Waitaminute. Aren’t there already huge government programs out there already which are purportedly trying to create new jobs? Enormous tax breaks targeted at businesses and the wealthy, for instance?
Maybe the resources that we’ve been devoting to trying to bribe businesses into creating new jobs (with no stipulation that they actually do so) would be better spent elsewhere.
Didn’t I say that a couple of times now? Haven’t most people in this thread been harping on the fact that unemployed workers make lousy consumers?
I didn’t say anything was broken beyond hope. To take the position would imply that there was no way to fix the problems. As you recall, some point back I posted a proposed list of solutions. I stand by those and I think you’ll see many of those be passed by the next President and Congress. The politicians are getting too much flack from many of their constituents and I’m confident that they will react as they always have, by passing laws without a lot of forethought. But really, you do seem to have a problem with understanding logical reasoning which is why I suggested that a reread might be helpful. Didn’t think you’d be open to that though. So, guess we’ll just have to wait, see what happens and who turns out to be right.
Evil Captor, the only constant in this world is change. Why do you think the market for the Buggy Horse Whip collapsed? The answer is Progress. We always come out of these Corrections stronger than before.
Lightning kills people too. So do Killer Bees. Eventually, everyone will die. Life is tough. You have to work. Cope, deal with it, get over it, and then do what you have to do to get a good job. The vice side of that argument is learn to live with less.
You will never get anywhere if you stay paralized with the What Ifs. So, answer the What Ifs. The true answer is never as bad as the imagination makes it out to be. You have to stay flexible and keep your ear to the ground. You have to always look for better opportunities. There is no government program that will protect you from the harshities of life.
So what is to be done about the 41,000,000 people in the USA who don’t work for the right company, only work part-time or don’t work at all and who don’t have health insurance?
Well, yes. But awful compared to what? Certainly you don’t mean that looking for a job in computer related fields is worse now than it was 100 years ago. Perhaps you mean that looking for such a job is worse than it was 6 or 7 years ago. I can agree with that. 6 or 7 years ago we were in the middle of a tech buble which burst. Those jobs are much mroe difficult to get now. I don’t know directly, but Nursing jobs seem easier to get.
Maybe. As I posted a while back, I think there is quite a bit of room for more retraining and job searching information. If you mean some sort of large redistribution of wealth, however, then I’d disagree.
I’m not sure that I understand you. Are you saying that you don’t want the corrections to happen? On reflection, that can’t be what you mean. You simply mean that you want to palliate the effects of the correction even if it might somehow impare the efficiency of the free market. Is that correct?
That’s right. How far do you want to go to palliate this (thanks for the word BTW)? If a person works for a dot com with a salary of 200,000 a year, buys the biggest house, car and lifestyle he can afford based on that salary, how much do you think the government should be obliged to pay him when the dot com goes bust? Remember he probably has a large house and car payments. The area he lives in is almost certainly expensive.
Well, I would turn that analogy around on you. You protectionists are like medieval healers who often proscribed poison under the theory that it might kill the disease. Oddly they never seem to realize that the high mortality rates might be due to their actions rather than “We didn’t administer enough leaches”, “We didn’t administer them soon enough”, or the ever popular “The patient did not believe enough.”
Which by itself is a sensible statement. Follow it with proposals for increasing the amount of the economy to be administered by the government by several 100 percent, however, and it gives lie to the “MODERATELY”.
Sam is perfectly capable of defending himself, but this is clearly a lie. He has posted several times that he is in favor of a safety net.
The number of immigrants then compared to the number of jobs travelling overseas is certainly comparable. The amount of hysteria then and now is absolutely comparable. Finally, what do you mean by “gives you away”? I have no idea what I was trying to hide.
No, you said that the current system was broken to an extent that it needed a major overhaul. That is, that the current system will not survive without extensive changes. So, technically, your hope is to scrap the current system and replace it with massive new welfare programs.
Well, no, I don’t. But regardless, there is no need to get personal.
Actually I did re read much of the thread. Did you?
Ah, there’s that tired old “buggy whip maker” meme.
As I mentioned before, the buggy whip analogy does not hold. If a buggy whip maker was put out of work, he could walk down the street at get a job at the new Model T factory.
In today’s paradigm, that Model T factory would be located in Mexico, or China, and the buggy whip maker would be out of luck.
Doesn’t that assume that a much larger number of jobs are being outsourced than has been claimed? Did I mis where you proved that most of the recently lost jobs were due to overseas outsourcing?
You are not grasping the full meaning of the meme.
From this statement, you are assuming that before yesterday, all cars were manufactured in the US. And then yesterday, suddenly all cars are now being manufactured outside of the US. Cars, and Horse Buggies, have always been manufactured in places other than the US, as well. So, if the Buggy Whip Maker lost his job, chances are he lost it to the Model T factory down the road.
If he lost it to the Model T factory down the road, then he must find the new skills to be able to work there.
If he lost it to a Model T factory overseas, he has several options in a Free Market society. He could move overseas. He could try to improve on the Model T and make his own millions. He could try get a local job with the Model T factory, but doing something else, like say, Engineering or Sales.
The reason why the Horse Buggy Whip meme is a good analogy is because in a Free Market society, progress marches on. And, as long as you don’t give up, you always have options.
Like anything else, you take your chances that you won’t be struck by lightning or attacked by killer bees in the meantime. Again, no amount of government intervention will insulate from the harshities of life.
Wait. iamme99, you said that only 41 million Americans don’t have medical insurance? So, in other words, 86 percent of Americans do have medical insurance. So, more Americans have medical insurance than own a car, own a house, own a computer, and have Internet access. In a world where there are no absolutes, 86 percent is pretty damn good.
The majority of those without insurance would be adults in the first quintile and adults and children in the second quintile. As such, the actual percentage you would be looking at is 64% which I don’t think would be viewed as “pretty damn good” especially when you consider even fairly minor medical care can run in the thousands of dollars which, in effect, would lock out those without insurance from traditional health care. Thus, emergency care is the only other option which of course is the most costly to them, to the tax payer, and to society as a whole.
I do not understand this comon assumption that health insurance is the only way people can pay for their health care. It is just a huge misconception.
Insurance (of any kind) is just a way for groups to pool their money and pay the average cost plus the cost of administrating the system. Those whose risk is lower than average are better off self-insuring.
All the years I have been in the USA I have chosen to go without health insurance and pay my medical bills out of my own pocket. Whether I have saved money or not is immaterial. The fact is that I have chosen to self-insure because I thought I would probably come out ahead and I know others in the same situation. being without health insurance is not the end of the world and many people do it voluntarily. I do not understand why people feel health insurance is an entitlement. It is a service like any other service. It is a need just like housing, food, clothing or any other. it is deesirable that people have money to buy these things, the more the better, but just pointing out that people have needs is not an answer to a thread dedicated to a completely different topic.
I do not understand why in any thread about how to make the economy better or create jobs or whatever some people feel the need to trot out a list of things people need. Yes, we know that if people have more income they can afford better health care, better housing, better clothes and food, etc. That is quite obvious and does not need to be said. What we are talking about is how to make the economy go better so that people can afford these things. Just stating that they need them and “something ought to be done” is meaningless. If you propose an idea then you have to prove it will make things better. Telling me people have needs is meaningless. Tell me how your idea means productivity will go up so that there will be more money for people to spend on health care or porn or whatever they want to spend it on.
Well, sailor, depending on the condition and the expense involved, in many cases you’re dead or disabled if you don’t get proper treatment for whatever it is you’re afflicted with. Last I checked, the dead were excluded from the productivity statistics because, well, they don’t do much. (This perhaps depends on their location, of course; should the remains be located at a proper depth beneath your raised bed in the backyard, for instance, it might be the case that your tomatoes might be a bit more juicier and more flavorful than usual.)
The disabled, arguably, are somewhat of a more intractable problem, as regardless of location, they’re going to cost you bucks for treatment of whatever condition it is that ails them.
And, finally, from that communistic rag The Financial Times , we have this:
Your anecdotal story aside, healthcare is a huge issue in terms of US competitiveness, and while the one side argues that outsourcing is a big problem, while the other side argues that it’s productivity or the after-effects of the bubble, health care costs keep rising apace here in the US. As a long-term problem undermining the health of the US economy, this one is about as insidious and lethal as it gets.
No, you are claiming that the rule must be abandoned, simply because you cannot change it and still have the same rule. The marginal benefit of an action is either larger than, less than, or equal to the marginal cost of an action. There are no other options. My claim, at least in this line of discussion, is that one optimizes where marginal benefits equal marginal costs (at least as closely as we can get). That’s the rule. To change the rule is to change the equal sign to greater than or less than.
How else can you change the rule? You have marginal revenues and you have marginal costs. You’re measuring them on the same scale. If they’re not equal, and if neither is larger than the other, what possible relationship do they have?
We don’t want to look at the caloric costs of the first two rats because our benefit is no longer being measured in calories. Originally I had assumed that we were at subsistence so that we’d know that we were getting enough, but not enough to have to put in a labor-leisure choice into the example. When you assume that only one rat is needed to survive, then we move into a new area where more than just calories are an issue and we have to include more stuff. I had to sacrifice a lot of important things to make the original example sensible because I am not skilled enough to do it right.
With the modification, I had to pick something else and I chose “utility”. Now we have to measure the costs in utility. So even though I am no longer hunting until my marginal caloric expenes is equal to the caloric content of a rat, I’m still optimizing on the margin because there are other things that I have to consider, e.g. the value of goofing off. That is beyond the scope of this discussion.
Yet you didn’t seem to notice your persistent position that there is more to optimizing than marginal costs and benefits. Again, you are claiming that MB=MC isn’t the optimizing rule, but you won’t explain how MB>MC or MB<MC is superior.
Let me say it again: There are three options to choose from, MB>MC, MB<MC, or MB=MC. Either you accept that MB=MC is the optimizing rule, or you have to explain why at least one of the other two options is superior. There are no other options. It goes back to my previous question: A woman is running a business and we take a bunch of money out of her bank account. Why is it now more beneficial for her to produce where the marginal cost of production is higher or lower than the price she gets, when is was not in her best interest before we took the money?
You may. But suggesting that doesn’t alleviate your need to answer my previously stated concerns. You’ll also need to explain why they would bid over $1 at all. If total benefit is a concern, why go from $0.99 to $1.01? The optimizing rule provides a clear mechanism as to why bidding would go over $1. The total cost rule doesn’t. Why would they stop before $2? Well, in a broader sense, they don’t. Long-term labor strikes are far more expensive than an extra 50¢, not to mention wars, arms races, and throwing good money after bad into dying investments. Economics won’t predict where the bidding should stop because there is no equilibrium. Economics only predicts that people who get involved, but don’t bid 99¢ as the very first bidder and don’t get out bid thus becoming the 3[sup]rd[/sup] lowest bidder or lower, will get in over their heads.
Right. You are making that claim and you have to make a positive defense of that claim. To say that we don’t optimize on the margin is the logical equivalent of saying that MB=MC is not true. But then you are claiming that MB>MC or MB<MC is superior. You have do show why that would be so. But you’re not showing why that would be so, and you keep not showing why that would be so.
You do seem to be completely misunderstanding the term. Or, I am completely failing to communicate it clearly.
[Rod Serling]Picture if you will a planning authority ¶.[/Rod Serling] Suppose that this planning authority appropriates wealth from people in a way that can be affected by what they do. So, for example, the pa taxes people based on the net weight of soap that they use. Person x thinks about this. “Hmmm…she says. I use soap to keep clean and the amount of soap I use is based on my taste for cleanliness, my taste for disease risk, my taste for dry skin, and the amount of skin I want to have, all weighed agains the cost of soap. Then after weighing all those, I make a decision. Well, that’s what I used to do. Now I am being taxed by the amount of soap I use. So now, the level of disease risk I chose to have is relatively more expensive, as are my the amounts of cleanliness I have on a day-to-day basis. Indeed, it is even more expensive for me to weigh this much because I have more surface area. Because of this, I am going to have to change my optimum level of consumption of soap.”
If you imagine an X-Y graph and consider only the positive area. X is person x’s welfare; Y is person y’s welfare. There is a bowed out curve that represents all the efficient distributions of welfare between the two. At some arbitrarily given efficient distribution, there is a line tangent to the curve. When the market does it’s stuff, the resulting price ratio is this tangent line. In the above scenario, what the pa has done is to grab that tangent line and yank on it like a lever in order to effect a new distribution. He does this by adding or subtracting to the marginal costs of the goods and services in the economy. He is distorting by directly grabbing ahold of that line and manipulating it.
Consider instead a different pa who doesn’t do that. What he is doing is taking some amount of wealth, and the amount of wealth is not affected by actions that individuals take. So person x says, “I have a new tax to pay. But since the price of soap is the same, I don’t have to adjust my levels of disease risk, etc.”
This pa is not distorting the market because he is not grabbing that efficient price level and cranking it one way or the other.
Suppose that he takes some wealth from some and gives it to others. The recipients are now more wealthy and their consumption will change, but only as a result of wealth changes and not something they can do to get more or less from the dole. So person x uses a certain amount of soap. She gets a check from the pa. The price of soap hasn’t changed nor has her taste for cleanliness, so she will still consume the same amount of soap. But before she bought store-brand cola because she didn’t want to trade soap consumption for the upgrade to name-brand cola. Now she doesn’t have to. She can take the check from the pa and and buy name-brand cola instead of store-brand cola.
You see how the pa didn’t change her incentives at all? He just gave her a check and there was nothing she could do to make the check larger or smaller. That check didn’t change her trade off for cleanliness or cola. That is non-distortionary.
Distortionary would have been if the pa had decided to subsidize name-brand cola and bring down its price. Person x would have been wealthier in real terms because the price dropped, but that price change would also have caused her to subsitute and that substitution would have been from the distortion.
So x drinks more name-brand cola and the price rises because demand has risen. People d, q, z, and r all have to adjust their consumption because of the price change. But this is still not distortionary. The reason is that the price change is a product of a real shift in demand for name-brand cola. The new price ratio will be on a different part of that curve, but it will still be at an efficient point.
The market is doing what it does. When we say there is distortion, we mean that we are not letting the market do what it does. When we grab that price ratio and crank on it, we are changing what the market has done vis-à-vis incentives. When we move wealth without touching the price ratio, we are involved with the market to the extent that we are changing which efficient outcome obtains, but it is still the market that adjusts the incentives to get the economy to the new efficient outcome. Competitive market prices are the standard from which distortion is measured, and the pa doesn’t change the market prices he isn’t distorting the market. If the market changes the prices, well, the market is the standard and cannot distort itself. It does what it does.
An analogy might help. To run efficiently, a firm needs to pay its costs. So, if it affecting people around it, it has to pay for that to be efficient. Thus, if it dumps effluent into a stream that effects people downstream, let’s say fishermen, then it has to eat that cost. What if a firm is producing kite string and it is buying up Spectra®, a popular, high-tech fishing line component? It will cause the price of Spectra to rise because by making kite string it has upped the demand for Spectra. Fishermen will eat some of this increased cost to fishing line manufacturers. Is this a cost external to the firm like dumping effluent? No. The price change is a natural product of the market in response to increasing demand. The market is doing to prices what it does to move things where they need to go.
OK, how about a little comic relief on the subject (you’ll need Flash player to view this)? Whether you agree or not with this, this is the perception that a good many people currently hold.
So what is to be done about the 41,000,000 people in the USA who don’t work for the right company, only work part-time or don’t work at all and who don’t have health insurance?
Whether you agree or not with this, this is the perception that a good many people currently hold.