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[civver_764]

No, it doesn't. This explanation doesn't even make any sense - the question here is whether the extra spending will lead to an increase in real production, and certainly according to sound economic theory giving money to poor people will do exactly that by increasing consumption and thus investment and production.

This is a well known fallacy.

In Bastiat's tale, a man's son breaks a pane of glass, meaning the man will have to pay to replace it. The onlookers consider the situation and decide that the boy has actually done the community a service because his father will have to pay the glazier (window repair man) to replace the broken pane. The glazier will then presumably spend the extra money on something else, jump-starting the local economy. (For related reading, see Economics Basics.)

The onlookers come to believe that breaking windows stimulates the economy, but Bastiat points out that further analysis exposes the fallacy. By breaking the window, the man's son has reduced his father's disposable income, meaning his father will not be able purchase new shoes or some other luxury good. Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount being spent on other goods. Moreover, replacing something that has already been purchased is a maintenance cost, rather than a purchase of truly new goods, and maintenance doesn't stimulate production. In short, Bastiat suggests that destruction - and its costs - don't pay in an economic sense.

 

[Lexicus]

This is a well known fallacy.

The parable of the broken window doesn't actually apply in this situation. Even for the parable of the broken window to be accurate, you need to assume an economy in which resources are fully employed, and no real-world economy is in that position.

In any case though since we are not talking about destroying anything, this is a complete non-sequitur/red herring. We are talking about giving money to people with a high marginal propensity to consume, allowing them to consume things, which in turn is what will give us investment and production, which is why there isn't much reason to expect harmful inflation to result from a basic income guarantee.

 

[civver_764]

In any case though since we are not talking about destroying anything, this is a complete non-sequitur/red herring. We are talking about giving money to people with a high marginal propensity to consume, allowing them to consume things, which in turn is what will give us investment and production, which is why there isn't much reason to expect harmful inflation to result from a basic income guarantee.

You're not giving them the money out of thin air, you're taking it from other people. If you raise Walmart's taxes, and then Walmart raises the price of their goods, then all the people who shop at Walmart have effectively lost money.

 

[metalhead]

Civver, you can't be serious. The entire economic theory of the right is based on the idea that if the government gives more money back to people who spend it, it spurs economic growth.

Walmart can't raise their prices because of the free market and competition, another economic belief of the right. The bulk of their tax increase will hit profits. Or, more likely, Walmart will shift their business practices such that more revenue is spent on tax-deductible things like wages, benefits, and capital improvements.

 

[Lexicus]

You're not giving them the money out of thin air, you're taking it from other people. If you raise Walmart's taxes, and then Walmart raises the price of their goods, then all the people who shop at Walmart have effectively lost money.

No, I am giving the money out of thin air. We already went over this, pages ago. Government spending conjures money out of thin air, just like bank loans do. The way it's 'paid for' is by inflation.

 

[Zelig]

We're talking total output, not necessarily greater productivity. A person working one day a week can't compete in terms of output with someone working five. Yes, an exaggeration but one that demonstrates there are limits. I'd want to see your studies that show the total output. It doesn't take much to be a loser in global terms.

Depends on job. In knowledge heavy professions, a top-tier employee can easily be an order of magnitude more productive than an average employee. If he or she works one day a week, they're still above average in total output.

I don't find the premise of prioritizing total output over minimizing hours worked to be compelling. That guarantees that you're a loser in terms of time quality, while treading water vs. the world in output. Better to prioritize minimizing work, and then only pull back on that goal if it causes problems with output competitiveness.

 

[civver_764]

No, I am giving the money out of thin air. We already went over this, pages ago. Government spending conjures money out of thin air, just like bank loans do. The way it's 'paid for' is by inflation.

But inflation is not out of thin air. You lose money when the dollar inflates. Less goods will be consumed when the dollar inflates, hurting the economy.

You're also stealing from the future when the government borrows money. I think it is totally immoral to steal from our children so that we can spend it on ourselves.

Walmart can't raise their prices because of the free market and competition, another economic belief of the right. The bulk of their tax increase will hit profits.

Uhm, no. If the government raises taxes on Walmart, it will also raise taxes on its competitors, and then all of them will raise the price of their goods.

 

[Akka]

Competition leads them to pay workers more, not less.

I'd like to live in your world, because in ours the opposite is true.

 

[Timsup2nothin]

While we don't always agree on things, you're certainly someone that i would enjoy going out for a drink with.

California is a fairly short plane ride from Chicago, and I'm known to drive down to the airport to meet CFCers. I'm a one beer limited drinker, but I like to eat.

I can image going out for drinks with Tim would be akin to rock climbing. ..unique, exhilarating, fun.....but one wrong move and you may end up battered and bloody

It's much safer since I instituted the one beer limit. It takes much more than 'one wrong move' to be deemed a jerk nowadays.

 

[civver_764]

I'd like to live in your world, because in ours the opposite is true.

>Company A has monopoly, pays workers $10/hr, much less than they can afford.
>Company B comes in to steal Company A's business, needs workers. Pays workers $11/hr so they come over to Company B.
>Company A needs to retain their workers, offers $11.50/hr.
>Rinse and repeat until worker's wages can't be raised any higher.

 

[metalhead]

That only works under a full employment scenario, which we are far, far away from.

Uhm, no. If the government raises taxes on Walmart, it will also raise taxes on its competitors, and then all of them will raise the price of their goods.

No, prices will stay low due to competition. Apply your little employment scenario in reverse. The market always wins, right?

Companies have many other options besides raising prices to deal with a heavier tax burden, like spending more on employee compensation, or on improving stores and supply chains. Raising prices is always the last resort, and is almost never undertaken in response to revenue declines, especially by large retailers. That's just bad business. You either boost revenue by other means, or figure out how to deduct more revenue from your tax bill.

 

[Lexicus]

But inflation is not out of thin air. You lose money when the dollar inflates. Less goods will be consumed when the dollar inflates, hurting the economy.

Again, the point I was originally making was that a basic income would be expected to increase production, which would nullify the inflationary effect...you still haven't refuted that argument, and at this point it seems like you're just knee-jerk responding with various right-wing economic tropes rather than actually reading/comprehending my arguments, so if you can't respond with something substantive this time I'm just going to ignore you.

You're also stealing from the future when the government borrows money.

Oh? Please, explain how this works.

 

[Akka]

>Company A has monopoly, pays workers $10/hr, much less than they can afford.
>Company B comes in to steal Company A's business, needs workers. Pays workers $11/hr so they come over to Company B.
>Company A needs to retain their workers, offers $11.50/hr.
>Rinse and repeat until worker's wages can't be raised any higher.

Nice theory.
Too bad reality doesn't follow fairyland script.
But why bother checking facts (like noticing that wages have been stagnant for a long time) when you can just stick your head in the sand and repeat some mantra instead, right ?

 

[rah]

Right, and my point is technological advance may make it possible for someone in, say, 2025 working one day a week to match or beat the output of someone working a five-day week in 2017. But what you quoted presumably is referring to the fact that numerous studies have demonstrated a four-day workweek would increase productivity, and I think total output as well though I'm not totally sure about that.

Don't have to wait for 2025, a tractor did that for farms decades ago. Yeah, I'd want to review those studies. (please remember that I work for a research company so am very wary of studies. Methodology is critical) I've seen our clients twist our research to make outrageous claims.

And Zelig, depending on the circumstances you could be right but it has to be determined on a case by case instance. I have no problem with minimizing work and working towards that goal. And taking advantage of any savings in that regard. Progress will not be halted.

 

[civver_764]

That only works under a full employment scenario, which we are far, far away from.

That's irrelevant. As a rule, more competitors = higher wages.

No, prices will stay low due to competition. Apply your little employment scenario in reverse. The market always wins, right?

They will stay as low as they can, but "as low as they can" will be higher with higher taxes.

Companies have many other options besides raising prices to deal with a heavier tax burden, like spending more on employees, or on improving stores and supply chains. Raising prices is always the last resort.

If we assume that Walmart can somehow reinvest all of its money so that it avoids the tax increase, then we haven't actually solved the problem of needing extra tax revenue. The government will then have to take away those tax deductions, or find some other part of the economy to take from.

Again, the point I was originally making was that a basic income would be expected to increase production, which would nullify the inflationary effect...

That's my point, at best it would nullify it, which keeps us in the same situation we're in now. Of course it doesn't just nullify it, it also goes along with higher and higher taxes. Eventually we will reach a point where we can't raise taxes any more and the whole thing will collapse. It's a lot like a heroin addiction. At first its great and seems to have no consequences, by the end you'll wish you had never started in the first place.

Oh? Please, explain how this works.

Who's going to have higher tax rates because they need to pay off the debt that their ancestors generated?

Nice theory.
Too bad reality doesn't follow fairyland script.
But why bother checking facts (like noticing that wages have been stagnant for a long time) when you can just stick your head in the sand and repeat some mantra instead, right ?

I looked and looked but I can't find a single argument in this post.

 

[Timsup2nothin]

That's irrelevant.

As has been noted before with you, facts generally are. The conversation moved out of your depth immediately after you regurgitated your "analysis" because you clearly don't understand the basic principles of the subject, but that doesn't mean that facts that counter your ridiculous claims can just be dismissed. It does mean that you can.

 

[civver_764]

What do you want, a bone or something? Go fetch boy!

 

[Akka]

I looked and looked but I can't find a single argument in this post.

There is a very simple one actually : reality disagrees with your theory.

 

[Lexicus]

That's my point, at best it would nullify it, which keeps us in the same situation we're in now.

No, it redistributes wealth by giving poor people proportionally more than they had before.

Of course it doesn't just nullify it, it also goes along with higher and higher taxes. Eventually we will reach a point where we can't raise taxes any more and the whole thing will collapse. It's a lot like a heroin addiction. At first its great and seems to have no consequences, by the end you'll wish you had never started in the first place.

Repeat after me: federal spending isn't paid for by taxes

Who's going to have higher tax rates because they need to pay off the debt that their ancestors generated?

No one is going to be paying off the federal debt ever. Every time we try the economy crashes and the budget goes deep into deficit.

 

[warpus]

I'm a one beer limited drinker

This changes everything