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Zuhzuhzombie!! posted:"Our poverty problem won't be fixed because we pay people to be poor." Just yell EITC over and over again.
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Aug 10, 2013 20:46
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Accretionist posted:What on earth is this guy referring to: Honestly? Nothing, because he's an idiot. You can't be an Austrian and a Chicago school person. They contradict each other frequently, ie efficient markets hypothesis Chicago favors goes against Austrian view of untrustworthy financial markets. Chicago favors monetarism and a central bank that engages in counter cyclical policy. Austrians are very much and very loudly not monetarists. Furthermore I think it's a little arrogant for a non-Econ person to claim a school. You should know the assumptions and framework that leads to the conclusions and policy recommendations, because that's really what sets the schools apart. Different assumptions. Economic schools of thought aren't political teams, you can't just pick one because you like the conclusions. We have boom and bust cycles because they are natural, but ours have moderated, even considering the recent crisis. Current economic policy is generally Keynesian, ie counter cyclical fiscal and monetary policy, or at least we try, and that's been around for awhile. Our redistributions have tended to move away from leftist policies so. EITC for example is a transfer program that incentivizes increased labor force participation and has been shown to do so. And our regulatory state is much more streamlined than it was a few decades ago. Why are things stimulative? First, why wouldnt they be? Crowding out. In normal times, government spending increases the interest rate. This decreases investment, and wipes out stimulative effects. But, in a recession or a depressed equilibrium, this problem goes away. Fiscal multipiers are state (of the economy) dependent! Food stamps are an automatic stabilizer, so they increase during recessions, providing automatic fiscal stimulus. Transfer programs can also be good for long run growth but I wouldn't call that stimulus. Um, and economic research over the past few decades has been largely empirical. A lot of new theories, but mostly tuning the same general framework we've been using for the past 60 or so years. But if you're an Austrian you don't believe in empirical research so there you go.
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Aug 11, 2013 22:50
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miscellaneous14 posted:How do you deal with someone doing the whole "blacks are the real racists!" routine? Especially when they're spouting off nonsense like "black parents teach their kids to abuse the system and hate whites"? I tried making the argument that it's nearly impossible for a black male to escape a situation where they grow up in an impoverished community, to where they kept saying "they're fully capable of moving out of the ghetto anytime they want, they just don't want to". Income and schooling are positively associated with mobility. It's relatively hard to move out the ghetto. There's also spatial mismatch issues. Good jobs tend to be clustered in higher income areas within cities, and those living in lower income areas have no access to them. And for any and most arguments wrt to welfare reducing work/destroying jobs or society: the EITC is the largest US welfare program. It is designed, and has been been shown, to increase labor force participation. Food stamps and unemployment insurance also have positive effects because they are countercyclical policies / automatic stabilizers. When times are bad, and thus fiscal multipliers higher, they automatically increase. When times are good, and fiscal multipliers lower, they automatically decrease. You don't need to resort to humanist arguments (not that they're wrong) or obscure canadian case studies to defend welfare programs when the economics supports it.
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Aug 18, 2013 09:01
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Quetzadilla posted:I mean, he's probably right? The housing market hasn't bottomed out, it's just that demand has artificially increased as a result of banks keeping shadow inventory to create artificial scarcity and real estate investment firms driving up prices/competition because they can pay in cash immediately to turn that foreclosed home into a rental to bundle and securitize and sell to a hedge-fund. Rent this year in the bay area increased 18% over the last 3 years, (8% in the past 12 months) and is officially more expensive than New York. Still can't afford to buy a house with that kinda money in Cali though! Oh. Uhh. Hmm. Wrt to the original post, I'm not familiar with the author but its pretty easy to make a deceptively 'correct' forecast with enough volume. Broken clocks and all that. For example it seems that in October of last year he predicted another devastating financial crash before the end of the year, but I doubt he'll be forthcoming in advertising that or his true forecasting record, just the correct ones. As for why we are probably not in imminent danger of another financial collapse, well, it just doesn't show in the numbers. Regional price fluctuations are probably due to regional factors. And we do actually have a safer financial system than we did pre-crisis because there is no way anyone is going to let a bank fail and everyone knows that. The implicit financial backstop drastically reduces the odds of a bank run type liquidity crisis. Do we have the best backstop and regulations? Hell no. But it's still pretty resilient for the time being. Edit: haha I found a quote. Also it seems some people think he is an economist. He's not. quote:The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012. Pierat fucked around with this message at 20:00 on Aug 19, 2013 |
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Aug 19, 2013 19:56
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WampaLord posted:
Read the next sentence. Yes it distorts incentives and in the long run will do, well, something. The biggest effect is an implicit subsidy that increases financial profits by reducing borrowing costs. Maybe it will lead to riskier portfolios, I'd have to do some reading before I have an opinion on that. But in terms of preventing financial crises themselves, we have a more certain backstop than we did before. If Lehman wasn't allowed to go under, the worst of the crisis wouldn't have happened.
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Aug 19, 2013 20:27
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How does this make our financial system safer?
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Zeitgueist posted:the government will let the industry do basically whatever it wants. Except collapse. Which is the relevant point wrt to why a financial crisis is unlikely to happen Next Month/Quarter/Whenever. Plus probably some sort of Minsky-like phenomenon where financial markets are risk averse right now because they are scared of another crisis. Longer term, yes, you're right. This is not the best policy regime and I've made that point in my last two posts.
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Aug 19, 2013 21:51
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Ardennes posted:Yeah, the assumption is that banks have "learned their lesson" when they almost certainly haven't. It is like giving some compulsive gamblers a bunch of chips, and then telling them if they lose then all that there are plenty more from where they came from. Nope, it's actually the pro-cyclicality of financial markets. You could just google Minsky or read his wiki, it's a pretty simple theory. And you'd like it, it's about unstable financial markets. Quetzadilla posted:Sorry, for whatever reason I read the first post I quoted as referring to California's economy rather than America's (hence my specifics being exclusively California related). That doesn't mean that we aren't headed for another national collapse though since like 2/3 of what I said applies nationally. A precipitous drop means big % increases after just as a matter of math. If there's another bubble it almost certainly won't be in housing. http://research.stlouisfed.org/fred2/series/SPCS20RSA http://research.stlouisfed.org/fred2/series/SFXRSA I've yet to see a single source claiming a huge looming asset price bubble that has even minimal data to back it up. If there's as asset price bubble, it should be reflected in some asset pice.
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Aug 20, 2013 09:11
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Or that annual student loan abs issuances are less than half than what they were in the years leading up to 2008.
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Aug 20, 2013 17:05
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Quetzadilla posted:http://www.reuters.com/article/2013/07/02/fitch-us-student-loan-abs-can-withstand-idUSFit66142920130702 Haha, okay. I'll even let you pick a date, but you have to be in on it too. Premature fed tapering doesn't count though! Edit: and do you mean two more recessions or just one? Cause that 'double dip' never actually happened. Pierat fucked around with this message at 05:29 on Aug 21, 2013 |
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Aug 21, 2013 05:04
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gradenko_2000 posted:Are there any good citations/studies showing that an increase in the minimum wage won't cause businesses to close, and/or that an increase would not increase prices or cause inflation to the point where a person would be right back where he started? Here's the thing. Those effects can happen if the minimum wage is set too high. A business would close if the minimum wage sets the marginal cost of labor above the value of the marginal product of labor. But, there is a 'correct' minimum wage that doesn't create these effects. In perfectly competitive labor markets with no distortions, the wage rate is set at the marginal productivity of labor. Any minimum wage above that marginal productivity will result in disemployment or neutral price increases. But labor markets are generally not perfectly competitive, and generally distorted at least a little bit. In any case where the labor market is less competitive on the demand side (The extreme case being a monopsony, a single buyer of labor), wages will be set below the marginal productivity of labor. A minimum wage that is set at the marginal productivity of labor in this case actually increase employment by moving up the labor supply curve. No business will close, because VMP of labor is not above the marginal cost. That's basically where we are. Labor markets aren't perfectly competitive, and the minimum wage is below the optimal level. We have some wiggle room where it can be raised with no negative effects. The optimal wage is estimated to be somewhere around $9.50 an hour, so anything above that there's a tradeoff between employment and higher wages. The distortion that labor markets have is the EITC. The effect is probably small, but I think it's worth mentioning. The EITC is a tax credit to low income workers. Workers should count the EITC as part of their labor income, and thus the equilibrium wage rate paid by employers will be set lower. Since MC is below VMP, a correctly set minimum wage will have no negative effects. As an aside, I'd like to talk about Bad Reasons to Raise the Minimum Wage: redistribution and stimulus. These are both things we want more of, but the minimum wage is not apt at doing them. It is an ineffective tool for redistribution because beyond the level that corrects for market failures and distortions, you face a tradeoff between providing welfare for the low-income employed and low-income unemployed. Do you choose higher wages and disemployment or lower wages and higher employment? Neither, because we have much better policy tools for redistribution. On the other side of the redistribution equation, using the minimum wage as an alternative to the tax code is a poor idea, because what types of businesses employ low-cost labor is pretty arbitrary. Why should gas stations and retail establishments be the target while law firms and investment banks are exempt? The stimulus argument follows from a redistribution effect. The change in distribution of income from a minimum wage set higher than the optimal rate is likely slightly stimulative but only in the short run. You still face the negative effects and it doesn't outweigh them. Using the minimum wage wage as an alternative to fiscal policy is a bad idea because A: it should be set at the correct level already and thus raising it has costs and B: In a downturn fiscal policy is both more effective and less costly than normal. The paper that gets cited a lot is Card and Krueger, 1992. They studied the fast food industry in NJ and Pennsylvania, and determined that a minimum wage increase in New Jersey had no disemployment effects. edit: Hmmm, this seems neat at a glance. Pierat fucked around with this message at 18:58 on Aug 25, 2013 |
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Aug 25, 2013 18:45
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Giving the book thread a quick browse, I'd say you're better off starting with some philosophy. Google something like "social and political thought syllabus" for reading lists, and from there you can look for primers on different philosophers. Hobbes, Locke, and Kant are worth looking at for a clearer understanding of later philosophy but imo skippable. I recommend Bentham and John Stuart Mill for some utilitarian thought. John Rawls' A Theory of Justice pretty much is modern liberalism, and I highly recommend you read some excerpts from it and maybe some summaries or study guides too. Nozick wrote the libertarian response to it, and I think it's worth reading if only to see that it's a fairly inconsistent theory, and because even if it's flawed it's important to understand it. I also recommend Krugman's "The Return of Depression Economics." It explains some macro, international finance, and monetary policy in a very accessible way. You'll also come away with a good understanding of recent economic history.
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Aug 27, 2013 20:40
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Ramadu posted:Does anyone have a link to an article showing that businesses are making the most profit ever? I can't seem to figure out the right keywords to google for that.  Corporate profits/GDP Here's a post from the NYT econ blog Economix regarding the recovery. quote:The study, “The ‘Jobless and Wageless Recovery’ From the Great Recession of 2007-2009,” said it was “unprecedented” for American workers to receive such a tiny share of national income growth during a recovery. Note that the 'unprecedented' bit is a little disingenuous. This recovery looks different from the other post-war recoveries, but it's not really comparable. None of the other post-war recessions were caused by a financial crisis, saw an extended liquidity trap/depressed equilibrium, etc. More apt comparisons would be to the U.S in 1929, 1907, or 1893, or various crises in other countries. How is this possible? How can output, profits, and stocks be up but unemployment still high? Honestly, I don't know. But Stephanie Schmitt-Grohe and Martin Uribe suggest that (no link, sorry): quote:The present paper makes a step toward overcoming the difficulty of the new Keynesian Paper recoveries with high unemployment are probably a feature of liquidity trap recessions.
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Sep 1, 2013 15:32
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Accretionist posted:What about something like this: "Group-rates. You can't afford the individual rate." Poorly written and sourced, and full of strawmans. And what the hell libertarianism isn't an extension of any form of liberalism it's opposed to it. Honestly? When I get into arguments with libertarians (it happens) I just tell them that the harm principle is full of holes and I prefer my principles of justice in the liberal tradition. If they care to listen, I explain the basics of John Rawls' theory, if not, whatever. It really is a preference and the only way to change that preference is to let people know their other options. If they already know and have made their choice, then it's really unlikely you're gonna change their mind.
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Sep 4, 2013 02:45
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eSports Chaebol posted:It's even simpler to point out that the distribution of resources is a result of primitive accumulation: i.e., the initiation of force. Probably the best case study for this would be enclosure. If one truly supported the non-aggression principle as a cornerstone of free markets, it would only make sense to support a massive jubilee as a "do-over" when we move to a hypothetical non-coercive free market. (Actually a few libertarians will even support this idea, surprisingly enough.) Pretty sure Nozick talks about exactly this and says "Nope." Regardless of any initial distribution it's still taboo to redistribute. But it's a good flaw in libertarian thought to point out. No rectification for previous injustice.
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Sep 5, 2013 13:10
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Caros posted:Pay raise for the CEO is qualified as an expense? The loss ratio (insurance payouts / premiums) can't be below 85%
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Oct 2, 2013 18:17
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KernelSlanders posted:Also, the FOMC sets the interest rate on short term government debt. Uh, no it doesn't. It sets the federal funds rate, which is the overnight interest rate between banks.
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Oct 4, 2013 04:59
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KernelSlanders posted:It sets the fed funds target, which it attempts to hit by setting the discount rate and by buying and selling short term bonds to control their yield. Yes, but that is not setting the rate on government debt any more than it is setting the rate for any other asset in the economy. The fed sets the fed funds rate, which is used as a benchmark for other interest rates. They could actually buy or sell any asset to achieve the target, the reason government debt is used is that it's the least distortionary option. I guess the fed could technically could set any rate, including short term government debt, if they were so inclined. But that would be bad central banking.
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Oct 8, 2013 22:36
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Habibi posted:Hey fellas and ladies - I know this topic has been discussed ad nauseum, but without a thread-specific search it's tough for me to go back and look for specific stuff that shares keywords with topics being brought up every hour, so: I'm currently discussing the rise of our healthcare costs with my step-dad, a diehard Republican (owns a GBW mug!) who is at least a little annoyed with his party right now (because he's not stupid [graduate of USSR university system as a mathematician], he's just poorly informed and afraid of communism). He is of the opinion that, He is partly right in that our healthcare system has a ton of market failures. Asymmetric information, no price transparency, monopolistic markets, etc. If you don't have an insurance company to bargain for you, you're in a very bad position, and even if you do insurance company payouts vary a lot even within regions and towns iirc. The market failures are probably a big part of healthcare costs, and even though I support single payer, we don't need it to deal with those. Litigation is a really small part of overall healthcare costs though. Oh, and a really big part of our high healthcare costs is that Americans have bad health. lovely diets and unhealthy lifestyles and poverty and all that. It's a more uphill battle for ues than other developed countries. Naive comparisons to other countries with single payer aren't going to prove any points because there's a big omitted variable bias. https://healthaffairs.org/blog is a pretty good resource for some links. Edit: naive as in without controlling for other factors, not a remark on anyone's character Pierat fucked around with this message at 00:48 on Oct 12, 2013 |
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Oct 11, 2013 23:05
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Can I point out that the costs of inflation that are being discussed are really the costs of inflation volatility? Or at least unexpected increases in inflation. Only unanticipated changes in inflation affects real values of debt, the rest is priced in. The costs of stable, long run inflation are more subtle, ie prices adjust at different times and that creates market distortions. It's relevant because in a liquidity trap effective monetary policy probably has to increase future inflation (or nominal income) so we will see the real value of debts and such decline, but that's the only situation where monetary policy has to deviate from its long run target.
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Oct 17, 2013 15:45
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Aeolius posted:Sure, but is that really a meaningful distinction in this context? I think when people are raising concerns about inflation, it's generally of the "runaway" sort, anyway. It's true that lenders will try to price it in, but in practice, accurately predicting inflation in a systematic way is all but impossible, as with any aggregate economic phenomenon susceptible to the effects of changing expectations. If you happen to take the view, as I do, that monetary policy isn't capable of increasing inflation at the zero bound by its lonesome, then this point is even more significant. Yeah, I think it's worth talking about real debt values in this context, but that clarity over long term inflation rates and short term fluctuations is useful too. The market distortions from inflation are because of price dispersion, prices adjusting at different times. That creates inefficient allocations of resources which reduces welfare. It's like, even though all prices adjust eventually, the short term differences in relative prices change our consumption decisions from what would be optimal. It's a measurable cost of positive inflation.
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Oct 17, 2013 17:06
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Aeolius posted:EDIT: Not trying to be priggish about it or anything; I just find that these phrases often carry more currency, as it were, than they probably ought to. Harder to pull people away from libertarian silliness when libertarianism holds sway over much of the lexicon. Oh yeah, I understand. But I'm not making a market fundamentalist point, that there's one true allocation of resources, just that inflation has costs. It also has a big benefit, that higher inflation makes liquidity traps less likely, and liquidity traps increase inflation and output volatility because it makes central banking harder so there's a cost/benefit calculation you can do. If you wanna do some technical reading this paper covers it pretty well with a whole bunch of specifications and monetary policy rules.
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Oct 17, 2013 17:15
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KernelSlanders posted:What is the MMT explanation of bitcoin? With no tax liability assesed in the fiat currency nobody ever needs to hold bitcoins, so why should they continue to hold value? This is old but I read this yesterday and it's literally an MMT explanation of Bitcoin so here: http://www.businessinsider.com/the-fair-price-of-a-bitcoin-is-zero-2013-12 (I think this is actually a pretty dumb analysis but whatever)
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Dec 4, 2013 00:04
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