When I stated working remote (long before the pandemic) it made me think differently about what I work on and with who. As things slowly open back up, I bet a lot of people are reassessing their lives now that they have had some time to see things in a different light.
Also, wild speculation...it's almost summer and why would you (if you really didn't need to) go get a job when you could stretch things out and try to enjoy this summer when the last one was taken from you.
Can we please try that experiment for once, letting people decide exactly what they want to do with the the taxed portion of their income, in terms of where they want to allocate it? We won't change or reduce their taxes, we'll let them choose where to direct it.
(hint: military spending to name one thing, would be cut in half; the monsters in DC, the globalists and forever-war advocates that dominate both parties and have us de facto occupying Syria right now, would never allow this)
Now that would be a glorious, worthy experiment. Of course everybody - without exception - knows the outcome ahead of time.
That will almost certainly mean critical services won’t be funded. We can see this with “school choice” initiatives. When they pass those that pay for private school remove their funds from the public school coffers.
Firefighting is the same. If I’ve put in place fire prevention equipment & paid for insurance why should I fund public firefighting?
The ballot box is supposed to be that "earmarking" system. If it's not working, fix it.
The problem with directly earmarking taxes is that whoever pays more taxes gets more control over government spending. People with more money already have too much control of the government; I would rather not support policies that make it even worse.
My prediction is "the collapse of society", because past the waste and corruption there is also a pretty mind-boggling amount of expertise that goes into allocating dollars to projects, and, if you're delegating to individual voters the task of replicating that expertise, you're not going to end up with a functioning NOAA, FSIS, FDA, NERC, &c. Beyond just knowing what NERC is, you have the coordination problem of knowing which worthy agencies need prioritized funding.
This is an idea that's trendy in local government, especially among progressives; "participatory budgeting". I don't think it's going to work much better in municipal government, but you can watch and see whether the participatory budgets outperform the competently-managed ones.
The cliched libertarian trope is that all our money goes into the military; the sharper libertarian critique would be that the United States is a health and benefits management provider with an army attached.
I don't even know what a "globalist" is, by the way. Maybe you could pry that phrase a little further open for us.
Shall we fix the roads that we drive on with our own dime too? When others benefit from a taxation and government spending system so do you. If workers have more time to meaningfully chose the work they wish to partake in, managers will have less trouble with unmotivated workers etc. It isnt just about 'give me money and taxes are OK', collectivised services are an economy of scale and benefit from these communal systems.
> Shall we fix the roads that we drive on with our own dime too?
That's an interesting suggestion given how horrific US infrastructure is. If only they actually fixed the roads we drive on with the trillions of dimes they already take from us.
Let's start with the fact that roads and infrastructure haven't been getting fixed properly for the past 20 to 30 years now despite a massive government expansion in spending and overall size since ~1999. Nearing $8 trillion in total government spending and they can't give us nice infrastructure or fix basic things like roads.
California is supposedly awash in a tax revenue surplus of epic scale, and yet their roads and infrastructure are horrific, akin to developing nation conditions across Los Angeles as a matter of routine the past 10-15 years.
edit: the downvotes are amusing, given how absolutely atrocious US infrastructure is, and given there is probably nobody left on this planet that doesn't know how bad it is. Every single person reading this knows how bad it is and how poor of a job the US has done at allocating its tax revenue the past several decades. It has been discussed endlessly here on HN for a decade or more, and now I point out that fact of reality and it's unpopular; un huh, sure.
Is the infrastructure in California really atrocious? It doesn't seem so bad compared to many other countries I've visited. Some of the roads that get a lot of heavy truck traffic are a little rough. We haven't had any bridges collapse lately.
You get the downvotes when you compare California's infrastructure to the Third World.
Sure, Germany and the Netherlands have excellent infra. Do you know what's "third world" infrastructure like? It's not having potable water. It's cities of 50K people with mostly dirt roads. It's highways with potholes literally bigger than mortar craters.
Much of the US infrastructure is complete shit. Sure, it's not Somalia, but the fact we are even having the comparison is ridiculous.
We do have rolling blackout on occasion. We do have non potable water on occasion. We have completely fucked up roads and failing bridges. We don't have underground powerlines in most places.
The shoddy state of US infrastructure does not condemn the entire system of taxation into the dustbin of history. Perhaps it condemns the US's way of taxation, which I agree with.
What you fail to consider is that there are a lot of people who simply would rather sit around and do drugs and watch TV than do any job that they are qualified for. They also lack the motivation to want to acquire new skills that would allow them to get a job that is more interesting to them.
My mother was one of these people and that's what she did. She eventually used her depression which was caused by her drug addiction to get on to social security disability. She spent her entire adult life living in group homes where all the other residents were also on social security disability and when I would hang out there you could guarantee there was going to be drugs and beer everywhere as the cable TV played.
The part of West Virginia where her family was and I would spend my summers was filled with people who had a way of life of living on the "draw".
People like yourself who come from culturally functional backgrounds simply have no reference point to understand the other cultural dysfunction that people like my mother and her friends exhibited.
She overdosed on oxycontin in 2015 and from the years 1985 to then she never worked a single job or paid a single bit of taxes and she never wanted to.
I understand that I am simply spouting an anecdote here, but no matter where my mom lives she always had roommates that were just like her. There's an entire subculture of people that do this.
You have made assumptions a plenty about me but i'll stick to your anectodal point. Progressive taxation and safety nets helps people like you describe - would you rather your mother be in a group home or on the streets freezing to death? People being 'lazy' is a far superior alternative to simply abandoning people. The problem comes when people are only given material support but no mental health support etc. This support is given out in the US and UK (where I am from) but it is woefully underfunded to the point that people blame the negative effects of underfunding on the idea it's self.
I come from an extremely similar background to yours, and due to the proximity to the situation and the trauma it causes, I think people with a past like this tend to massively overestimate the pervasiveness of this behavior and how large of a problem it actually is.
For every one of these people there are many more who aren’t like this and do manage to claw their way out of poverty (or at least give their children a legitimate shot at it) with the help of social programs.
Should only those of
means be able to take time to evaluate their life and goals in the midst of a life-changing societal transition without the constant pressure of daily survival bearing down on them?
Are you willing to pay for their living expenses will they go through their existential crisis? I would be willing to do this for my kids, maybe, but not someone else's.
I think I would much rather pay for their living expenses than bail out yet another board of fat-cats who gambled on exotic financial instruments and lost. I'd much rather pay someone to live than buy more bombs to go kill someone in a country that has literally nothing to do with my daily life. I'd much rather give a kid a chance to do what they want, or a person to reevaluate their career, than to subsidize carbon fuels.
As a taxpayer I think it’s fine for anyone to make the rationale decision to take effectively free money versus getting a job. I don’t blame the individual anymore than that I blame someone for taking a legal tax deduction. They’re acting rationally within the parameters of the law.
But that doesn’t make it sound economic policy for the country as a whole. Far from it.
Oh, since when do our grandkids and great grandkids get consideration in our actions?
If they did get consideration, wouldn’t we want to reconsider a market-based economic system that destroys the natural systems they’ll be stuck with? That seems far more destructive to me than some human created currency numbers.
> my fellow citizens who didn’t have a chair when the music stopped
You're mixing up two different groups of people: those who lost their job and want a new one but can't find one, with those who just decided they don't feel like working anymore. I'm happy to invest in the former but not the latter.
You're redefining the term here. Yes, the employee might say "this is bullshit" to low pay and long hours, but the term "bullshit jobs" is meant to refer to jobs that have no tangible benefit to society. These jobs are typically mid level management type jobs that could be eliminated if not for our society's sense that managers are necessary.
Cf. Arguments about the financialization of the economy and correlation of per capita lawyers in a society with that society's impending doom.
Edit: oh, also healthcare in America. Very much healthcare in america.
If they didn't have erratic hours, provided benefits (or if we had universal healthcare) and paid a decent wage those restaurant and store jobs would at least have some meaning. Many people working at Facebook or Google making the big bucks often wonder if their work has any meaning - getting people emotionally charged so that they engage with your site doesn't ultimately have any meaning (it's even worse than that it's leading to societal trouble). But it pays really well so they keep at it.
I think those latter people are just as capable of being my customers and providing an environment where _I_ can invent/produce something of note.
Why should I care whether they toiled miserably in order to be able to buy my thing? Maybe it would be better if they were leisurely, the better to go and search out the best things, allowing me to devote my efforts to MAKING said best things. Let 'em be thing-mavens, sipping lattes. They can compete over who is the coolest thing-maven.
If they’re living off their own resources, enjoying their life, while I work to make something they want to buy, more power to them, that’s awesome.
If they’re living off the taxpayer dime, enjoying their life, while I work to make something for them to buy, then turn around and, as the taxpayer, give them the money to buy my thing, that’s substantially less awesome.
"living off their own resources" generally equals, for many people: "living in active exploitation in a ruthless work environment destroying their mental and physical health, because they literally need money to live, like anyone"
Whereas:
"living off the taxpayer dime" generally equals, for many people: "living free to do whatever they wish, for the most part" [and you find this absolutely abhorrent]
If it's working out that well for me that I'm thousands, millions of times richer than them (since there's a LOT of them and they all want to buy my things) I'm still getting a lot more from them than they're getting from me. Let 'em have some of it back, I will still be obscenely wealthy off exploiting their inability to produce on their own.
Still seems like you're not quite grasping how this works.
You’re right; I’m not quite seeing how your proposal works mathematically. Perhaps you could illustrate it with a simple but closed-loop mathematical model to help drive your point home?
It is completely possible to tax the rich enough to fund social programs, but allow the rich to live exactly the same life they'd otherwise live. They'll just have less money to pass on to their descendants, which is fine by me. Multi-generational wealth transfer is inequitable and anti-progress.
I'm not going to dig up concrete numbers at this point, but it's not difficult to take a look at what the top wealth-holders and income-earners have, and what the people at the bottom need, and reconcile the two.
I’m mixing up nobody. They all get my support, as I believe in my fellow citizens and their desire to feel useful in this world. Sure, some people will abuse the system, but the benefits of treating everyone equally outweigh the costs.
When you means test, you require more bureaucracy while less effectively covering the people who need support.
Frankly I find it perfectly acceptable that if someone is making $X from their job, and the government says the minimum amount to survive per month is $Y and is going to pay you that amount, and $Y > $X, then why would I return to work if my job is paying me starvation wages?
The other thing is this is not new in the US, COVID-19 just dragged it into sharp focus. It is a standard employment practice at Walmart to walk their staff through signing up for food stamps - which they qualify for because Walmart doesn't pay them a living wage.
Walmart costs you the tax payer more money every time they open a store.
I don't understand this line of reasoning. If someone lacks the skills to produce enough value to earn a living wage then the taxpayer is going to be paying for them regardless. At least with the job that cost is partially offset by productive employment and there is an opportunity to develop skills so that they can earn a living wage in the future.
They're only not earning enough to make a living wage because companies which are making billions of dollars a year in profit can get away with not being forced to pay a living wage.
Yes. How is this even a question? You don't get to low-ball your employees because of their age or circumstance. If they work the hours, they get paid a living wage for those hours.
The time out from that high schoolers life is not valueless. If the employer wants to swear up and down the work is "unskilled" then they can pay everyone the unskilled labor rate which should still be a living wage.
The high schooler working part time isn't doing so because it's fun, they're doing it most likely because their family is not wealthy and it's helping put food on the table or pay bills or buy textbooks.
> You don't get to low-ball your employees because of their age or circumstance.
Correct. You pay your employees according to the value they produce. And if they don't yet have the skills to produce much value, then either you can't pay them much, or you can't hire them at all. Which is better?
I specifically chose high schoolers because they usually aren't trying to fully support themselves financially, and so most living wage arguments don't apply.
It's still amazing that folks here in the USA somehow justify that paying starvation wages or not raising the minimum wage for 20 years is somehow good. If a company can't pay a minimum amount for someone to live, then that job shouldn't exist. This has been raised in parts of the country, and in countries overseas and the economy hasn't collapsed.
If you are posting one single dollar of profit as a business owner, while employing someone on so little pay they qualify for income based government assistance, then you are stealing from me, the tax payer.
Because that means you can afford to pay that employee more, and instead are pocketing the difference.
In fact, if any employee is on an income-based form of government assistance to provide them a living wage, and any other employee is being paid more then that, then you are still stealing from me because the business is fully capable of supporting these people (who are apparently necessary because they are being employed) and instead using my money to subsidize yourself.
If a job produces so little value that it doesn't justify a living wage, then I don't want anyone doing it because we've just established that even the experience or expertise which might develop from it is not worth anything. My taxes are to support my fellow citizens, not keep worthless jobs and worthless businesses in existence.
This perspective seems to presuppose that people who don’t work for corporations aren’t doing any useful work for society. In fact, people who don’t have jobs are engaged in all kinds of productive work that keeps society moving. This includes:
- childcare
- eldercare
- homemaking (cooking, cleaning)
- educating (homeschooling)
- creating art
- open source coding
- volunteering
Etc.
We should absolutely invest in these people. Their work goes unpaid because it is not immediately profitable, but make no mistake it is absolutely necessary to society.
Google, Facebook and Twitter could disappear tomorrow and there really wouldn't be much loss to society, in fact we'd likely benefit from their disappearance. And yet they rake in huge amounts of $$ while people engaged in things you mention like eldercare and childcare make a pittance.
If Google disappeared tomorrow, I would think the biggest immediate effect would be people scrambling to figure out what to do about their lost email. The other two probably aren't very important, but that would hurt; Google has some pretty dangerous leverage.
Borrowing to build a bridge is economically rational. Borrowing to pay someone who could work not to isn’t. That’s not an investment, it’s just debt. (Debt that has to be paid back, usually with another person's labor.)
If people want these programs, do the hard work and start championing for large tax increases.
Property tax, sales tax, car tabs, usage fees, gas tax, sin taxes, etc. These all add up, and depending on your lifestyle can easily go well above 50% in California. (The highest federal + California tax rate is already around 50%.)
My wife and I are high income earners in the state of California. Looking at our 2019 tax returns, I see our effective tax rate was 29%. Property taxes were 4.5%. So, together a smidge below 34%.
To get to a 50% tax burden, the remaining 66% of our income would have been taxed at a ~24% rate. Of course that didn't happen since we spent on things like our 401(k) and food (both of which are not taxed), plus our cash savings.
I stand by my statement that any high-income earner paying 50%+ in taxes needs to get a better accountant.
It’s called unemployment insurance. The people who collect it have (for the most part, excepting gig workers) paid into it. It’s not “other taxpayers money” it’s their taxpayer money.
Who says it's other tax payers' money? We all go through periods in our lives when we pay into the system and periods when we draw on it. As a child a large amount of money was paid to educate you, to provide you with vaccinations, to try to provide some kind of safety net for you, however dysfunctional it often is. At the end of your life, you will be paid a pension that other people pay into.
If people go from exploitative, miserable jobs to better paying jobs, they are going to pay more taxes. Effectively the later them is paying for the earlier them. An actuary could probably estimate how much support is likely to produce a positive value. Perhaps our society should be giving everyone a sabbatical year ever decade or something like that?
This is also why doing it as a public insurance system is better than via private savings. Private savings can only go one direction in term and are subject to large deviations, the same way health insurance costs are.
Government spending doesn't depend on taxes; it depends on the Fed printing (actually, just changing numbers in spreadsheets). That's why we've been able to fight half a dozen stupid costly wars in less than a generation without raising taxes. It will be a win for humanity if we find better uses for our reserve currency status than fighting stupid wars.
I agree. Sadly I think some fraction of these people, maybe many tens of thousands, will end up homeless or opting for “van life” as a result of their reorientation to risk.
For all the talk of "lazy Europeans", I hope this has opened some Americans eyes. It's insane to me we don't have the equivalent of their summer "holiday". We work hard enough the rest of the year, taking a break should be a badge of honor, not shame.
Some/many Europeans pretty much take the month of August off to go on holiday. That's in addition to other holidays/time off throughout the year. People in many jobs here in the U.S. are lucky to get 2 weeks off total per year.
This was the most surprising thing to me when I started working with Europe. I had a meeting with a company in Germany at the end of July a few years ago and all involved said they would be unavailable until September.
Most Europeans take 3 weeks off in the summer (sometimes 4), typically July or August. Companies run very slow for a couple of months, or even close down in August.
As a European I am not keen on the European model. Everything just stops. You can't get anything done. We should have SLA's for critical and/or important services. For example one time I wanted to change the use of a commercial premises and was told to come back in 6 months because the person who takes care of that was on extended leave. IMO this is inexcusable and reflects poorly on Europeans and their values. This attitude problem extends way beyond holidays too. It's a miracle if you find a customer service rep that wants to help you solve your problem. The amount of times I've been fobbed off to go talk to someone else when calling customer support is worrying. As labour protections are so strong no one loses their job over non-performance. We're only hurting ourselves in the long run. This decay is hard to turn around. You need to holiday from something but based on my experience many people are not taking their jobs and role in society seriously enough to earn/need a break at all. I think there is a middle ground we should strive for.
I absolutely agree with the examples you mention, but I have to believe there's a middle ground! The American system of work-till-you-can't-anymore is just as (if not more) awful, only in different ways.
If someone wants to take 6 months off, someone else needs to be trained to handle their responsibilities during that period. Companies should be incentivized (somehow!) to provide good customer service; providing bad service should be more expensive for them than providing good service.
I'd pick Europe over US to live in every day of the week but there is no denying most of the comforts I have in life originated in the US. I even renounced my US citizenship so it's not hypothetical for me.
You have it all backwards. Not working if you can avoid it isn't lazy but completely sensical. Holiday and leisure time shouldn't even be considered a break from work - instead working should be considered a break from living ...
Having said that I believe work and life can go hand in hand very healthily. The reality though is different. Work is for most people just financially compensated abuse.
That's exactly it. If you don't have to work, you shouldn't. The idea that hard work and endless toil is some sort of virtue that gives life meaning and is necessary for a strong, moral character... is just puritanical garbage.
The long-term goal of humanity should be an end to scarcity, and automation of everything possible. No one should have to work to live comfortably, though people should be able to choose to work if they enjoy it.
It's humans behaving exactly as expected when given the choice of barely enough money for survival (unemployment benefit) vs not enough money for survival (pay too low to afford daycare or rent). If anyone out there is having trouble getting gig workers or low-level employees and wants to blame very low unemployment benefits and a one-time stimulus check, I suggest offering more money instead.
"I suggest offering more money instead"
To an extent that's true, but this type of sentiment is airily tossed around by people who've never had to make payroll. There's often little or even no profit to be made at the rate offered - should the business increase their offer to the point where a loss is guaranteed?
> To an extent that's true, but this type of sentiment is airily tossed around by people who've never had to make payroll. There's often little or even no profit to be made at the rate offered - should the business increase their offer to the point where a loss is guaranteed?
Maybe they shouldn’t be in business.
Imho, these are effectively zombie businesses, and it would probably be better for the overall market efficiency (esp. wrt labor and asset allocation) if they closed.
I suspected that would be the response. If you close down all the businesses that can't survive paying more for unskilled or semi-skilled labour, what do all the unskilled and semi-skilled people do? Where do they get the opportunity to upskill?
> If you close down all the businesses that can't survive paying more for unskilled or semi-skilled labour, what do all the unskilled and semi-skilled people do?
They get deployed in other commercial activities that can make more efficient use of their time, and hence, pay them more.
Very good in theory. Any suggestions on how to get from here to there in the real world, without massive disruption to people's real lives?
The consequences of massively & rapidly increasing the number of unemployed doesn't seem to be covered in the libertarian literature. History books do cover this though.
It's not strange at all, you just didn't understand the point. Libertarian theory has all kinds of bizarre reasoning about human nature, which doesn't translate into the real world. History, on the other hand, does provide a guide to how large numbers of actual people have behaved in the past, when cast on to the scrap heap of life. Human nature doesn't change rapidly.
I'm not taking your bait (never raise minimum wage), but it's important to be aware that, at the margin, increasing the cost of any business input will result in business attempting to substitute that input to the extent possible - i.e. fewer jobs.
Keeping zombie businesses alive for the sake of steady employment is one of the reasons that Japan has been stagnant for many years. A healthy economy needs creative destruction.
As someone who has seen this firsthand while living in Japan, I agree with your statement.
What is more, one of the things that I love about the US is that we seem to be fairly good at deconstructing and reconstructing relatively quickly and efficiently. Our system isn’t perfect (tends to favor the capital class and stick it to labor more than I would prefer), but I personally think it’s much better than what Japan has done.
But if you don't close those businesses, you get people who are one financial emergency away from bankruptcy. You get people who have no chance of bettering their lives. I do not have a solution, but that does not mean that I cannot call out what I see as the problem.
Reality is not the enemy here, hard life is and I'd like to think that we're all in this together & we'll help each other out. :-) I'm hoping we're becoming an advanced enough society that we'll be able to at least provide food, shelter and basic health insurance for everyone free of charge. But enough dreaming for today...
At that point the business should either pivot to a new strategy, or liquidate in an orderly fashion and return any remaining capital to investors. If your business is on an unsustainable path then there's no point in continuing.
If the only way for the business to be profitable is to pay less than a living wage, then that business is in fact _not_ profitable. I'd rather subsidize people that are between jobs rather than business owners (because I'd still have to subsidize food stamps for their employees). If the company cannot make money without exploiting workers, maybe it shouldn't exist? And then I'll happily pay the (now ex-) owner's unemployment benefit until they land a job.
I’ve found that most people seek fulfillment by being useful. Being useful means that you can see how your labor benefits the people in your community. Many jobs that exist today don’t feel useful because there are too many layers of abstraction between the labor and the societal benefit. Many people even feel that their labor is a net negative for society. Unemployment benefits may provide a living but I don’t think it’s viable for your soul long term because you know you’re not being useful. However, it’s better than working hard for no good reason and getting paid the same, or less.
If our society is too efficient, we run out of ways to give people meaning.
Retail workers are treated incredibly poorly, and the American customer frequently uses the interaction to establish the social class hierarchy for themselves.
This group was also ongoingly and repeatedly thrown to the wolves in COVID responses, being most exposed to the possibility of dying from the virus.
It is no surprise that the places which can't find workers are restaurants and retail outlets.
Perhaps spend a few years cleaning toilets for a living and report back to us on how fulfilling it is to benefit people in your community. The very same people who will look down on you as a total looser for doing such a shitty job. Perhaps that will change your mind?
Obvious that a lot of folks in the tech community did not grow up a poor Appalachian boy.
Welfare is a plague.
I know so many people who did not work because it would cut into their welfare.
I know so many homes that lived lies (separate fake addresses, never marrying) so they could get welfare.
I've seen welfare programs (wic, food stamps) exchanged for cash..
I've seen emergency rooms abused with medical cards (something most yuppies do not even know exists --- most do not seem to know most poor people already get free healthcare).
It's a sad thing. Reality on the privileged persons terms, I guess.
So using your logic, we should also stop having CEO’s because some of them enrich themselves instead of doing their job? And stop having politicians because some of them are corrupt and take bribes? And get rid of all police because some cops are dangerous and corrupt? Where do we stop? Or do you think that only rich people deserve to cheat and misuse the power they have? Why are you selecting only the most desperate and low status/underprivileged people for punishment? Yes some people, rich and poor, take advantage. That doesn’t mean that all should pay for it.
Are you saying since other people do bad things we shouldnt aim to design systems that put productive people first?
At least in these other, and we agree equally scummy cases, theres some run-off benefit we can assume given the higher levels of profit and/or related risk.
"...get rid of all police because some cops are dangerous and corrupt" because I said I've seen welfare do more harm than good? Geez, makes total sense.
If you can break even on 50 to 80% salary in government benefits, and you work a low-skilled job that you can easily drop and find a new one, why would you go back to work? Let’s end extended unemployment and see if the desires of workers have changed.
I mean, if we're already subsidizing low wage jobs with social programs like food stamps, why not just make the extra UE benefits permanent? It'll rob those companies of productive labor they were paying substantially less for and force them to either do without or pay more.
But how would the government afford to pay all these benefits indefinitely? Unless the new normal will be to just keep taking out more debt in perpetuity.
That is basically the plan, yes. "Modern Monetary Theory" is that USD-denominated debt is free because you can print the dollars to pay it back at any time.
Govt. debt has been used to pay for high military spending etc. It has happened before many times and can happen again. A better way to solve these problems could be to not just throw money at them but build preventative systems.
The new normal should be a combination of moderate deficit spending (nothing like the COVID stimulus packages - those are special crisis spending level events) and significant tax increases for the wealthy (think 1950 level), plus wealth taxes for the ultra-wealthy.
I would love something like this. Honestly I think it's the right answer to minimum wage, the whole gig economy independent contractor thing, and if we can just get healthcare removed from the employer/employee relationship we can get a real situation where the only people working these jobs "want" to work them. As in these jobs give enough X where they consider it worth it rather than they need to work to live.
This is just a consequence of the semi-free job market the US has. Indeed people would return to work if their benefits were taken but would this be a good thing? Should people be forced to work like this? These jobs will soon be automated anyway. The key question is how we can share the benefits of automation widely such that we don't have giant swathes of penniless workless population.
People have been saying automation will make a bunch a people unemployed "soon" for how long now? 10 years? Yet we still reached record low unemployment pre-COVID.
Once automation reaches the level that you describe and there's a labor surplus, then we'll easily have enough resources to support UBI. But don't kid yourself, we're far from that point.
It's at least worth considering the possibility that, if potential workers are really choosing to stay home for as long as they can rather than go back to these specific high-stress, low-pay and low-benefit jobs, perhaps the temporary expansion in unemployment benefits is not the "problem" we should be taking a closer look at.
Yup. Look at the forces at work. You've got stimmy money, eviction moratoriums, and lots of crappy min-wage and better but still only a few steps from entry level jobs that need workers. All these things are incentivizing people in different directions. Some people are gonna go back to work. Some aren't. Some are gonna reduce work. Some jobs are gonna pay higher. Some are gonna get automated away. We all know where the dust is gonna settle. This is all just hand wringing over proportions.
But I don't own a business employing people near minimum wage so I guess that's easy for me to say.
The balance of power between labor and capital is shifting a little bit back towards labor, and this is one aspect of that. It’s going to mean higher wages and slightly lower profit margins. A good thing, in my view. I’ve noticed an uptick in labor organizing, minimum wage referendums, and so on.
Also we’re finally giving a little bit of due to the house and home portion of a person’s work- the work of maintaining a house and caring for children. In other words some of those people now are probably staying home to care for kids.
Now hacker news being a bastion of people who want to be capital C capitalists, it’s natural the prevailing sentiment favors capital. I therefore expect that my expression of support for labor to garner me some harsh words.
But you can’t argue against the fact that having some kind of government assistance to fall back on makes it much easier to negotiate a higher salary, and will result in higher wages.
2) interest rates, which are set by the central bank. The "power" of labor has nothing to do with it.
For 1) this is about monopolies and we are seeing more concentration of market power, not less.
For 2) yes, interest rates are in a secular low period which does give rise to secularly low profit margins. That does not mean that workers earn more, it means investment increases so that marginal return projects are funded and more workers are hired.
* The "balance of power" between labor and capital.
First, there is no battle between labor and capital, the battle is between non-management labor and management labor.
Capital doesn't care and isn't affected by these disputes, which are struggles of the share of the pie given to management versus non-supervisory workers. When you buy a share of stock in company X, you just price the cashflow relative to what you can get from the central bank or another company, including foreign companies. You price it so that the risk adjusted returns are the same in all cases. So companies that earn fewer profits are just priced down to be less valuable and capital is reallocated elsewhere. So for capital, every return is the same.
The real battle is between managers (e.g. CEOs on down to branch managers) and non-supervisory labor.
In that battle, management has a lot of tricks up its sleeves: outsourcing to foreign countries, outsourcing to contract workers, eliminating demand for labor via automation. Non-supervisory workers have at their disposal the power of unionization and trying to get lawmakers to outlaw some of management's techniques.
It's not clear at all who wins and who loses, and this may shake out differently in different industries. There is no global change where one side wins and the other side loses. While most want executive pay reduced -- CEO pay seems especially obscene, so far management has proven itself to be effective at taking a bigger share of the labor bucks. Investors see low returns generally in an low IR environment, and that has been the case for some time, even to the point of many pension funds going bankrupt as the returns just aren't what they had predicted. Yet executives keep seeking and obtaining windfalls.
For example, in the 70s, it was a grim time to hire workers since wages kept rising and unions were powerful. But then again, inflation was high, so those wages were not rising in real terms. Thus labor thought it had "won" something when in reality there was stagnation in living standards.
It used to be that 70% of the stock market was owned by retirement funds, before we began accepting massive capital inflows from the foreign sector.
I guarantee you very few people who buy these portfolios even know the names of the businesses they own. There is nothing about "caring" involved in this equation. Nor is there anything about "loyalty". It's not a good idea to anthropomorphize capital markets, not if you are trying to understand them. People at a horse track placing bets on which horse is the fastest are not loyal to the horses, nor do they expect the horses to be loyal to them. If a horse doesn't run as fast, they just change the odds on that horse. Really, I think a poor understanding of both capital markets and banking is the main reason a lot of well-intentioned reforms end up being ineffective or backfiring. For example, you'd get a lot farther at promoting higher wages if you ban capital inflows than with unionization efforts.
I'm not trying to humanize Capital. There are plenty stock market analyses that matter-of-fact-ly complain about wages and demand more buybacks/dividends. And the profit have also been increasing more than wages or reinvestments.
To the extent the "new inequality" is these institutional investors, well it's "first time as tragedy, second time as farce" all over again.
That's a neat graph. I would also like to see some measure of foreign assets with US owners to put that in perspective. "Foreigners" I also want to break down; that label makes it sound like all the rich individuals families went abroad (!), but I assume the foreign investors are institutional too?
> But you can’t argue against the fact that having some kind of government assistance to fall back on makes it much easier to negotiate a higher salary, and will result in higher wages.
It also makes it much easier to start a business. If anyone should be cheering it on it’s entrepreneurs and VCs.
The article doesn't say it of course, but the big question is what happens when the government keeps the dole, at least past midterm elections?
There's tremendous automation happening right now, and it'll accelerate, to the point where if the government waits 2 years, a good portion of those jobs likely won't exist, and the government will never be able to get rid of the dole.
It's kind of like quantitative easing infinity, except for the poors.
I say things like "California is not a market-based economy right now"
instead of saying what non-market-based systems are called. It goes over better with Americans who are more universally triggered by certain words, instead of their definitions.
second example I've had surprising luck with over the past several years is that I tell people that big pharma doesn't want them to know that our body can build immunity by being exposed to weakened and dead versions of viruses. They're like "I knew it, natural remedies all along!", they are just allergic to the word vaccine and not the concept.
UBI doesn't say anything directly about where the money comes from. It's whatever plan you want it to be. (Or more charitably, a family of plans with a common feature.)
You can get any redistribution you like depending on how the offsetting taxes work (if any).
The basic tenet is the "universal basic income" part, the source of funding is not as clear cut. It could be funded by taxes, it could be funded by inflation, it could be funded by something else. Except funding it by inflation long term would probably not be too healthy for the economy as a whole.
"inflationary" is a very complicated concept. It definitely isn't caused by increases in a "quantity of money", as the latter concept doesn't really hold up to scrutiny in the first place.
Many libertarians (Milton Friedman among them) support a concept like this. It isn't a left/right thing. In fact, many liberals staunchly oppose UBI-type initiatives.
I'm a libertarian who supports UBI. Or I did until I realized my conception of it was different from most supporters.
Libertarians who support UBI think of it as replacing the other stuff. This is a wildly unpopular opinion on the left, who want everything else (welfare, college, childcare, healthcare, retirement) and UBI. Any libertarian non-corporatist supporter of UBI would not only have to win against his better-funded corporatist opponents, but would need to win with a "Let's get rid of social security for this other thing" pitch. You're more likely to find Bigfoot riding a unicorn.
> Libertarians who support UBI think of it as replacing the other stuff. This is a wildly unpopular opinion on the left
AFAICT, as a left-wing UBI supporter who sees it as replacing lots of other stuff, that depends which other stuff and how you plan on replacing it; phased (such as by counting a UBI introduced at a low rate and increased over time) displacement of means-tested welfare programs is not all unpopular on the left. Displacing means-tested healthcare (Medicaid/CHIP) has more mixed reactions (healthcare policy in general is contentious within the left). Displacing earned benefits (Medicare, Social Security, Unemployment insurance) is even more likely to be rejected (though in this case the general controversy over healthcare works in your favor with Medicare, as its probably the least universally toxic of these on the left.)
Displacing minimum wage with it also isn't too popular on the left.
Where you run into problems with some stuff that isn’t problematic on its own is when you don’t have a plan for a robust, mature UBI but you want a big-bang cold-turkey replacement of programs that what you do propose for UBI can’t come close to dollar-for-dollar substituting for for current recipients.
Maybe, but that's comparing real market dollars vs. government spending dollars. When you're not spending 20k on a hammer and 30k on a toilet seat, prices go down. Half of the people will waste their UBI money, yes, but the government is going to waste half the dollars they spend.
Ask your friends if they want to send a check to Bill Gates every month. You'll find that most people on the left don't actually believe in UBI. It's a great talking point because a politician says it and people imagine whatever they want (yours was a great breakdown of potential disagreement points). But the people around you are imagining very different things.
> Libertarians who support UBI think of it as replacing the other stuff. This is a wildly unpopular opinion on the left, who want everything else (welfare, college, childcare, healthcare, retirement) and UBI.
Really? I've never heard this before, and I'm pretty far to the left. Replacing all those other things with UBI sounds like a no-brainer. Why administer N different welfare systems when you can administer one? But I think the larger issue is that "the left" does not at all agree that UBI is a good thing, regardless of implementation.
I think objections to replacing (specifically) Social Security are political in nature, not policy-based. In that anyone (left or right) proposing to eliminate Social Security -- even if it's replaced by something better and more comprehensive -- would get voted out next election cycle. It's a very touchy subject, I think.
One exception I will make is healthcare, though: I don't think we should keep our current healthcare system and just expect that, instead of getting insurance through their employers, everyone is expected to pay for it individually with their UBI check. We need a major overhaul that gets rid of the private insurance system (or at least makes it the "not really needed, but rich people can get it if they want" type of thing) and removes all of the unnecessary graft in medical billing. (I get that this is also a touchy subject, so I certainly accept that M4A or whatever is not the One True System and that there are other options that might work just as well. But our current system is absolute garbage.)
You sound exactly like me before I started talking to people about the specifics. I've lost friends making that N different welfare systems argument.
Left and right are relative terms. If everyone else moves left of you, you're on the right. I think this has happened to you but you're in denial over it.
If you consider yourself a classical liberal then you're firmly on the right. That's where we are.
The United States is already at the point where a senatorial candidate campaigned on ‘vote for me and you’ll get that $2,000 check’. You can Google Raphael Warnock’s exact phrasing on the campaign ad but that was basically the pitch in the GA runoffs.
Isn’t this the classic argument about how Athenian democracy dies? Either a majority oppresses a minority or the people start voting for excesses until the society goes bankrupt
We already have the dole it's known as food stamps, wic, ssi, government subsidies, etc.
Instead of padding the pockets of Walmart or McDonald's by supplementing their labor costs, why don't we give the money straight to the people. Then force these companies to pay the true cost of their discounted labor.
It's also wildly unpopular amongst liberal groups in America who think people can't be trusted to be given cash; also disincentivizes the need for public workers to allocate the resources "properly," etc. Conservatives fear a "welfare state."
It's a tried and true bi-partisan way to make sure the poor are worse off and feeling that we need to coddle them.
I believe it's a deeper cultural trait that goes beyond the current left/right extreme divide. It also doesn't help that at its best, it brings notable achievement in many spheres, but it does not assign value to the general welfare of people.
Well we’ve had QE and tax cuts for the rich for a good long while now, pendulum swinging the other way feels warranted.
You know what’s crazy? The solution is very simple. Pay workers more. The minimum wage is not a living wage. Heavily fine companies that attempt to run models that cannot support paying a living wage. The uninformed think that this will stop innovation, but it will only slow it, and that’s OK. Innovation is fueled by need or greed, and the VCs who complain about mandated high wages will indeed be greedy enough to fund the next batch of companies, because even if your returns go from 1000x to 100x (when you win), the returns still beat a lot of other investment vehicles.
> No, raising the minimum wage subsidizes innovation. It's better for the people and the technology.
I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses".
More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing.
> The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
I don't understand the point here on illegal work -- could you lay out the scenario?
I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit.
[EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things:
- which businesses are really "essential"
- the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
- The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean").
Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.
> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.
Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it.
If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.
I should have been more clear on that, I should have written even more persistent inflation (than normal). I see UBI as just a add-more-inflation button.
Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.
In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.
Thanks! Lyn Alden's a great source of information -- I'm familiar with her work.
That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context.
I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?
I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.
> I don't understand the point here on illegal work -- could you lay out the scenario?
UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
(I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
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The stuff below the [edit] sounds great to me; since we agree on that I am wondering what about UBI you don't like?
> demand creates jobs
Yes! And nothing creates demand like a UBI since:
> Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods)
> The fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
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> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.
Happy to tackle this
> The best people get at is "competition", but very few "free" markets are as competitive as people think they are.
Agreed
> Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends)
Sure!
> and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.
Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.
Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some...
> I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.
Well I don't think that's quite true (workers are very expensive -- reforming your business processes could take like $100/month for some SaaS tool that massively saves everyone time or improves some process), but what I was failing to get across is that people get more shots at innovation (and entrepreneurship) with higher worker pay.
There's another thing here -- paying workers more also leads to more income for the businesses that workers frequent, but that's a mess of hypotheticals to go down.
> UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
> (I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
Illegal jobs which skirt the minimum wage laws aren't my focus. I actually think of those as fine as an on-ramp for recent immigrants who may be in an odd spot where applications haven't cleared but they need cash to purchase stuff to eat. Most normal citizens are not doing this unless you're in a society with lots of marginal fraudulent activity (some EU member states), but those countries have their own problems.
Agreed on preferring harder to evade taxes.
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> UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
Right I get that -- but why doesn't this lead to a stagnant minimum wage? It's been hard enough raising the minimum wage with inflation and/or cost of living (again, it's supposed to be a "living" wage), and that's going to be a lot harder with UBI around. In my mind this starts with making the minimum wage a living wage, then considering whether UBI is still necessary (ex. when too many jobs have been automated).
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> I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
Disagree, unless the benefits of UBI are extraordinarily well designed (percentage of some moving metric with inflation adjustment), then it will be much like the minimum wage is right now, and lag inflation and other changes. Businesses will adapt to those costs (and raise their prices) and UBI will fall behind just like minimum wage does now.
> The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
> Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Hmnnn I think it's more a "maybe". Adding the fixed amount will not make it easy to restore the distribution, and I'm not guaranteeing it will be one for one, but some of that different will definitely slip. There is a realized % gain of wages that varies for each household, but businesses don't need to know the exact % to scale prices, they'll rise naturally. Now whether it gets to exact 1.2 (given that the household has a realized scale factor of 1.2%) is up for debate, but I'm arguing that it will not be 1 -- the pernicious thing is that it may even g...
Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich. If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 60% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.
> Quantitative easing prevents the economy from completely shutting down, which helps everyone, not just the rich.
Could you describe "the economy completely shutting down"? Certain parts would absolutely shut shut down and be adversely affected, but I'm not convinced of the doomsday scenario here. Yes, lots of restaurants and services would close down (as they have, but in greater numbers), but this is the cost of not being prudent, buying insurance (if it was possible, and it certain was after SARS and MERS, etc), and saving for a rainy day. The economy will start up again, because there is always money to be made, and people are motivated to make that money.
The problem is that it's "helping" everyone, but disproportionately helping the rich, with no return on investment in the government. The highest ROI (in GDP terms) on investment by government usually comes from infrastructure last I checked (there's also been a really weird perturbation of what "infrastructure" means by the Biden administration), so propping up balance sheets for companies that should have saved for a rainy day is absurd.
Let them fire who they need to fire, then help those citizens directly, via the government programs that are literally built to do just that. 2T is enough to pay A LOT of money out to all citizens (again, some % of the full/part-time work force, which is some % of the total population of ~350M), and definitely tide them over for a year. Strategic/truly essential businesses (let's say hospitals, airlines, freight, etc) are given extra help, and that's that. I am a layman to be fair, so of course it's not this simple but I sure would have been more behind 2T given straight to people who became unemployed as a result, and letting that money trickle up back into the economy.
> If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 85% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.
This is wrong on it's face, and I think it's due to intentional misinformation by political actors. That first 2T stimulus (a lot of press was made about that number, it was almost fetishized) contained something like ~700B to households/household-adjacent programs, but what people overlooked was that the ~500B that went to businesses was leveraged up to 6x[0]:
> “We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans.
When you take into account that these loans are going to be given at sweetheart rates, and maybe may not even be repaid (picking good lessees is hard), the popularly cited stat that "more money was allocated to households than businesses" is absolute bullshit. This is absolutely stimulus for the rich, who didn't need it to begin with, and arguably companies should have been just as prudent as we expect people to be.
I'm a layman too, so to be honest, it might not be productive for us to argue about these things. If the government issues $2 trillion dollars in bonds to fund the stimulus, that dries up the liquidity for businesses. Businesses that otherwise would have been fine weathering the pandemic with a private loan may be unable to receive one. As a result, they would have to furlough or lay off more employees, which further reduces lender confidence and sends us into a spiral that results in another Great Depression. Obviously, this is largely speculative, but my point is that in this case, QE went hand in hand with the stimulus.
> what people overlooked was that the ~500B that went to businesses was leveraged up to 6x
That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
> I'm a layman too, so to be honest, it might not be productive for us to argue about these things. If the government issues $2 trillion dollars in bonds to fund the stimulus, that dries up the liquidity for businesses. Businesses that otherwise would have been fine weathering the pandemic with a private loan may be unable to receive one. As a result, they would have to furlough or lay off more employees, which further reduces lender confidence and sends us into a spiral that results in another Great Depression. Obviously, this is largely speculative, but my point is that in this case, QE went hand in hand with the stimulus.
Point taken, maybe this is just 2 blind mice. I understand this argument, and agree with it on some level -- steadying the ship so people don't run on the banks is important, but it's just not that simple. Some sectors of the economy imploded and some didn't -- some grew as a result. Some companies needed the help, some arguably did not and should not have had the help extended, the indiscriminate use of this money is putting us on the road to zombie companies. The US has been doing stealth QE since 2008 with no end in sight -- we can't build real financial stability this way.
As an aside, lender confidence is still shaken, credit has not grown and is in decline in the last 1Y period[0]. Lenders aren't buying the V shaped recovery narrative. If I think of this as purely a gambit to slow the process down (i.e. give businesses more time to absorb the shock) then fine, but if the goal is to stimulate the economy policies that enrich a segment of the population that does not spend isn't all that effective. We need worker wage growth.
> That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
My point on this was the messaging, that this point was overlooked, regardless of whether it was used or not. The Fed played the situation masterfully and essentially bluffed the market into buying the corporate bonds (because they believed in the backstop), but it's this backstop-at-any-cost that is a problem in my mind.
The main street lending and PPP programs are not what I'm referring to (though there was some graft there from larger corporations). As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
> A related initiative by the Fed was the Primary Market Corporate Credit Facility (PMCCF). Between the two initiatives, the Fed purchased $750 billion in bonds
Also, the PPPLF[2] is a bit of an issue in my mind because of this:
> The PPPLF extends term credit to financial institutions making PPP loans, accepting the PPP loans as collateral. The liquidity provided by the PPPLF helps eligible financial institutions fund additional PPP loans. The PPPLF was established under the Board's 13(3) authority and the extension from March 31 to June 30, 2021, was approved by the Secretary of the Treasury.
So their goal here is to make more money available to financial institutions to make loans but with credit in decline, who is getting these loans? Businesses who arguably do not need them and/or people with cozy access to banks.
> Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
Some points on how I see this:
- Student loans are very very hard to discharge, usually persisting through bankruptcy
- The narrative is usually the opposite —- companies are to be protected at all times whereas students should have just studied something else or went to community college instead. Companies are not in the same financial position as random students but the negligence should weigh heavier on a large corporation.
>The US has been doing stealth QE since 2008 with no end in sight -- we can't build real financial stability this way.
I agree, but in my view, the Federal Reserve is about the only institution doing their job to stabilize the economy. The problem is they're only meant to provide short term fixes, much like an ER doctor. Meanwhile, Congress primarily prioritizes bribing their voting base: Republicans through unnecessary tax cuts and Democrats through unnecessary handouts and pork spending. I agree with extending unemployment benefits during a pandemic, but it's ridiculous for single people making $75k to get a handout that comes straight from government debt.
>As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
> I agree, but in my view, the Federal Reserve is about the only institution doing their job to stabilize the economy. The problem is they're only meant to provide short term fixes, much like an ER doctor. Meanwhile, Congress primarily prioritizes bribing their voting base: Republicans through unnecessary tax cuts and Democrats through unnecessary handouts and pork spending. I agree with extending unemployment benefits during a pandemic, but it's ridiculous for single people making $75k to get a handout that comes straight from government debt.
I can definitely agree with this, the means test was a bit wonky.
> Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
Ahh you're definitely right -- thanks for pointing this out again, I stand corrected.
There is no labor shortage because of all the debt. Idiots do not realize that the "stimulus checks" are paid by taxpayers in the coming years. Plus, with companies not being able to hire workers shortages of goods is coming. This is a perfect storm coming. The great depression is coming again with vengeance unless people stop the government spending on BS.
Of course, maybe something good will come of this... then again people are giving up their freedoms and rights to be safe from a virus that has a 0.000009 chance of killing them
What the “don’t worry about spending” and “we can just print more money” folks don’t realize is there is a direct line between these policies and wealth inequality.
And yet, so many people seem to both support an easy money environment forever, but also oppose rising wealth inequality without realizing they are intrinsically linked.
No, they don’t. Money printed and given to poor people is immediately spent and trickles up to the ownership class. Inflation in the US tends to push up prices of limited assets, like real estate, rent, and investments faster than wages.
The only way to increase welfare programs without increasing wealth inequality is to pay for your spending with taxation.
> Money printed and given to poor people is immediately spent and trickles up to the ownership class.
For sure. It's first spent by poor people on things that poor people need (maybe several times over as it works its way through the economy and is meanwhile taxed), rather than being given directly to rich people.
We could do it and simultaneously lift up the bottom & middle while taxing the very top to bring back at least a little balance.
That's why the proposed Infra and other bills are written to be paid for mostly with very high earner taxes and savings like beefing up IRS enforcement.
My concern is that if we pass say another 2-4T Republicans will revoke the .1% taxes and keep the spending.
The only reason why the current situation is viable is because shipping by sea in containers is so cheap. Should this change due to conflict, or disease, the whole thing falls apart. Shortages within weeks. China will do fine, since they retained all the means of production at home. The big guy will do fine in his second home in the Virgin Islands. He has a backup plan. Do you?
China probably won’t do fine in that scenario. They need the US at least as much as the US needs them. Interesting lecture by Peter Zeihan on that topic: https://youtu.be/yttug-a3sWI
China doesn't produce enough food; the US doesn't produce enough goods. China would also experience unrest because of unemployment from the loss of export industries, which could or could not be worse than the unrest elsewhere because of shortages of goods.
The Chinese government is also vividly aware of this: China's social credit systems, internet firewall etc. are all means of control designed to get ahead of the civil unrest they know is coming when China's growth rate slows to one more expected of a developed economy (but due to corruption they're still going to have massive inequality). They're trying to pre-oppress their population, because once the perception of upward mobility falls apart, they'll be in a lot of trouble.
There’s a presumption that this is isolated to low-skill workers enjoying high unemployment benefits. However, stimulus has also greatly benefitted anyone owning assets which are more often high skilled workers.
The incentives are the same. If you have enough money you can quit working if you want.
A little pay bump isn’t going to bring someone out of early retirement and a high skill job can’t be filled by anyone.
Capitalism will re-adjust. With UBI, less people need to work, many sitll will... Also, with UBI if I take a job, I still GET the UBI, with Unemployment that isn't the case....so it's a do or die, do I take the job and risk losing this, what if I get fired next month and can't get back on UI?....
More people will be able to find companies/niches to grow between the cracks, but a lot of existing businesses will need to raise prices, raise wages, and find other ways to compete.... but this would actually be a boon for capitalism because more people also have a ton of money to spend --assuming you can pay people enough to want to work for you.
A combination of women joining the labor force in the 70s-80s, globalization, growing population, and automation has weakened the demand for labor.
At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work. It seems like this pandemic could be the catalyst for facing this reality and finding a solution.
Great question! Profits of the most successful companies (the ones most skilled at making strategic, marketing, investment, and other business decisions) probably should (at least “will” and I’m fine with “should”) rise faster than inflation while profits of companies who are not good at these decisions should rise less quickly than inflation (or even fall or become negative).
I’d expect there to be a subset of companies who have grown their profits faster than inflation and for survivorship bias to mean that appears very common in a backward-looking point-in-time snapshot.
The 2019 real median incomes of White, Black, Asian, and Hispanic households all increased from their 2018 medians [between 5.7% (Blacks) and 10.6% (Asians)] Percentage change in share of aggregate income was highest for the lowest income quintile (+1.8%). High income quintile saw decrease in share of aggregate income (-0.6%)
The demand for labor declined because we shipped it all overseas.
People say automation and that’s true, but automation doesn’t seem to be stopping China from lifting millions of people out of poverty and giving them jobs, so I’m not sure why the US can’t do it. If you have more automation that doesn't necessarily mean you have fewer jobs, it can also mean you make more things.
The US largely doesn’t have the stomach for it because it would require labor protections and significant tariffs/trade restrictions on goods produced via dirt cheap labor overseas. As soon as anyone tries that, the country loses its mind about “trade wars”.
This is a more complicated question. If wages go up, then goods cost less relatively. If everything is made internally, then the price of goods can be substantially lower than it is when everything is imported.
Compare the price level of Hawaii to the mainland USA. Food is expensive because it's imported, yet Hawaii has some of the most productive farmland in the world. Unfortunately that production goes to cash crops owned by global corporations, nearly eliminating all local food production.
The operative question here is who is benefiting from comparative advantage? In this case quite literally no resident of Hawaii benefits from the current situation. Sugar cane and coffee do not create good jobs relative to other agriculture and the exports drive up land and food staple prices.
Donald Trump was elected by promising a trade war. The people freaking out about a "labor shortage" and a "trade war" are on wall street and in the media. Real people understand free trade was a bait and switch. NAFTA was never popular, Clinton was elected to veto it and signed it instead.
> The people freaking out about a "labor shortage" and a "trade war" are on wall street and in the media.
It's much uglier than that:
1) Wall Street is funding the CCP government and BRI with trillions in US capital, and resisted Trump/Pompeo to the level of treason
2) Wall Street wants illegal immigration to keep labor costs low, and the Dems believe illegals will vote for them (a study done by Obama's administration said 80% would.) So it's a conspiracy against US immigration law.
China/Xi cut their definition of 'poverty' in half:
To make this claim, the Chinese government uses a poverty line of about $2.25 a day, in 2011 prices and adjusting for purchasing power. The World Bank believes ...For upper-middle-income countries like China, it reckons that a reasonable poverty line is $5.50 a day.
Apparently 80% of job reductions is because of automation. 20% because of shipping jobs to other countries. Now China is investing heavily in automation to stay competitive.
It’s going down if you count from 2000 but up if you count from 2015. I’m not sure whether it makes more sense to look at the trend over the last 5 or 20 years but I think you must make an argument that one should pick the span that supports your thesis, rather than the one that contradicts it.
This is highly questionable: ask any business owner and they'll declare there's a shortage of skilled labor, while whatever skill they're looking for is widely available in the market and has a decent velocity of job change (meaning they're looking for work).
What it means is they don't want to pay the market rate for it, not that they can't find it.
That does not follow. There are many cases where the total demand exceeds the total supply; in such cases, no amount of "paying more" will alleviate the shortage, you are just moving it around. Furthermore, the upper bound on pay is the amount of value that can be generated with those skills -- a market requires buyers which requires a positive exchange for both parties. Consequently, the market clearing wage in a skill shortage is a function of the amount of value a company can create with a given set of skills.
The challenge for highly skilled labor is that the latency between a market demand signal and new supply is typically many years. Demand won't manufacture that supply on any time horizon that matters.
> At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work.
Declining demand for labor goes hand in hand with lower production costs (cheaper labor overseas and automation). That means lower costs of things, not higher. And if the costs of things were higher than what people could afford due to being underemployed, the demand drops, which puts even more negative pressure on prices.
Theory and reality aren't the same. If Nike finds some slaves willing to work for .25 cents a day instead of .50 that has no bearing on what they charge for their sneakers. Nor does declining demand for labor mitigate the rapidly rising prices of the things people require to live (food, healthcare, housing, insurance).
If Nike competes with another shoe company (who can also find cheap labor), then what they can pay for labor does impact what they charge for sneakers.
You're assuming fictional consumer behavior based on theories that do not comport with reality. Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
> You're assuming fictional consumer behavior based on theories that do not comport with reality.
Yes, I understand that this is your original argument. You don't believe that established economic theories like supply and demand apply in today's society.
> Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
Nike gets a higher price because of the strength of their brand. When I talk about their competitors, I'm referring to other premium sneaker brands like Adidas, Asics, and Puma.
In fact, premium brands aren't an appropriate example for either of our arguments. It's not appropriate for my argument, since there is in fact a well known psychological effect (contrary to your claim) where consumers assume higher prices are associated with exclusivity and luxury. This can change the equation of how cost inputs effect price equilibrium.
It's also a poor example for your argument, since we are talking about people who may not be able to afford sneakers due to rising prices that allegedly break the laws of supply in demand. For that discussion, we'd need to use an example of a brand perceived as affordably-priced, not luxury-priced. (I could go on Amazon and find some, but their brand probably wouldn't be recognizable anyway, which is part of the point.) Those brands do compete on price, and cost inputs like labor absolutely effect what they charge consumers.
Nope not at all. The cost of high end goods has very little to do with cost of production. Brands like Nike is about paying for virtue/wealth/attractiveness signaling.
Nobody wants shitty jobs with shitty pay - the vast majority of the jobs lost in the shutdown. This is especially true when it's better and easier to live off the government (don't bite my head off just yet). The cost of benefits like insurance is huge. For the people who lost low skill low pay jobs, the high paying jobs that can cover these benefits plus a very comfortable life are out of reach. Even the medium paying jobs are out of reach for many, and if they get them it's still a struggle. I know people who make more on unemployment with the extra amount than they did at their regular jobs.
It's a problem of hope. Why would I want to bust my ass to just barely make it? Thw powers that be can crush your progress at any point. I hate my job. Even though I'm in a high demand field and I make a decent amount (not even $100k), I still think about quitting or being fired and living on the government programs. It's because I have no hope that anything will get better. The political environment is not getting any better (in my opinion), I don't see a future at my job, I can't afford land, etc.
Because it hasn't happened. I've been screwed over multiple times by a company that's supposed to be good. There aren't really any good jobs in my area and my wife won't move. I don't have any desire to improve at work because it won't be rewarded. It's really pavlovian - repeatedly beat a dog and they are just going to hide in the corner in hope they don't get beaten again.
Immobility may not be an obstacle for you anymore. The most competitive eng. positions are fully remote now by necessity, because the best people have come to demand it over the past year.
A lot in this comment that I would like to understand. What is the source of this despair? You mention: low pay, undesirable job, inability to progress, and inability to afford land. What exactly is it about government programs that provide any of those? It seems the issue is entirely something else if the "solution" doesn't actually address the problems.
The solution isn't a solution, it's the idea of giving up on a future you realize doesn't belong to you, working disproportionately hard for a minor bump in standard of living, and instead living in marginal comfort for less effort until you die.
"Why are so many migrants desperate to get in on the border?"
Because it's all relative. The shitty jobs here are much better than the shitty jobs there.
Giving them the jobs won't fix anything. Now you would be adding to the people at the bottom of the income scale while still having people who were here drop out of the work force. If anything, the availability of cheap labor (and labor that is afraid to complain due to illegal status or because it's better than their past) keeps the labor price low, which could arguably hurt the overall labor price (I know, I know, Americans don't want those jobs; but maybe they would if they paid a lot more).
(1) They are being sold fantasies about how wonderful the US is, which don't reflect the reality of the life they will experience when they get here. There's a massive industry built around smuggling, fake documentation, and relocation assistance for illegal immigrants in the US. They make a ton of money selling the "American Dream" to desperate people.
(2) Even with a "low paying" job in the US, you still acquire an enormous amount of spending power in their home country, so remittances to family are extremely helpful. Often these people are coming from countries where $400-500 USD a month (or less) supports a family of 4-6 people.
Because they're fleeing violence, organized crime and corruption, both in general and some which is specifically targeting them (i.e. wrong place, wrong time, witnessed something).
This is a useless comparison. Certainly the existential malaise experienced by many in the first world is incomparable to the necessities of keeping your family safe from instability and violence in the third world, and the aspiration to acquire the stability of the first at great risk.
But scolding someone for pouring out spoiled milk because there are children dying of thirst in Africa does little to fix the fact that the milk has gone bad.
Our great grandparents generation were traumatized by depressions, wars, and deprivation. We are afforded the luxury of being isolated from such experiences. That is no reason to declare society a finished product, and reject any criticisms of it.
Many of us want to have a hand in building a future in-which they can believe, and in-which they and their children have a meaningful place. But the world has become too big, too complex. Humans are increasingly cheap commodities to be consumed and replaced by massivr structures both private, and state - all hell-bent upon the minimization of the impact one is permitted to have on society. It is tempting to give up on ambitions, and instead live an easy, somewhat comfortable, if uneasely purposeless life.
Edit: added a lot, first two paragraphs were the original comment
The migrant, and refuge 'crises' are the consequence of U.S. imperialism the world over. What are people supposed to do when their country is being destroyed by an invading army with superior forces? There's nothing left for the average person in these countries. Fighting results in death, or do you want to become Cuba?
It's not that the government programs provide those. It's that if you don't see a clear path to those things, and the extra $300/week unemployment benefit puts you not too far from what you were making at the shit job, why not wait until the benefits run out to go back to the shit job?
That's perfectly logical, why dress it up with all this talk about land and such as the reason to milk unemployment? This is standard practice in the maritime provinces of Canada where you fish for the season and claim unemployment until the next fishing season with no intention of getting a job in the meantime.
Because America is insanely obsessed with Working Your Ass Off and with casting hate upon anyone who might dare be getting by without making that same sacrifice of most of your waking life at the altar of Capitalism and Sharehold Profit.
I think if there were a clear path to increased salary that came with the job, people wouldn't milk benefits but would start down the path that leads to growth. So I think OP is dressing it up to show that in the absence of a path towards growth, people just milk benefits.
Thank you for actually putting an explanation forward. One day, I hope to own a business and want to treat all my employees with dignity and respect. Knowing that people need a prospect of growth from their employer is incredibly useful to hear. Obviously, the policies associated with "paying more" and "provide growth opportunities" are entirely different.
It doesn't provide those things, but it does provide the basics. So if your job doesn't provide those things either, the basics are the best you can hope for. This means you might as well attain those basics at the lowest effort.
There is a lot of merit to this comment. Historically many individuals would have the option to progress (or at least the illusion of an option) from sweeping floors to something greater within a company. A line worker at a plant could easily become a machinist, and from entry level skilled labor move into advanced skilled labor.
At this point most of those jobs are done as 1099's via a proxy firm. There are few options for anyone in such a position to level up in, and pivoting to another service gig isn't going to provide significant upwards mobility options.
Even starting a business is more capital intensive now relative to the earnings you can make from it thanks to cheap money.
If there is no option to reasonably advance, it's reasonable that people will simply optimize to have the lowest effort.
It is more than that, it is a different flavor of hope,
if your not having your time and soul devoured to attain the basics maybe something else will have a chance to grow.
Yes without landmarks, guides, tutors, examples, culture
many if not most will achieve the next level in some game instead as that is what they know, but some will bloom and that is more than good enough for me.
There is something bigger going on, Covid accelerated it. A lot of people are exhausted and lost hope and are giving up. From factory jobs going over seas to Cheap H1B labor replacing the US Tech worker. The Gov loves the corporations more than the people and the Corporations are running the Gov.
Even the military is having a hard time recruiting, why serve a country that doesn't love you....
Not even visas. My job was outsourced to a company working in India.
The military issue is about a lot of things, but I think it's mostly about pay and the overall trend toward the population not trusting leaders without question like they did in the past.
A lot of people are very derisive, and that's easy to do while sitting from a comfortable chair on a keyboard. but if you're taking a manual labor, you will suffer the consequences down the road, all that and without insurance.
And sure, clearly staring at the sun (or a screen) for hours on end isn't good for anyone's eyesight, but at least there's glasses.
What do we do with individuals whose economic output in general is not worth the new higher minimum wage? Maybe similar to people with Down Syndrome, we have a special, lower minimum wage for them? Genuinely unsure.
Maybe just take care of them because in the grand scheme of things, the actual support cost would be a minuscule fraction of current spending, and, as an accidental byproduct, we’d do some actual unmitigated good in the world.
No, we simply change the game. Why is their labor not worth the new minimum wage? Is it outsourcing? Foreign tariffs or import controls. Is it robots/automation? Tax robot productivity and provide a general UBI with the output.
Why is the livable wage so high - is the problem affordable housing? How about we provide guaranteed government backed housing loans directly through a federal agency (no intermediation), and force the rate on secondary mortgages and investment mortgages up significantly making investing in real estate less appealing?
The market is already not a free one - we know this ever since the FED started bailing out corporations in the 80s. If we are already moving towards a centrally planned system, why not drop the façade and at least do it in a way that benefits the underclass as opposed to the bankers.
It's always just that simple. Say goodbye to 90% of restaurants and most small businesses - problem solved!
Why should I pay you $25 an hour when I can get 4 people working for the same money in Mexico or China. What skills do you have to earn the $25/hr?
But it doesn't work with the non-living-wage either. That's just externalizing the costs. If people are actually not making enough to live basic, healthy lives, that means we have a portion of the population scraping by in bad health and even dying early etc etc. and that isn't free of costs. That has massive massive costs, and the burden is going to be paid some way.
The concept of a living wage is fluid. Things tend to go from luxury, to aspirational, to ubiquitous.
Electricity, cars, internet, non-dirt floors, children having their own bedrooms... none of these are things my grandparents had access to.
But now you cannot even build a house like the one they grew up in--it would not meet code. Even a poor person is expected to have access to running water and electricity.
I know it's controversial, but I think there is an upward sliding of what we expect the bare minimum to be. You could easily raise a family on minimum wage if you lived like a family 100 years ago.
The survey data she cites is pretty weak and seems to be the only real evidence:
>A Pew Research Center survey this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.
Ya I keep seeing these kind of arguments, that something has "fundamentally changed" but I just don't believe it. Maybe just wishful thinking... In a year when the stimi stops/runs out, people will need money and will return to these jobs.
Still quite an exaggeration, since most of the (ex) service workers I know are going to coffee bars and sharing joints. I’ve seen a few teachers unions get busted for coordinating vacations abroad while they boycotted in-class learning because it was an “unnecessary risk”.
The reality is, a lot of people are abusing the temporary safety nets to avoid what they see as inconveniences because it’s a once in a lifetime opportunity and probably won’t come back to bite them.
It's a labor/motivation shortage for the lowest paying jobs, but more troubling is the growing skills deficit:
> “Clearly, there are industries in both manufacturing and services that are eager to beef up staff as the pace of economic activity accelerates. But those efforts are being frustrated. In some cases, the problem is a mismatch in skills. You can’t train a one-time courier on a bike to become an IT specialist overnight,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.
As a hiring manager, it's become much more difficult to find even mediocre engineers over the past three years, and I don't believe it's because the duds we interview would rather live off of unemployment.
I used to think it was lack of motivation, or plain stupidity, but really it seems like most people are naturally terrible at programming. Basically it's an uncommon skill and no amount of "teach kids of code" is going to beat it into people.
There will never be enough skilled software developers to provide software of the depth and quality that the greater population demands. It's a perpetual deficit, no doubt amplified by bit rot.
If there are unfilled jobs, employers should raise wages and increase benefits. If there are not unfilled jobs, people without wealth should receive support from a social safety net.
No, employers are supposed to have to pay the market rate. The problem is that the government paying people to do nothing significantly inflates the market rate.
You’re making this comment without realizing that you’re pre-supposing the market rate was “correct” in the first place.
Which is a big proposition to just accept on its face, considering how the US government for example has been subsidizing the workforce of companies like Walmart and McDonalds, who actively encourage their own employees apply for food stamps and other social welfare programs - because their wage is so low that even though they’re working, they’re still qualifying for poverty programs!
Wages have not matched productivity for decades. To assume that the market was working correctly before this extra unemployment payout program started is misguided.
"No, employers are supposed to have to pay the market rate."
Supposed to? Says who? I say, employers are supposed to have to pay enough for a person to support themselves without government assistance. If we allow businesses to pay below a living wage, then the government is simply subsidizing their labor costs.
Capitalism and creative destruction apply to wages naturally going up due to the actions of people and companies, not artificial changes due to government meddling.
All markets (including the labour market) are created and defined by government. That’s why (for example) it is illegal to hire children for factory lines or selling certain products. Capitalism without any governmental “meddling” is pure anarchy. The kind of capitalism you only see in failed states. When people say that they don’t want any governmental meddling, what they are really saying is that they don’t like certain rules but are happy with others.
I was lucky enough to already have a partially remote job before the pandemic and it was already six figure paying. Now after the pandemic what few investments I had all blew up into the 7 figure range. I told my boss at our last one on one that once we are required to be back I'm putting in my two week notice. It's not because I don't want to work. It's because I don't want to work in the city where he chose to locate our office. I grew up, went to college, and spent my early career on the east coast so when covid hit I realized I'd be stuck there forever if I didn't gtfo now. So I did. I moved to Hawaii and I've never been healthier or more fit in my life. Going back to the east coast just to get seasonal depression for 5-6 months a year is just off the table now.
This whole thing has also shown me how working for a wage paycheck to paycheck even at six figures is basically slavery. You might get lucky and your 401k might grow in value but chances are you won't be able to retire till your 50s. It turns out that capital is everything.
Covid has shown us all that you might still die young so why work instead of enjoying life?
> This whole thing has also shown me how working for a wage paycheck to paycheck even at six figures is basically slavery.
I retired at 30 and have done nothing but travel the world developing open source software since then. I have little to no possessions, and nothing tying me to any geographic area aside from a preference for clean air and such.
To your point, in my travels I’ve rarely come across anyone working a job out of anything other than financial necessity. Only a small fraction of people seem to do what they do out of genuine passion. Much more often, artistic, well-natured people are toiling away on menial tasks for money because that’s what it takes for them to survive.
> It turns out that capital is everything.
The gains from this are disproportionately accruing to billionaires while most people add almost nothing to the total output in exchange for cash and at the cost of much of their waking hours. These bullshit jobs are costing people time they’ll never get back, for dubious societal gains in many cases, while also depleting us of creative energy on an unbelievable scale.
Meanwhile, because of the dog-eat-dog nature of our existence, it seems as if there are only two viable paths for most people to achieve “freedom”: either you can withdraw deep into the proverbial jungle, or exploit the underexploited. A staggering amount of what passes for “industry” today is essentially just strip mining our planet of its natural resources, and/or converting it to food in whichever way using as inhumane of a process as is allowed by our current legal systems. The remainder of profitable human activities are by and large facilitating the dominion’s continuity, or quaint distractions from our highly cancerous existence.
Let's dust out those whips as well while we're at it, shall we? /s
There's nothing wrong with people leveraging their (temporary) increase in bargaining position to drive the wages up. I'm not at all surprised that people don't want to get back to thankless, low-paid jobs when not faced with the prospect of starvation.
Some people work hard, some people don't work hard. Communist and Capitalist societies have different ways to coerce people to work. In the Capitalist system, people work because they don't want to starve, because they want a nicer car etc...
In China back in the 70-80s, they tried to make sure that no one starved (with varying degrees of success) but there was no option to not work. Work in your work unit or work in the labor camp. We have the worst of two words right now, people do not want to work and are not being coerced into working by forces of nature or government
Just another weird circle jerk by the ultra-woke highly paid techies espousing statism and “capitalism bad”.
These things have long term consequences beyond the basic emotions of a naive teenager. Last year, many users here lauded the CHOP/CHAZ fiasco, and quickly went quiet after teens got gunned down and females got beat up and raped.
The money that’s being printed is a debt that will be paid by you and your children. These distortions and destruction of markets isn’t healthy.
911 call centers are short staffed because people are sitting at home making $16/hr. The argument here is that these people are reskilling, changing careers etc. The simple truth is they are simply riding out the bennies as much as they can, before they will head back to their old jobs after a year of Netflix and chilling.
In the interim, with shortages and magic money everywhere, the US will consume all the “cheap” but fast-rising commodities, and leave the rest of the world to starve.
While I see a ton of truth in your comment, my understanding is that the newly-printed money is actually going disproportionately to the already-wealthy.
I do assume that you oppose the money-printing all around.
At any rate, it's all far from simple. Our system is corrupt and broken in several different ways.
> they largely blame the more generous unemployment payments and stimulus checks for making people less likely to take low-paying fast food and retail jobs again
This will be an interesting test case for the basic income gang. Especially now that some states are blocking the extra $ and we'll have stratified sample sets for comparison.
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[ 3.5 ms ] story [ 277 ms ] threadAlso, wild speculation...it's almost summer and why would you (if you really didn't need to) go get a job when you could stretch things out and try to enjoy this summer when the last one was taken from you.
Good. You can do it on your own dime, then.
(hint: military spending to name one thing, would be cut in half; the monsters in DC, the globalists and forever-war advocates that dominate both parties and have us de facto occupying Syria right now, would never allow this)
Now that would be a glorious, worthy experiment. Of course everybody - without exception - knows the outcome ahead of time.
They were not asking for firefighters to be privatized.
Instead they were asking for people to be allowed to earmark their tax revenue.
So, someone could move their money from military spending, and put it in firefighting, for example.
Firefighting is the same. If I’ve put in place fire prevention equipment & paid for insurance why should I fund public firefighting?
I think quite a lot of people would choose to divert their military tax dollars to firefighting.
> remove their funds from the public school coffers.
I think that many more people would choose to put their tax dollars into public schools, than they would other things, such as the military.
In the US the public can't really choose to meaningfully allocate money for public health. It's catastrophically expensive.
The problem with directly earmarking taxes is that whoever pays more taxes gets more control over government spending. People with more money already have too much control of the government; I would rather not support policies that make it even worse.
This is an idea that's trendy in local government, especially among progressives; "participatory budgeting". I don't think it's going to work much better in municipal government, but you can watch and see whether the participatory budgets outperform the competently-managed ones.
The cliched libertarian trope is that all our money goes into the military; the sharper libertarian critique would be that the United States is a health and benefits management provider with an army attached.
I don't even know what a "globalist" is, by the way. Maybe you could pry that phrase a little further open for us.
That's an interesting suggestion given how horrific US infrastructure is. If only they actually fixed the roads we drive on with the trillions of dimes they already take from us.
Let's start with the fact that roads and infrastructure haven't been getting fixed properly for the past 20 to 30 years now despite a massive government expansion in spending and overall size since ~1999. Nearing $8 trillion in total government spending and they can't give us nice infrastructure or fix basic things like roads.
California is supposedly awash in a tax revenue surplus of epic scale, and yet their roads and infrastructure are horrific, akin to developing nation conditions across Los Angeles as a matter of routine the past 10-15 years.
edit: the downvotes are amusing, given how absolutely atrocious US infrastructure is, and given there is probably nobody left on this planet that doesn't know how bad it is. Every single person reading this knows how bad it is and how poor of a job the US has done at allocating its tax revenue the past several decades. It has been discussed endlessly here on HN for a decade or more, and now I point out that fact of reality and it's unpopular; un huh, sure.
Sure, Germany and the Netherlands have excellent infra. Do you know what's "third world" infrastructure like? It's not having potable water. It's cities of 50K people with mostly dirt roads. It's highways with potholes literally bigger than mortar craters.
We do have rolling blackout on occasion. We do have non potable water on occasion. We have completely fucked up roads and failing bridges. We don't have underground powerlines in most places.
My mother was one of these people and that's what she did. She eventually used her depression which was caused by her drug addiction to get on to social security disability. She spent her entire adult life living in group homes where all the other residents were also on social security disability and when I would hang out there you could guarantee there was going to be drugs and beer everywhere as the cable TV played.
The part of West Virginia where her family was and I would spend my summers was filled with people who had a way of life of living on the "draw".
People like yourself who come from culturally functional backgrounds simply have no reference point to understand the other cultural dysfunction that people like my mother and her friends exhibited.
She overdosed on oxycontin in 2015 and from the years 1985 to then she never worked a single job or paid a single bit of taxes and she never wanted to.
I understand that I am simply spouting an anecdote here, but no matter where my mom lives she always had roommates that were just like her. There's an entire subculture of people that do this.
For every one of these people there are many more who aren’t like this and do manage to claw their way out of poverty (or at least give their children a legitimate shot at it) with the help of social programs.
Personally, I don't consider forcing people to work for others who are able but unwilling to work "looking out for each other". I call that slavery.
But that doesn’t make it sound economic policy for the country as a whole. Far from it.
This may or may not be a 100% return, but I’m happy to invest in my fellow citizens who didn’t have a chair when the music stopped.
If they did get consideration, wouldn’t we want to reconsider a market-based economic system that destroys the natural systems they’ll be stuck with? That seems far more destructive to me than some human created currency numbers.
You're mixing up two different groups of people: those who lost their job and want a new one but can't find one, with those who just decided they don't feel like working anymore. I'm happy to invest in the former but not the latter.
Cf. Arguments about the financialization of the economy and correlation of per capita lawyers in a society with that society's impending doom.
Edit: oh, also healthcare in America. Very much healthcare in america.
Put another way, is the cost of administering a system that can tell the difference worth the savings?
Why should I care whether they toiled miserably in order to be able to buy my thing? Maybe it would be better if they were leisurely, the better to go and search out the best things, allowing me to devote my efforts to MAKING said best things. Let 'em be thing-mavens, sipping lattes. They can compete over who is the coolest thing-maven.
You're not thinking creatively enough.
If they’re living off the taxpayer dime, enjoying their life, while I work to make something for them to buy, then turn around and, as the taxpayer, give them the money to buy my thing, that’s substantially less awesome.
"living off their own resources" generally equals, for many people: "living in active exploitation in a ruthless work environment destroying their mental and physical health, because they literally need money to live, like anyone"
Whereas:
"living off the taxpayer dime" generally equals, for many people: "living free to do whatever they wish, for the most part" [and you find this absolutely abhorrent]
Still seems like you're not quite grasping how this works.
I'm not going to dig up concrete numbers at this point, but it's not difficult to take a look at what the top wealth-holders and income-earners have, and what the people at the bottom need, and reconcile the two.
When you means test, you require more bureaucracy while less effectively covering the people who need support.
Walmart costs you the tax payer more money every time they open a store.
If you can't pay someone a living wage, then you shouldn't be in business.
The time out from that high schoolers life is not valueless. If the employer wants to swear up and down the work is "unskilled" then they can pay everyone the unskilled labor rate which should still be a living wage.
The high schooler working part time isn't doing so because it's fun, they're doing it most likely because their family is not wealthy and it's helping put food on the table or pay bills or buy textbooks.
Correct. You pay your employees according to the value they produce. And if they don't yet have the skills to produce much value, then either you can't pay them much, or you can't hire them at all. Which is better?
I specifically chose high schoolers because they usually aren't trying to fully support themselves financially, and so most living wage arguments don't apply.
Because that means you can afford to pay that employee more, and instead are pocketing the difference.
In fact, if any employee is on an income-based form of government assistance to provide them a living wage, and any other employee is being paid more then that, then you are still stealing from me because the business is fully capable of supporting these people (who are apparently necessary because they are being employed) and instead using my money to subsidize yourself.
If a job produces so little value that it doesn't justify a living wage, then I don't want anyone doing it because we've just established that even the experience or expertise which might develop from it is not worth anything. My taxes are to support my fellow citizens, not keep worthless jobs and worthless businesses in existence.
- childcare
- eldercare
- homemaking (cooking, cleaning)
- educating (homeschooling)
- creating art
- open source coding
- volunteering
Etc.
We should absolutely invest in these people. Their work goes unpaid because it is not immediately profitable, but make no mistake it is absolutely necessary to society.
If people want these programs, do the hard work and start championing for large tax increases.
My wife likes to work, yet contributes nothing due to taxes. Accounting for extra expenses.
I don't really believe you're actually paying a 50% tax rate. Unless you mean a _marginal_ tax rate.
Property tax, sales tax, car tabs, usage fees, gas tax, sin taxes, etc. These all add up, and depending on your lifestyle can easily go well above 50% in California. (The highest federal + California tax rate is already around 50%.)
To get to a 50% tax burden, the remaining 66% of our income would have been taxed at a ~24% rate. Of course that didn't happen since we spent on things like our 401(k) and food (both of which are not taxed), plus our cash savings.
I stand by my statement that any high-income earner paying 50%+ in taxes needs to get a better accountant.
If people go from exploitative, miserable jobs to better paying jobs, they are going to pay more taxes. Effectively the later them is paying for the earlier them. An actuary could probably estimate how much support is likely to produce a positive value. Perhaps our society should be giving everyone a sabbatical year ever decade or something like that?
This is also why doing it as a public insurance system is better than via private savings. Private savings can only go one direction in term and are subject to large deviations, the same way health insurance costs are.
https://heterodox.economicblogs.org/multiplier-effect/2018/b...
If someone wants to take 6 months off, someone else needs to be trained to handle their responsibilities during that period. Companies should be incentivized (somehow!) to provide good customer service; providing bad service should be more expensive for them than providing good service.
Having said that I believe work and life can go hand in hand very healthily. The reality though is different. Work is for most people just financially compensated abuse.
The long-term goal of humanity should be an end to scarcity, and automation of everything possible. No one should have to work to live comfortably, though people should be able to choose to work if they enjoy it.
Maybe they shouldn’t be in business.
Imho, these are effectively zombie businesses, and it would probably be better for the overall market efficiency (esp. wrt labor and asset allocation) if they closed.
They get deployed in other commercial activities that can make more efficient use of their time, and hence, pay them more.
As for the history books, I recall we've raised the minimum wage in the past. The US still exists, so i guess the history books say its ok?
What is more, one of the things that I love about the US is that we seem to be fairly good at deconstructing and reconstructing relatively quickly and efficiently. Our system isn’t perfect (tends to favor the capital class and stick it to labor more than I would prefer), but I personally think it’s much better than what Japan has done.
If our society is too efficient, we run out of ways to give people meaning.
Retail workers are treated incredibly poorly, and the American customer frequently uses the interaction to establish the social class hierarchy for themselves.
This group was also ongoingly and repeatedly thrown to the wolves in COVID responses, being most exposed to the possibility of dying from the virus.
It is no surprise that the places which can't find workers are restaurants and retail outlets.
Welfare is a plague.
I know so many people who did not work because it would cut into their welfare.
I know so many homes that lived lies (separate fake addresses, never marrying) so they could get welfare.
I've seen welfare programs (wic, food stamps) exchanged for cash..
I've seen emergency rooms abused with medical cards (something most yuppies do not even know exists --- most do not seem to know most poor people already get free healthcare).
It's a sad thing. Reality on the privileged persons terms, I guess.
At least in these other, and we agree equally scummy cases, theres some run-off benefit we can assume given the higher levels of profit and/or related risk.
"...get rid of all police because some cops are dangerous and corrupt" because I said I've seen welfare do more harm than good? Geez, makes total sense.
I imagine by not having to pay as much for social programs, like food stamps. We're already paying for social programs indefinitely.
Are you aware of this thing called "inflation"? Do you understand that printing more dollars dilutes the real value of a dollar?
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
https://www.cato.org/cato-journal/fall-2019/modern-monetary-...
Once automation reaches the level that you describe and there's a labor surplus, then we'll easily have enough resources to support UBI. But don't kid yourself, we're far from that point.
If you give people close (or more) money than they would receive from actually working, most won't work.
But I don't own a business employing people near minimum wage so I guess that's easy for me to say.
Also we’re finally giving a little bit of due to the house and home portion of a person’s work- the work of maintaining a house and caring for children. In other words some of those people now are probably staying home to care for kids.
Now hacker news being a bastion of people who want to be capital C capitalists, it’s natural the prevailing sentiment favors capital. I therefore expect that my expression of support for labor to garner me some harsh words.
But you can’t argue against the fact that having some kind of government assistance to fall back on makes it much easier to negotiate a higher salary, and will result in higher wages.
* profit margins: profit margins are set by
1) how competitive is the market, and
2) interest rates, which are set by the central bank. The "power" of labor has nothing to do with it.
For 1) this is about monopolies and we are seeing more concentration of market power, not less.
For 2) yes, interest rates are in a secular low period which does give rise to secularly low profit margins. That does not mean that workers earn more, it means investment increases so that marginal return projects are funded and more workers are hired.
* The "balance of power" between labor and capital.
First, there is no battle between labor and capital, the battle is between non-management labor and management labor.
Capital doesn't care and isn't affected by these disputes, which are struggles of the share of the pie given to management versus non-supervisory workers. When you buy a share of stock in company X, you just price the cashflow relative to what you can get from the central bank or another company, including foreign companies. You price it so that the risk adjusted returns are the same in all cases. So companies that earn fewer profits are just priced down to be less valuable and capital is reallocated elsewhere. So for capital, every return is the same.
The real battle is between managers (e.g. CEOs on down to branch managers) and non-supervisory labor.
In that battle, management has a lot of tricks up its sleeves: outsourcing to foreign countries, outsourcing to contract workers, eliminating demand for labor via automation. Non-supervisory workers have at their disposal the power of unionization and trying to get lawmakers to outlaw some of management's techniques.
It's not clear at all who wins and who loses, and this may shake out differently in different industries. There is no global change where one side wins and the other side loses. While most want executive pay reduced -- CEO pay seems especially obscene, so far management has proven itself to be effective at taking a bigger share of the labor bucks. Investors see low returns generally in an low IR environment, and that has been the case for some time, even to the point of many pension funds going bankrupt as the returns just aren't what they had predicted. Yet executives keep seeking and obtaining windfalls.
For example, in the 70s, it was a grim time to hire workers since wages kept rising and unions were powerful. But then again, inflation was high, so those wages were not rising in real terms. Thus labor thought it had "won" something when in reality there was stagnation in living standards.
Where it gets weird is when Capital is also pension funds.
40% of US corporate equity is owned by the foreign sector
40% is in tax-advantaged retirement accounts and pension funds as well as tax-advantaged non-profits.
20% is in various taxable accounts of US citizens and US based corporations.
source: https://theirrelevantinvestor.com/2020/10/25/who-owns-the-st...
It used to be that 70% of the stock market was owned by retirement funds, before we began accepting massive capital inflows from the foreign sector.
I guarantee you very few people who buy these portfolios even know the names of the businesses they own. There is nothing about "caring" involved in this equation. Nor is there anything about "loyalty". It's not a good idea to anthropomorphize capital markets, not if you are trying to understand them. People at a horse track placing bets on which horse is the fastest are not loyal to the horses, nor do they expect the horses to be loyal to them. If a horse doesn't run as fast, they just change the odds on that horse. Really, I think a poor understanding of both capital markets and banking is the main reason a lot of well-intentioned reforms end up being ineffective or backfiring. For example, you'd get a lot farther at promoting higher wages if you ban capital inflows than with unionization efforts.
To the extent the "new inequality" is these institutional investors, well it's "first time as tragedy, second time as farce" all over again.
> https://theirrelevantinvestor.com/2020/10/25/who-owns-the-st...
That's a neat graph. I would also like to see some measure of foreign assets with US owners to put that in perspective. "Foreigners" I also want to break down; that label makes it sound like all the rich individuals families went abroad (!), but I assume the foreign investors are institutional too?
It also makes it much easier to start a business. If anyone should be cheering it on it’s entrepreneurs and VCs.
There's tremendous automation happening right now, and it'll accelerate, to the point where if the government waits 2 years, a good portion of those jobs likely won't exist, and the government will never be able to get rid of the dole.
It's kind of like quantitative easing infinity, except for the poors.
[1] https://en.wikipedia.org/wiki/Universal_basic_income
I say things like "California is not a market-based economy right now"
instead of saying what non-market-based systems are called. It goes over better with Americans who are more universally triggered by certain words, instead of their definitions.
second example I've had surprising luck with over the past several years is that I tell people that big pharma doesn't want them to know that our body can build immunity by being exposed to weakened and dead versions of viruses. They're like "I knew it, natural remedies all along!", they are just allergic to the word vaccine and not the concept.
You can get any redistribution you like depending on how the offsetting taxes work (if any).
https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
https://en.wikipedia.org/wiki/Hyperinflation_in_Venezuela
All libertarians I have seen actually doing politics are corporatists.
Libertarians who support UBI think of it as replacing the other stuff. This is a wildly unpopular opinion on the left, who want everything else (welfare, college, childcare, healthcare, retirement) and UBI. Any libertarian non-corporatist supporter of UBI would not only have to win against his better-funded corporatist opponents, but would need to win with a "Let's get rid of social security for this other thing" pitch. You're more likely to find Bigfoot riding a unicorn.
AFAICT, as a left-wing UBI supporter who sees it as replacing lots of other stuff, that depends which other stuff and how you plan on replacing it; phased (such as by counting a UBI introduced at a low rate and increased over time) displacement of means-tested welfare programs is not all unpopular on the left. Displacing means-tested healthcare (Medicaid/CHIP) has more mixed reactions (healthcare policy in general is contentious within the left). Displacing earned benefits (Medicare, Social Security, Unemployment insurance) is even more likely to be rejected (though in this case the general controversy over healthcare works in your favor with Medicare, as its probably the least universally toxic of these on the left.)
Displacing minimum wage with it also isn't too popular on the left.
Where you run into problems with some stuff that isn’t problematic on its own is when you don’t have a plan for a robust, mature UBI but you want a big-bang cold-turkey replacement of programs that what you do propose for UBI can’t come close to dollar-for-dollar substituting for for current recipients.
Maybe, but that's comparing real market dollars vs. government spending dollars. When you're not spending 20k on a hammer and 30k on a toilet seat, prices go down. Half of the people will waste their UBI money, yes, but the government is going to waste half the dollars they spend.
Ask your friends if they want to send a check to Bill Gates every month. You'll find that most people on the left don't actually believe in UBI. It's a great talking point because a politician says it and people imagine whatever they want (yours was a great breakdown of potential disagreement points). But the people around you are imagining very different things.
Really? I've never heard this before, and I'm pretty far to the left. Replacing all those other things with UBI sounds like a no-brainer. Why administer N different welfare systems when you can administer one? But I think the larger issue is that "the left" does not at all agree that UBI is a good thing, regardless of implementation.
I think objections to replacing (specifically) Social Security are political in nature, not policy-based. In that anyone (left or right) proposing to eliminate Social Security -- even if it's replaced by something better and more comprehensive -- would get voted out next election cycle. It's a very touchy subject, I think.
One exception I will make is healthcare, though: I don't think we should keep our current healthcare system and just expect that, instead of getting insurance through their employers, everyone is expected to pay for it individually with their UBI check. We need a major overhaul that gets rid of the private insurance system (or at least makes it the "not really needed, but rich people can get it if they want" type of thing) and removes all of the unnecessary graft in medical billing. (I get that this is also a touchy subject, so I certainly accept that M4A or whatever is not the One True System and that there are other options that might work just as well. But our current system is absolute garbage.)
Left and right are relative terms. If everyone else moves left of you, you're on the right. I think this has happened to you but you're in denial over it.
If you consider yourself a classical liberal then you're firmly on the right. That's where we are.
Most of the libertarian supporters (Milton Friedman among them) are dead, making them not particularly effective activists, though.
> It isn't a left/right thing.
It actually is, but a left-and-(right-libertarian) thing, not a left-vs-right thing.
> In fact, many liberals staunchly oppose UBI-type initiatives.
liberals (center-right) tend to, yes, progressives (center-left to left) tend to be in favor.
The dole is here to stay.
Instead of padding the pockets of Walmart or McDonald's by supplementing their labor costs, why don't we give the money straight to the people. Then force these companies to pay the true cost of their discounted labor.
[1] https://en.wikipedia.org/wiki/Protestant_work_ethic
It's a tried and true bi-partisan way to make sure the poor are worse off and feeling that we need to coddle them.
You know what’s crazy? The solution is very simple. Pay workers more. The minimum wage is not a living wage. Heavily fine companies that attempt to run models that cannot support paying a living wage. The uninformed think that this will stop innovation, but it will only slow it, and that’s OK. Innovation is fueled by need or greed, and the VCs who complain about mandated high wages will indeed be greedy enough to fund the next batch of companies, because even if your returns go from 1000x to 100x (when you win), the returns still beat a lot of other investment vehicles.
The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses".
More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing.
> The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
I don't understand the point here on illegal work -- could you lay out the scenario?
I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit.
[EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things:
- which businesses are really "essential"
- the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
- The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean").
Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.
Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it.
If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.
Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.
In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.
That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context.
I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?
I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.
> I don't understand the point here on illegal work -- could you lay out the scenario?
UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
(I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
------------
The stuff below the [edit] sounds great to me; since we agree on that I am wondering what about UBI you don't like?
> demand creates jobs
Yes! And nothing creates demand like a UBI since:
> Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods)
> The fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
----------
> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.
Happy to tackle this
> The best people get at is "competition", but very few "free" markets are as competitive as people think they are.
Agreed
> Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends)
Sure!
> and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.
Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.
Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some...
Well I don't think that's quite true (workers are very expensive -- reforming your business processes could take like $100/month for some SaaS tool that massively saves everyone time or improves some process), but what I was failing to get across is that people get more shots at innovation (and entrepreneurship) with higher worker pay.
There's another thing here -- paying workers more also leads to more income for the businesses that workers frequent, but that's a mess of hypotheticals to go down.
> UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
> (I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
Illegal jobs which skirt the minimum wage laws aren't my focus. I actually think of those as fine as an on-ramp for recent immigrants who may be in an odd spot where applications haven't cleared but they need cash to purchase stuff to eat. Most normal citizens are not doing this unless you're in a society with lots of marginal fraudulent activity (some EU member states), but those countries have their own problems.
Agreed on preferring harder to evade taxes.
--------------
> UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
Right I get that -- but why doesn't this lead to a stagnant minimum wage? It's been hard enough raising the minimum wage with inflation and/or cost of living (again, it's supposed to be a "living" wage), and that's going to be a lot harder with UBI around. In my mind this starts with making the minimum wage a living wage, then considering whether UBI is still necessary (ex. when too many jobs have been automated).
------------------
> I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
Disagree, unless the benefits of UBI are extraordinarily well designed (percentage of some moving metric with inflation adjustment), then it will be much like the minimum wage is right now, and lag inflation and other changes. Businesses will adapt to those costs (and raise their prices) and UBI will fall behind just like minimum wage does now.
> The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
> Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Hmnnn I think it's more a "maybe". Adding the fixed amount will not make it easy to restore the distribution, and I'm not guaranteeing it will be one for one, but some of that different will definitely slip. There is a realized % gain of wages that varies for each household, but businesses don't need to know the exact % to scale prices, they'll rise naturally. Now whether it gets to exact 1.2 (given that the household has a realized scale factor of 1.2%) is up for debate, but I'm arguing that it will not be 1 -- the pernicious thing is that it may even g...
Could you describe "the economy completely shutting down"? Certain parts would absolutely shut shut down and be adversely affected, but I'm not convinced of the doomsday scenario here. Yes, lots of restaurants and services would close down (as they have, but in greater numbers), but this is the cost of not being prudent, buying insurance (if it was possible, and it certain was after SARS and MERS, etc), and saving for a rainy day. The economy will start up again, because there is always money to be made, and people are motivated to make that money.
The problem is that it's "helping" everyone, but disproportionately helping the rich, with no return on investment in the government. The highest ROI (in GDP terms) on investment by government usually comes from infrastructure last I checked (there's also been a really weird perturbation of what "infrastructure" means by the Biden administration), so propping up balance sheets for companies that should have saved for a rainy day is absurd.
Let them fire who they need to fire, then help those citizens directly, via the government programs that are literally built to do just that. 2T is enough to pay A LOT of money out to all citizens (again, some % of the full/part-time work force, which is some % of the total population of ~350M), and definitely tide them over for a year. Strategic/truly essential businesses (let's say hospitals, airlines, freight, etc) are given extra help, and that's that. I am a layman to be fair, so of course it's not this simple but I sure would have been more behind 2T given straight to people who became unemployed as a result, and letting that money trickle up back into the economy.
> If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 85% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.
This is wrong on it's face, and I think it's due to intentional misinformation by political actors. That first 2T stimulus (a lot of press was made about that number, it was almost fetishized) contained something like ~700B to households/household-adjacent programs, but what people overlooked was that the ~500B that went to businesses was leveraged up to 6x[0]:
> “We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans.
When you take into account that these loans are going to be given at sweetheart rates, and maybe may not even be repaid (picking good lessees is hard), the popularly cited stat that "more money was allocated to households than businesses" is absolute bullshit. This is absolutely stimulus for the rich, who didn't need it to begin with, and arguably companies should have been just as prudent as we expect people to be.
[0]: https://thehill.com/homenews/senate/488879-fight-over-500-bi...
> what people overlooked was that the ~500B that went to businesses was leveraged up to 6x
That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
[1] https://apnews.com/article/warren-buffett-corporate-bonds-fi...
[2] https://www.investopedia.com/main-street-lending-program-480...
Point taken, maybe this is just 2 blind mice. I understand this argument, and agree with it on some level -- steadying the ship so people don't run on the banks is important, but it's just not that simple. Some sectors of the economy imploded and some didn't -- some grew as a result. Some companies needed the help, some arguably did not and should not have had the help extended, the indiscriminate use of this money is putting us on the road to zombie companies. The US has been doing stealth QE since 2008 with no end in sight -- we can't build real financial stability this way.
As an aside, lender confidence is still shaken, credit has not grown and is in decline in the last 1Y period[0]. Lenders aren't buying the V shaped recovery narrative. If I think of this as purely a gambit to slow the process down (i.e. give businesses more time to absorb the shock) then fine, but if the goal is to stimulate the economy policies that enrich a segment of the population that does not spend isn't all that effective. We need worker wage growth.
> That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
My point on this was the messaging, that this point was overlooked, regardless of whether it was used or not. The Fed played the situation masterfully and essentially bluffed the market into buying the corporate bonds (because they believed in the backstop), but it's this backstop-at-any-cost that is a problem in my mind.
The main street lending and PPP programs are not what I'm referring to (though there was some graft there from larger corporations). As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
> A related initiative by the Fed was the Primary Market Corporate Credit Facility (PMCCF). Between the two initiatives, the Fed purchased $750 billion in bonds
Also, the PPPLF[2] is a bit of an issue in my mind because of this:
> The PPPLF extends term credit to financial institutions making PPP loans, accepting the PPP loans as collateral. The liquidity provided by the PPPLF helps eligible financial institutions fund additional PPP loans. The PPPLF was established under the Board's 13(3) authority and the extension from March 31 to June 30, 2021, was approved by the Secretary of the Treasury.
So their goal here is to make more money available to financial institutions to make loans but with credit in decline, who is getting these loans? Businesses who arguably do not need them and/or people with cozy access to banks.
> Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
Some points on how I see this:
- Student loans are very very hard to discharge, usually persisting through bankruptcy
- The narrative is usually the opposite —- companies are to be protected at all times whereas students should have just studied something else or went to community college instead. Companies are not in the same financial position as random students but the negligence should weigh heavier on a large corporation.
- In terms of...
I agree, but in my view, the Federal Reserve is about the only institution doing their job to stabilize the economy. The problem is they're only meant to provide short term fixes, much like an ER doctor. Meanwhile, Congress primarily prioritizes bribing their voting base: Republicans through unnecessary tax cuts and Democrats through unnecessary handouts and pork spending. I agree with extending unemployment benefits during a pandemic, but it's ridiculous for single people making $75k to get a handout that comes straight from government debt.
>As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
https://www.federalreserve.gov/releases/h41/current/h41.htm
I can definitely agree with this, the means test was a bit wonky.
> Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
Ahh you're definitely right -- thanks for pointing this out again, I stand corrected.
And yet, so many people seem to both support an easy money environment forever, but also oppose rising wealth inequality without realizing they are intrinsically linked.
The only way to increase welfare programs without increasing wealth inequality is to pay for your spending with taxation.
For sure. It's first spent by poor people on things that poor people need (maybe several times over as it works its way through the economy and is meanwhile taxed), rather than being given directly to rich people.
That's a massive difference to inequality.
That's why the proposed Infra and other bills are written to be paid for mostly with very high earner taxes and savings like beefing up IRS enforcement.
My concern is that if we pass say another 2-4T Republicans will revoke the .1% taxes and keep the spending.
https://www.lynalden.com/inflation/#benefit
There’s a presumption that this is isolated to low-skill workers enjoying high unemployment benefits. However, stimulus has also greatly benefitted anyone owning assets which are more often high skilled workers.
The incentives are the same. If you have enough money you can quit working if you want.
A little pay bump isn’t going to bring someone out of early retirement and a high skill job can’t be filled by anyone.
More people will be able to find companies/niches to grow between the cracks, but a lot of existing businesses will need to raise prices, raise wages, and find other ways to compete.... but this would actually be a boon for capitalism because more people also have a ton of money to spend --assuming you can pay people enough to want to work for you.
Here's some graphs to make the point:
https://fred.stlouisfed.org/series/CIVPART
We can see the labor participation rate has been declining since early 2000.
Even more so for men once women joined the labor force:
https://fred.stlouisfed.org/series/LNS11300001
But even for women this has gone sideways:
https://fred.stlouisfed.org/series/LNS11300002
The productivity vs pay gap illustrates a stagnant growth in wages even as the value of goods and services grows: https://www.epi.org/productivity-pay-gap
A combination of women joining the labor force in the 70s-80s, globalization, growing population, and automation has weakened the demand for labor.
At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work. It seems like this pandemic could be the catalyst for facing this reality and finding a solution.
https://www.epi.org/productivity-pay-gap/
I’d expect there to be a subset of companies who have grown their profits faster than inflation and for survivorship bias to mean that appears very common in a backward-looking point-in-time snapshot.
https://www.census.gov/library/publications/2020/demo/p60-27...
The 2019 real median incomes of White, Black, Asian, and Hispanic households all increased from their 2018 medians [between 5.7% (Blacks) and 10.6% (Asians)] Percentage change in share of aggregate income was highest for the lowest income quintile (+1.8%). High income quintile saw decrease in share of aggregate income (-0.6%)
People say automation and that’s true, but automation doesn’t seem to be stopping China from lifting millions of people out of poverty and giving them jobs, so I’m not sure why the US can’t do it. If you have more automation that doesn't necessarily mean you have fewer jobs, it can also mean you make more things.
Compare the price level of Hawaii to the mainland USA. Food is expensive because it's imported, yet Hawaii has some of the most productive farmland in the world. Unfortunately that production goes to cash crops owned by global corporations, nearly eliminating all local food production.
"Unfortunately"? Clearly you haven't heard of https://en.wikipedia.org/wiki/Comparative_advantage
It's much uglier than that:
1) Wall Street is funding the CCP government and BRI with trillions in US capital, and resisted Trump/Pompeo to the level of treason
2) Wall Street wants illegal immigration to keep labor costs low, and the Dems believe illegals will vote for them (a study done by Obama's administration said 80% would.) So it's a conspiracy against US immigration law.
That's propaganda.
Xi gave local governors the task of reporting that everybody was good, and they complied by faking the reports.
The reality is that 1/7 of the Chinese population is either unemployed or underemployed, and the social welfare net is even less than the US.
It gets better. After the 2020 floods and locusts, a large portion of the farmers were wiped out. China is currently importing 50% of some foods.
Example of Cities Competing on Vaccine Counts with bribes
https://www.youtube.com/watch?v=mFf9rhz_u1Q
To make this claim, the Chinese government uses a poverty line of about $2.25 a day, in 2011 prices and adjusting for purchasing power. The World Bank believes ...For upper-middle-income countries like China, it reckons that a reasonable poverty line is $5.50 a day.
https://www.brookings.edu/blog/future-development/2021/01/25...
China is also into forced relocation, forced labor, etc.
This information, to me, makes the China-automation evidence largely irrelevant in this discussion.
And, small but not insignificant point, a lot of our labor also went south to Mexico, not overseas. Not sure what the percentages are.
What it means is they don't want to pay the market rate for it, not that they can't find it.
The challenge for highly skilled labor is that the latency between a market demand signal and new supply is typically many years. Demand won't manufacture that supply on any time horizon that matters.
Good news, everyone! That's exactly what's going to happen.
https://www.weforum.org/focus/the-great-reset
Declining demand for labor goes hand in hand with lower production costs (cheaper labor overseas and automation). That means lower costs of things, not higher. And if the costs of things were higher than what people could afford due to being underemployed, the demand drops, which puts even more negative pressure on prices.
Theory and reality aren't the same. If Nike finds some slaves willing to work for .25 cents a day instead of .50 that has no bearing on what they charge for their sneakers. Nor does declining demand for labor mitigate the rapidly rising prices of the things people require to live (food, healthcare, housing, insurance).
Yes, I understand that this is your original argument. You don't believe that established economic theories like supply and demand apply in today's society.
> Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
Nike gets a higher price because of the strength of their brand. When I talk about their competitors, I'm referring to other premium sneaker brands like Adidas, Asics, and Puma.
In fact, premium brands aren't an appropriate example for either of our arguments. It's not appropriate for my argument, since there is in fact a well known psychological effect (contrary to your claim) where consumers assume higher prices are associated with exclusivity and luxury. This can change the equation of how cost inputs effect price equilibrium.
It's also a poor example for your argument, since we are talking about people who may not be able to afford sneakers due to rising prices that allegedly break the laws of supply in demand. For that discussion, we'd need to use an example of a brand perceived as affordably-priced, not luxury-priced. (I could go on Amazon and find some, but their brand probably wouldn't be recognizable anyway, which is part of the point.) Those brands do compete on price, and cost inputs like labor absolutely effect what they charge consumers.
It's a problem of hope. Why would I want to bust my ass to just barely make it? Thw powers that be can crush your progress at any point. I hate my job. Even though I'm in a high demand field and I make a decent amount (not even $100k), I still think about quitting or being fired and living on the government programs. It's because I have no hope that anything will get better. The political environment is not getting any better (in my opinion), I don't see a future at my job, I can't afford land, etc.
Why is that? It sounds like you're well positioned for career improvement.
Because it's all relative. The shitty jobs here are much better than the shitty jobs there.
Giving them the jobs won't fix anything. Now you would be adding to the people at the bottom of the income scale while still having people who were here drop out of the work force. If anything, the availability of cheap labor (and labor that is afraid to complain due to illegal status or because it's better than their past) keeps the labor price low, which could arguably hurt the overall labor price (I know, I know, Americans don't want those jobs; but maybe they would if they paid a lot more).
(1) They are being sold fantasies about how wonderful the US is, which don't reflect the reality of the life they will experience when they get here. There's a massive industry built around smuggling, fake documentation, and relocation assistance for illegal immigrants in the US. They make a ton of money selling the "American Dream" to desperate people.
(2) Even with a "low paying" job in the US, you still acquire an enormous amount of spending power in their home country, so remittances to family are extremely helpful. Often these people are coming from countries where $400-500 USD a month (or less) supports a family of 4-6 people.
But scolding someone for pouring out spoiled milk because there are children dying of thirst in Africa does little to fix the fact that the milk has gone bad.
Our great grandparents generation were traumatized by depressions, wars, and deprivation. We are afforded the luxury of being isolated from such experiences. That is no reason to declare society a finished product, and reject any criticisms of it.
Many of us want to have a hand in building a future in-which they can believe, and in-which they and their children have a meaningful place. But the world has become too big, too complex. Humans are increasingly cheap commodities to be consumed and replaced by massivr structures both private, and state - all hell-bent upon the minimization of the impact one is permitted to have on society. It is tempting to give up on ambitions, and instead live an easy, somewhat comfortable, if uneasely purposeless life.
Edit: added a lot, first two paragraphs were the original comment
At this point most of those jobs are done as 1099's via a proxy firm. There are few options for anyone in such a position to level up in, and pivoting to another service gig isn't going to provide significant upwards mobility options.
Even starting a business is more capital intensive now relative to the earnings you can make from it thanks to cheap money.
If there is no option to reasonably advance, it's reasonable that people will simply optimize to have the lowest effort.
Even the military is having a hard time recruiting, why serve a country that doesn't love you....
The military issue is about a lot of things, but I think it's mostly about pay and the overall trend toward the population not trusting leaders without question like they did in the past.
And sure, clearly staring at the sun (or a screen) for hours on end isn't good for anyone's eyesight, but at least there's glasses.
Why is the livable wage so high - is the problem affordable housing? How about we provide guaranteed government backed housing loans directly through a federal agency (no intermediation), and force the rate on secondary mortgages and investment mortgages up significantly making investing in real estate less appealing?
The market is already not a free one - we know this ever since the FED started bailing out corporations in the 80s. If we are already moving towards a centrally planned system, why not drop the façade and at least do it in a way that benefits the underclass as opposed to the bankers.
Electricity, cars, internet, non-dirt floors, children having their own bedrooms... none of these are things my grandparents had access to.
But now you cannot even build a house like the one they grew up in--it would not meet code. Even a poor person is expected to have access to running water and electricity.
I know it's controversial, but I think there is an upward sliding of what we expect the bare minimum to be. You could easily raise a family on minimum wage if you lived like a family 100 years ago.
>A Pew Research Center survey this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.
The reality is, a lot of people are abusing the temporary safety nets to avoid what they see as inconveniences because it’s a once in a lifetime opportunity and probably won’t come back to bite them.
> “Clearly, there are industries in both manufacturing and services that are eager to beef up staff as the pace of economic activity accelerates. But those efforts are being frustrated. In some cases, the problem is a mismatch in skills. You can’t train a one-time courier on a bike to become an IT specialist overnight,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.
As a hiring manager, it's become much more difficult to find even mediocre engineers over the past three years, and I don't believe it's because the duds we interview would rather live off of unemployment.
There will never be enough skilled software developers to provide software of the depth and quality that the greater population demands. It's a perpetual deficit, no doubt amplified by bit rot.
Which is a big proposition to just accept on its face, considering how the US government for example has been subsidizing the workforce of companies like Walmart and McDonalds, who actively encourage their own employees apply for food stamps and other social welfare programs - because their wage is so low that even though they’re working, they’re still qualifying for poverty programs!
Wages have not matched productivity for decades. To assume that the market was working correctly before this extra unemployment payout program started is misguided.
Supposed to? Says who? I say, employers are supposed to have to pay enough for a person to support themselves without government assistance. If we allow businesses to pay below a living wage, then the government is simply subsidizing their labor costs.
Don't work = be poor
Why work?
This whole thing has also shown me how working for a wage paycheck to paycheck even at six figures is basically slavery. You might get lucky and your 401k might grow in value but chances are you won't be able to retire till your 50s. It turns out that capital is everything.
Covid has shown us all that you might still die young so why work instead of enjoying life?
I retired at 30 and have done nothing but travel the world developing open source software since then. I have little to no possessions, and nothing tying me to any geographic area aside from a preference for clean air and such.
To your point, in my travels I’ve rarely come across anyone working a job out of anything other than financial necessity. Only a small fraction of people seem to do what they do out of genuine passion. Much more often, artistic, well-natured people are toiling away on menial tasks for money because that’s what it takes for them to survive.
> It turns out that capital is everything.
The gains from this are disproportionately accruing to billionaires while most people add almost nothing to the total output in exchange for cash and at the cost of much of their waking hours. These bullshit jobs are costing people time they’ll never get back, for dubious societal gains in many cases, while also depleting us of creative energy on an unbelievable scale.
Meanwhile, because of the dog-eat-dog nature of our existence, it seems as if there are only two viable paths for most people to achieve “freedom”: either you can withdraw deep into the proverbial jungle, or exploit the underexploited. A staggering amount of what passes for “industry” today is essentially just strip mining our planet of its natural resources, and/or converting it to food in whichever way using as inhumane of a process as is allowed by our current legal systems. The remainder of profitable human activities are by and large facilitating the dominion’s continuity, or quaint distractions from our highly cancerous existence.
There's nothing wrong with people leveraging their (temporary) increase in bargaining position to drive the wages up. I'm not at all surprised that people don't want to get back to thankless, low-paid jobs when not faced with the prospect of starvation.
These things have long term consequences beyond the basic emotions of a naive teenager. Last year, many users here lauded the CHOP/CHAZ fiasco, and quickly went quiet after teens got gunned down and females got beat up and raped.
The money that’s being printed is a debt that will be paid by you and your children. These distortions and destruction of markets isn’t healthy.
911 call centers are short staffed because people are sitting at home making $16/hr. The argument here is that these people are reskilling, changing careers etc. The simple truth is they are simply riding out the bennies as much as they can, before they will head back to their old jobs after a year of Netflix and chilling.
In the interim, with shortages and magic money everywhere, the US will consume all the “cheap” but fast-rising commodities, and leave the rest of the world to starve.
I do assume that you oppose the money-printing all around.
At any rate, it's all far from simple. Our system is corrupt and broken in several different ways.
This will be an interesting test case for the basic income gang. Especially now that some states are blocking the extra $ and we'll have stratified sample sets for comparison.