last year, up 57% from 2009: Recent U.S. Economic Growth - in Charts

If the rich simply paid themselves their own money, they wouldn't be earning more & more money.

Spending from the middle class and lower/working class also go to the rich, but more often in the form of necessary rents instead of voluntary consumer spending choices.

It isn't that hard to understand if you think about it: imagine the US government stopped spending money, like it would have if the debt ceiling agreement hadn't gone through (many people didn't want it to go through). Transfer payments and government employee salaries would not go through or would be significantly reduced.

Poor people wouldn't stop spending money, but would be earning less money, and many people would rapidly run out of money. Where does this money go? To the rich, of course.

Overall, incomes in America are increasing, for all "walks of life", because more & more products are being sold (real GDP, "Q", quantity of output), raising more & more revenues from sales (nominal GDP, "P x Q", quantities times prices).

I am not sure if you are aware of economic data. Wages have been nearly flat since about 1979:
Growth of productivity, average hourly compensation and median hourly compensation by gender, 1973-2009 | State of Working America

During the first few years of the recovery, corporate profits captured 93% of the rise in real national income while wages/salaries captured only 1%:
The Wageless, Profitable Recovery - NYTimes.com

You seem to be suggesting similar -- hire more workers, part-time, instead of fewer workers, full-time.

The critical difference is that it would be by choice. For example, take this story about a government employee with a $100k salary who is pulling in another $160k per year in overtime pay: EXCLUSIVE: Port Authority Sgt. Edwin Rivera nearly triples his 100G-plus salary with about 40 overtime hours a week - NYPOST.com

The example used on the site linked in the petition is to pay people 1.2x the normal rate up to 20 hours per week, and 0.8x the normal rate beyond that (including past 40 hours per week). While the above employee could choose to continue working 80 hours per week, the cost to taxpayers would be much lower.

So in this way it is intended to encourage people to choose to work less even when the company may be agreeable to them working as much as they want since it doesn't have to pay the 1.5x or 2.0x overtime pay rate.

 

[Moonglow]

Not the dumbest idea I've ever heard, but close. For the love of God, stop thinking you can meddle with a free market to direct a particular outcome. Central planner wannabes...it's sickening.

Overtime was enacted in ~1937 specifically to limit the amount of work people were forced to do. If that wasn't an attempt to "centrally control" the supply of labor by reducing what a business would demand from a single worker what else would you call it?

This isn't about forcing anyone to work less though, it's about giving them the choice to by telling people that it's ok to do... nothing more.

That's exactly what I'd call it: central planners screwing with a free market. Your ideas are even worse. Sorry comrade, nobody, including you, knows what's best for everyone else.

i am glad you included yourself, maybe you could delete the ideas you posted.

 

[Widdekind]

after-tax corporate profits were about $1.6 trillion last year

more than half of that was paid out, as dividends (>$0.8T). Only "undistributed" corporate profits are retained (from that account). Thus, undistributed, retained, corporate profits were about 5% of GDP. If US businesses were not profitable, then they would be unprofitable. And if they were unprofitable, then they would go bankrupt, and everybody would lose their jobs. "my employer who pays me is making money (to pay me next month)" is... bad?

Spending from the middle class and lower/working class also go to the rich, but more often in the form of necessary rents instead of voluntary consumer spending choices.

rich landlords put roofs over peoples' heads, for which "service" they receive payment. They provide a "necessity". That is necessary. Nevertheless, rental payments, of tenants, to landlords, is only about 2% of GDP, and only about 3% of personal consumption expenditures. Not a primary expense (on average, overall).

Where does this money go? To the rich, of course.

Taxes taken from the rich, are routed through government, to poor people, for welfare.

Wages have been nearly flat since about 1979

According to their data, median wages, in real (inflation-adjusted) dollars per hour, have averaged over $20 / hour for men, and over $15 / hour for women. Wages for women have increased steadily for 40 years; wages for men are as high, today, as they ever were:

you know you cannot complain about that, right? "my real wages are as high, or higher, than ever, pity me" is not legitimate. An "American dream" of "everybody works hard, and gets at least a little ahead" is plausible. Utopian Fantasy of "everybody will actually become a millionaire" is destroying even the "dream".

During the first few years of the recovery, corporate profits captured 93% of the rise in real national income while wages/salaries captured only 1%

According to the Federal Reserve, "aggregate wages & salaries", adjusted for inflation (2009 dollars), increased by over $100B (per year), from 2009-2010, from trough to peak:

http://research.stlouisfed.org/fredgraph.png?g=8Qd​

According to the same source, "corporate profits (before tax)", adjusted for inflation, increased by about $600B (per year), during the same period. Of that increase in pre-tax profits, taxes took $200B (per year), so that "corporate profits (after tax)" increased by about $400B (per year). And of those post-tax profits, dividends took nearly $200B (per year), so that "undistributed corporate profits (after tax)" increased by over $200B (per year):

http://research.stlouisfed.org/fredgraph.png?g=8Qj​

So, citing the same source, from 2009-2010, in real terms (2009 dollars):

• US GDP increased by $700B (per year)
• corporate taxes increased by $200B (per year)
• corporate retained earnings increased by $200B (per year)
• dividends to owners increased by $200B (per year)
• wages to workers increased by $100B (per year)

So, during the recovery, workers made more money; owners made more money; businesses made more money; government took more money. None of those people can complain. If they do, then they are not legitimate. "me and everybody around me made more money... woe is me, and fie on the world" is not legitimate.

 

[there4eyeM]

Whatever one thinks about central planning, it is what the US used to win WWII. It was not because GM introduced a new tank model and then tried to sell it that the Germans were overwhelmed by American mass production. Factory changes and production quotas were set by war time administration on the part of the central government.
It is also interesting that other massive efforts have been done collectively by the US. The Panama Canal was not built by Haliburton! Calling Teddy Roosevelt a commie probably won't be accepted by most people.
And, didn't he also lead the charge against monopolies - er, I mean free enterprise and the power of the market to control itself?

 

[editec]

End FREE TRADE.

Pretty simple, really.

 

[EdwardBaiamonte]

End FREE TRADE.

Pretty simple, really.

yes that is the logical extension of pure liberal ignorance. CA is liberal and in trouble. Should it end free trade with the other states??

 

[Misaki]

more than half of that was paid out, as dividends (>$0.8T). Only "undistributed" corporate profits are retained (from that account). Thus, undistributed, retained, corporate profits were about 5% of GDP. If US businesses were not profitable, then they would be unprofitable. And if they were unprofitable, then they would go bankrupt, and everybody would lose their jobs. "my employer who pays me is making money (to pay me next month)" is... bad?

I think the numbers are that about 1/3 of the income of the top 1% is from capital gains, the rest is earned from work..? Not sure exactly how much of those capital gains would be from corporate profit. For example, if someone gets advice from a financial company like Goldman Sachs, buys some stocks for $100k, and then those stocks are bought by another company for $120k... I believe that stock purchase would be included in that company's cost of business and would decrease profit?

So the reason that the spending of the rich does not 'trickle down' to the rest of the economy, which is what the original question was about, is that other rich people end up with money from corporate profits AND also from working and getting high salaries (like the $200k+ at many financial companies).

The only reason corporate profits are not higher is that companies pay some people very high salaries. If necessary due to market pressure, corporations could reduce those salaries and still keep those employees because other companies would be doing the same thing... or they might find that the work done by the very-highly-paid employee is no longer necessary (like lawyers for patent litigation) and there would be structural unemployment as some very-highly-paid people have to lower their job expectations.

rich landlords put roofs over peoples' heads, for which "service" they receive payment. They provide a "necessity". That is necessary. Nevertheless, rental payments, of tenants, to landlords, is only about 2% of GDP, and only about 3% of personal consumption expenditures. Not a primary expense (on average, overall).

Real estate can be extremely profitable. Are the fees paid in that business the result of 'necessary' services?

"Rents" was used in the technical sense. The high cost of college might fall into this category for example since it is a fact that employers discriminate based on the prestige of the institution someone attends.

The high cost of housing in New York, where an apartment will cost significantly more than it costs to build in contrast to other cities, is another example of rents that end up going to the rich. Since the number of residencies and therefore number of practicing physicians in the US is limited, health care might be another example of how wealth travels from the poor to the rich to the extent it is seen as necessary.

I will note that the top 10% of income get 47% of all income so the bottom 90% is left with the rest, with most of that in turn concentrated in the upper half of the population (meaning that 3% of consumer expenditures can be quite high as a proportion of income for certain population segments), but a quick search lead to some better data:

They find that, from 2007 to 2010, there was an increase of 2.3 million households paying more than half of their income for housing (what they define as "severly burdened"); that brings it to a total of 20.2 million.

27 percent of renters fall into this severly burdened category, with homeowners roughly half that number.

From The Rent(al Income as a Percentage of GDP) Is Too Damn High, and Households Severely Burdened with Housing Costs | Next New Deal

Taxes taken from the rich, are routed through government, to poor people, for welfare.

Precisely, because if the government did not poor people would have no money. A recent summary of this effect for different income quintiles:
Greg Mankiw's Blog: The Progressivity of Taxes and Transfers

While this includes things like social security, and people might for example pay into the system while in the higher-earning quintiles then get their benefits while in the lowest one, if we create jobs then fewer people will have to be supported by welfare. It's very simple.

According to their data, median wages, in real (inflation-adjusted) dollars per hour, have averaged over $20 / hour for men, and over $15 / hour for women. Wages for women have increased steadily for 40 years; wages for men are as high, today, as they ever were:
[chart]

you know you cannot complain about that, right? "my real wages are as high, or higher, than ever, pity me" is not legitimate. An "American dream" of "everybody works hard, and gets at least a little ahead" is plausible. Utopian Fantasy of "everybody will actually become a millionaire" is destroying even the "dream".

Median wages may have slightly increased, but many costs that people feel are necessary have increased even more, such as college. (Some people would probably include gasoline but we'll have to stop using it eventually.) From Is Student Debt the Next Front in the Consumer Debt Crisis? « naked capitalism

That uses average wages, and of course it doesn't help the average person that investment bankers are making $450k per year (well, I guess if it tracks consumer prices it's probably actually median income). But nicely shows how wages have not been keeping up with college costs. Other things like dental costs have also followed a remarkably similar price increase to college costs, and I think health costs have had roughly the same increase as well. These aren't about the inherent difficulty of providing a product/service like high gasoline prices are, these are just the price point that maximizes income from the rich due to ever-increasing inequality. It DOES hurt the average person if the top 1% of wealth go from having 131 times as much as the median wealth (1983) to having 225 times as much wealth (2009). If sellers could price discriminate it wouldn't be a problem, but this often isn't practical or possibly even not legal.

However I agree just taxing away wealth is not good answer, which is why the petition suggests giving people the option of working less so unemployment, and also inequality, is fixed without government wealth transfers.

During the first few years of the recovery, corporate profits captured 93% of the rise in real national income while wages/salaries captured only 1%

According to the Federal Reserve, "aggregate wages & salaries", adjusted for inflation (2009 dollars), increased by over $100B (per year), from 2009-2010, from trough to peak:

http://research.stlouisfed.org/fredgraph.png?g=8Qd​

According to the same source, "corporate profits (before tax)", adjusted for inflation, increased by about $600B (per year), during the same period. Of that increase in pre-tax profits, taxes took $200B (per year), so that "corporate profits (after tax)" increased by about $400B (per year). And of those post-tax profits, dividends took nearly $200B (per year), so that "undistributed corporate profits (after tax)" increased by over $200B (per year):

http://research.stlouisfed.org/fredgraph.png?g=8Qj​

So, citing the same source, from 2009-2010, in real terms (2009 dollars):

• US GDP increased by $700B (per year)
• corporate taxes increased by $200B (per year)
• corporate retained earnings increased by $200B (per year)
• dividends to owners increased by $200B (per year)
• wages to workers increased by $100B (per year)

So, during the recovery, workers made more money; owners made more money; businesses made more money; government took more money. None of those people can complain. If they do, then they are not legitimate. "me and everybody around me made more money... woe is me, and fie on the world" is not legitimate.

Skimming the PDF mentioned in the NYtimes blog post (I think this is it, the original link is no longer valid), it says it uses the CPI for Urban consumers which looks like it might be rising faster than the CPI for all items in the US, so that might explain the different result they got.

Edit: I hadn't noticed the scale (no wonder the shapes of the two graphs were so different!)... having found the correct link it is comparing 6 quarters, and measures past the peak in aggregate wages. This drop is presumably due to slow growth in wages while inflation continues at the same rate, so the 1% share in the study is probably correct for their time period (6 quarters).

Anyway though, wasn't there a more recent study that found that only the top 10% of income have benefited during the recovery, and the income of everyone else has actually fallen? Of course there is economic mobility but the rise in worker income is mostly only from a few very-highly-paid workers like the financial sector and a small increase in total employment, even as unemployment remains high.

So people without a job, or people who have only been able to find minimum-wage work despite having a college degree can complain, which is what OWS is all about. Most people don't care as much about inequality as they do about the lack of jobs, which is why the petition is focused on jobs, not inequality.

 

[Misaki]

End FREE TRADE.

Pretty simple, really.

yes that is the logical extension of pure liberal ignorance. CA is liberal and in trouble. Should it end free trade with the other states??

Two quick summaries:
1) This might cause people to buy products manufactured overseas due to their lower price, but the government can always just print more dollars. We're constantly complaining about how other countries keep their currencies weak compared to the U.S. and giving them dollars would help fix that. In the worst case those countries would use that money to buy products sold by U.S. companies, with the money going to the rich who could then spend it.

2) A final note, about the whole "buy local" thing. Imagine that money used to purchase goods from China went to a black hole, or maybe an extra-dimensional market that will sell any amount of goods at a constant price. Normally you would expect prices to go down if that money never returned to the United States, but of course the US can always just print more money to replace what was lost. Since the money leaves the system, it doesn't even cause inflation. Taxes could go to zero and printing money would support all government services. I don't know what people see wrong with this. On the other hand, if money does come back, then there is no reason to discriminate about the country of origin for goods, is there?

So if we buy things from China, and China never uses that money to buy things from us, what's wrong with just printing money?

Or maybe, oh noez, China will use that money to buy things from us and we'll have to do work! Forced to do work by another country! also known as jobs, which are currently in somewhat short supply.

 

[Widdekind]

about 1/3 of the income of the top 1% is from capital gains, the rest is earned from work..? Not sure exactly how much of those capital gains would be from corporate profit. For example, if someone gets advice from a financial company like Goldman Sachs, buys some stocks for $100k, and then those stocks are bought by another company for $120k... I believe that stock purchase would be included in that company's cost of business and would decrease profit?

borrowing terms from international economics, buying shares of stock is a "portfolio investment", buying up legal titles to (partial) shares of businesses. Those monies would be spent from the business' "corporate profits, after tax, un-distributed [as dividends]", i.e. "retained profits" (for lack of better words). If, instead, they bought a factory or machines; then such expenditures would be "direct investment", directly (?) into "capital assets" (machines, factories). Either way, the purchase of "capital assets" (machines, factories), or "portfolio assets" (stock), would come from "retained profit".

So the reason that the spending of the rich does not 'trickle down' to the rest of the economy... is that other rich people end up with money from corporate profits AND also from working and getting high salaries (like the $200k+ at many financial companies).

inexpertly, money "trickles down" from rich to poor, when the rich spend (tips at expensive restaurants & golf courses, fancy clothes, luxury cars). But, by definition, the rich are those who earn so much money, that they cannot spend it all. So, they wind up with official "savings". Ideally, entrepreneurs innovate "good ideas"; borrow money from those "savings" (S) as "investment" (S --> I) in their startup; and everybody winds up making products, and generating wealth:

• trickle down = spending of wealthy (limited)
• venture capitalism = (re-invested) saving of wealthy (less limited)

Somebody needs to innovate another "good (and productive) idea", worthy of rich peoples' saved money, as an investment. Until they do, unproductive, ipso facto unprofitable, speculation may run rampant. Speculation is non-profitable; does not generate wealth; merely transfers wealth, to the "starters of the fad", from the "last suckers in". Rampant speculation seemingly implies, that there is more money accumulated in savings, than actually-productive-and-profitable "good ideas", of entrepreneurs. (Meanwhile, all the "Mr. Ponzi's" know where to go.)

The only reason corporate profits are not higher is that companies pay some people very high salaries.

reductions in wages & salaries, "from factory floor to office high-rise", would make US businesses more profitable, and more competitive

wealth travels from the poor to the rich

money flows to rich & poor. But, more money flows to rich, than to poor. And, the poor live "hand to mouth", re-spending their incomes, almost as fast as they earn them. So, poor have a low savings rate. Meanwhile, rich earn much more, and spend only some more. So, rich have a high savings rate.

Saying that "wealth travels from the poor to the rich" seems mis-leading. Rich people don't mug poor people, and take their money. Money flows to everybody; more money flows to the rich; the rich save more money ("they earn more than they know how to spend").

Entrepreneurs innovate "good ideas", to produce profitable products, generating jobs & wealth. Rich savers then invest in those "good ideas", actualizing those profits, jobs, & wealth. Inexpertly, the crucial requirement, is the recycling & recirculation of savings (of 'rich' people, by definition), as investment, back into the economy:

S --> I​

Precisely, because if the government did not poor people would have no money.

you describe a "public sector approach", taking rich people's savings as taxes, and spending them on welfare:

S --> T --> C​

previously i described a "private sector approach", wooing rich people's savings as investment, and spending them on innovative entrepreneurial "good ideas":

S --> I​

The former promotes personal consumption spending, on "more small stuff" (haircuts, shoes, TVs). The latter promotes investment, on "big stuff" (machines, factories). The former promotes "more of the same" (more shoes, more TVs). The latter promotes "something new & different" (new machines, new factories, for new products).

Now, the "public sector approach" can be productive, and profitable, when the taxes taken are spent on large-scale Public Investments, e.g. highways & internet:

S --> T --> I​

The profitable Public programs, to which Pres. Obama & Senator-candidate Elizabeth Warren have referred recently, are Public Investments, on productive-and-so-profitable "huge stuff" (thousands of miles of roads & computer cables). The net value of Public Investments (S --> T --> I), into productive-and-profitable assets, does not logically imply the net value, of welfare (S --> T --> C). "Huge new & different Public Investments have been good" does not imply that "more welfare transfers for shoes, clothes, & TVs" will be worth the while.

Wages have kept pace with prices. Even house prices are returning to historic trend levels, from their 2006 "bubble" peak. College costs are not necessary. Or, if college is necessary for a "modern workforce", then perhaps Public Education could be extended, to college level. Such a proposal would require careful consideration.

It DOES hurt the average person if the top 1% of wealth go from having 131 times as much as the median wealth (1983) to having 225 times as much wealth (2009).

you getting mugged, and losing your money, hurts you. Somebody "way over their winning the lottery" helps them. But their boon is not your bain, and their gain is not your loss -- except for some psychological sensation of "Envy".

wasn't there a more recent study that found that only the top 10% of income have benefited during the recovery, and the income of everyone else has actually fallen?

On average, over the past year, real wages (adjusted for inflation) have increased +2%, whilst some measures of inflation report +3% rise in prices. So, perhaps real wages have fallen by a penny per dollar. During a "Great Recession", with millions of people out of work entirely, the working majority complaining about pennies on dollars is not legitimate.

The minimum wage outlaws millions of low-paying jobs. Eliminating minimum wages would regenerate those jobs, earning many people some money.

I will note that the top 10% of income get 47% of all income so the bottom 90% is left with the rest, with most of that in turn concentrated in the upper half of the population (meaning that 3% of consumer expenditures can be quite high as a proportion of income for certain population segments)

that's good thinking

from 2007 to 2010, there was an increase of 2.3 million households paying more than half of their income for housing (what they define as "severly burdened"); that brings it to a total of 20.2 million.

27 percent of renters fall into this severly burdened category, with homeowners roughly half that number.

In the US, there are 115 million households, of which 75 million are homeowners. If the remainder are renters (40 million), then about 10 million renters are "severely burdened". That would leave (the other) 10 million "severely burdened" households, as homeowners. And, indeed, 10 million homeowners is about 13% (half of 27%) of the aforesaid 75 million homeowners. So, these numbers seem to jive. In the US, more than one in six legal households is "severely burdened" by housing costs (one in four renters, one in eight homeowners).

Meanwhile, due to the countrywide housing bubble in the mid 2000s, millions of now-foreclosed homes were built, across the country. Somehow, there is an over-supply of rentable homes, which is not reducing housing costs, relative to incomes. Either all the homes were built in "all the wrong places", or incomes are not recovering from the recession. Eliminating minimum wages would regenerate millions of jobs, giving many low-income renters & leasers some money.

"Woe is me" does not imply "you (or anybody) owe(s) me". Eliminating minimum wages would regenerate millions of ways for impoverished people to improve their lot, at least a little.

 

[Misaki]

borrowing terms from international economics, buying shares of stock is a "portfolio investment", buying up legal titles to (partial) shares of businesses. Those monies would be spent from the business' "corporate profits, after tax, un-distributed [as dividends]", i.e. "retained profits" (for lack of better words). If, instead, they bought a factory or machines; then such expenditures would be "direct investment", directly (?) into "capital assets" (machines, factories). Either way, the purchase of "capital assets" (machines, factories), or "portfolio assets" (stock), would come from "retained profit".

Thank you for clarifying this.

If more businesses were reinvesting their profits maybe the argument to keep profits high would be more convincing, but as a group corporations are not finding anything useful to spend their money on: The Slack Wire: Disgorge the Cash!

Anecdotally, this recent debate between Peter Thiel, noted for involvement with Paypal etc, and Eric Schmidt, CEO of Google, discusses how many tech companies like Google, Microsoft and Apple just don't have anything to spend their money on and so are letting it sit at negative real interest rates. Supposedly paying it out in dividends would be saying that they are no longer "tech companies" but are instead just, in the case of Google, a "search engine".

inexpertly, money "trickles down" from rich to poor, when the rich spend (tips at expensive restaurants & golf courses, fancy clothes, luxury cars). But, by definition, the rich are those who earn so much money, that they cannot spend it all. So, they wind up with official "savings".

The first serious post on this topic described how this money tends to circulate among the rich instead of trickling down as it is expected to. For example, golf courses might look for employees with a college education even if it is completely irrelevant to the work being done.

Ideally, entrepreneurs innovate "good ideas"; borrow money from those "savings" (S) as "investment" (S --> I) in their startup; and everybody winds up making products, and generating wealth:

• trickle down = spending of wealthy (limited)
• venture capitalism = (re-invested) saving of wealthy (less limited)

Somebody needs to innovate another "good (and productive) idea", worthy of rich peoples' saved money, as an investment. Until they do, unproductive, ipso facto unprofitable, speculation may run rampant. Speculation is non-profitable; does not generate wealth; merely transfers wealth, to the "starters of the fad", from the "last suckers in". Rampant speculation seemingly implies, that there is more money accumulated in savings, than actually-productive-and-profitable "good ideas", of entrepreneurs. (Meanwhile, all the "Mr. Ponzi's" know where to go.)

This narrative describes how it is 'supposed' to work, and this is the way people have thought about political economy since it was first seriously studied. But it falls apart when innovation in the efficiency of production happens faster than innovation in "new things to buy that don't replace old things".

For example, Apple's profits have mostly come at the expense of the previous market leaders in cell phones: Apple and Samsung Claim 99% of Profits Among Top Mobile Phone Vendors - Mac Rumors

While the iPhone was a new product, and in fact did increase the total profits of major cell phone vendors, in another sense it is just another 'fad' or speculation by consumers in "coolness factor". See for example the young Chinese male who sold a kidney so he could afford an iPhone and iPad, or the young Chinese female who was offering to sell her "first night" for an iPhone.

One way of looking at it: suppose the petition was successful, and many high-income people chose to work less, like 20 hours per week or so. Would entrepreneurs be able to invent products that would convince people to spend MORE time working so they could afford those products?

reductions in wages & salaries, "from factory floor to office high-rise", would make US businesses more profitable, and more competitive

More profitable, yes... but I don't think it would make them more competitive unless they actually have something to invest that money in. For many businesses, it's just a zero-sum game between employees and stockholders, which is why many people were upset about the Bain Capital thing.

Giving Nokia $100 billion will not magically cause its brand to be more attractive so it can sell at an Apple-level of prices. For example, the attraction of Google's new Nexus 7 is not that it's hip to have, it's that it's cheap and yet still functional. Apparently Google is even willing to sell it at a loss despite not having the same way to recoup that loss as Amazon does with its Kindle Fire or console makers have with video game sales.

Brands are not inherently reflective of quality! They are just a sometimes-inaccurate estimation of quality, the same way that luxury goods buyers in the NYtimes article in the petition use price as an estimation of quality.

(For another perspective, the Chinese book translated into English as "Unrestricted Warfare", and famous for 'predicting' an airplane terrorist attack, highlighted the weakness of the US culture as an obsession with technology and an aversion to casualties—which was played out in the recent occupation of Iraq where the "invincible" US military continued to have casualties that turned the tide of public opinion against further major military interventions in world politics.)

Saying that "wealth travels from the poor to the rich" seems mis-leading. Rich people don't mug poor people, and take their money. Money flows to everybody; more money flows to the rich; the rich save more money ("they earn more than they know how to spend").

To the extent that it makes people think the rich earned their money unethically, it is misleading. The fact that people who think this are delusional and a minority is seen first from the fact that no one from the Occupy Wall Street movement supported the proposal in this thread on the OWS forums, and second from the high birth rates in countries or regions like Gaza despite being 'oppressed' by richer countries or lacking wealth.

Entrepreneurs innovate "good ideas", to produce profitable products, generating jobs & wealth. Rich savers then invest in those "good ideas", actualizing those profits, jobs, & wealth. Inexpertly, the crucial requirement, is the recycling & recirculation of savings (of 'rich' people, by definition), as investment, back into the economy:

It is actually usually banks or venture capitalists who make the decisions on what to invest in; the money could just as easily come from the 'middle class' letting banks take care of their money. And if people just hid their money under their mattress instead of lending to banks, the government could easily and instantly create more money for people to use to invest, as it did in the ineffective "Quantitative easing" programs which injected trillions of dollars into the economy.

But again, the petition is about job creation, not inequality. People would be expected to work less only to the extent they are knowingly buying "brands" which give little additional value. This would make the competitive environment for companies more fair and honest, and smart people would still be able to earn lots of money. The 'eddies' of money that result when rich people spend their money would just be disrupted so it would trickle down as people expect it should.

The former promotes personal consumption spending, on "more small stuff" (haircuts, shoes, TVs). The latter promotes investment, on "big stuff" (machines, factories). The former promotes "more of the same" (more shoes, more TVs). The latter promotes "something new & different" (new machines, new factories, for new products).

Taxes and welfare are what is currently used to give the poor money, because the private sector has not created enough jobs. The petition is about job creation without higher government spending. Taxes would only rise enough to support necessary government services.

Military spending probably partly falls under the 'unnecessary' category, as the reason some bases are not closed are political reasons and we have plenty of nuclear weapons, but so do many welfare programs. If there was no unemployment, there would be no need for unemployment benefits as anyone who lost their job could easily get another one, even if it was just working at a fast food restaurant.

"Huge new & different Public Investments have been good" does not imply that "more welfare transfers for shoes, clothes, & TVs" will be worth the while.

If there were obviously beneficial public investments (computer cables) we would be taking them right now; the best that many people can come up with is fracking which is obviously just another short-term solution that also harms the environment.

Which again, is why the solution is not about giving the poor more government money so they can buy another TV; it is about giving them jobs while people with higher incomes who choose to do so can spend more time doing whatever they want.

Wages have kept pace with prices. Even house prices are returning to historic trend levels, from their 2006 "bubble" peak. College costs are not necessary. Or, if college is necessary for a "modern workforce", then perhaps Public Education could be extended, to college level. Such a proposal would require careful consideration.

Interestingly, less people think college is worth it. Fewer people see college as good financial investment - Life Inc.

Nearly 57 percent of people think college is a good financial investment for young adults these days . . . That’s down sharply from just four years ago, when 81 percent of people saw college as a good investment.

The survey also found that wealthier people were more likely to see college as a good investment than those who make less money.

(This second quote is important because it suggests that either poor people are not aware of the job opportunities that become available with an education, or they think that those jobs, like the financial sector, are "unethical" and possibly even worse than being unemployed.)

But again, I agree that inequality is not that important except to the extent that it leads to high unemployment. The unemployed are much less politically active now compared to even the 2001 recession, and maybe it is because they have been spoiled by iPhones and such.

you getting mugged, and losing your money, hurts you. Somebody "way over their winning the lottery" helps them. But their boon is not your bain, and their gain is not your loss -- except for some psychological sensation of "Envy".

Is someone who is unemployed, can't find a job despite hundreds of applications, and at the risk of losing their home being "hurt" by society in any way?

House and car explode miles, minutes apart in Poconos | PoconoRecord.com

During a "Great Recession", with millions of people out of work entirely, the working majority complaining about pennies on dollars is not legitimate.

The minimum wage outlaws millions of low-paying jobs. Eliminating minimum wages would regenerate those jobs, earning many people some money.

(I responded to this in another thread) People can't work for $1 per hour the way they do in China because housing is too expensive in the US.

McDonald's received 1 million applications for 50,000 job openings in a single day last year: McDonald’s Hires 62,000 in U.S. Event, 24% More Than Planned - Bloomberg

Meanwhile, due to the countrywide housing bubble in the mid 2000s, millions of now-foreclosed homes were built, across the country. Somehow, there is an over-supply of rentable homes, which is not reducing housing costs, relative to incomes. Either all the homes were built in "all the wrong places", or incomes are not recovering from the recession. Eliminating minimum wages would regenerate millions of jobs, giving many low-income renters & leasers some money.

This article says that there are 18 million empty homes in the US, but I don't know how it compares historically:
Home Ownership—Nearly 11 Percent of US Houses Empty - CNBC

This is similar to China with 50~70 million empty dwellings in China, and both cases are due to 'imperfect price discrimination' on the monopoly of a dwelling in a certain location as mentioned in the post I linked in the other thread. Many rich people in China have invested in homes while hoping that prices will continue to rise, especially since inflation makes it difficult to save in other ways... somewhat similar to the US! (Most stock market investors underperform the market)