I actually do think we need an "income ceiling". Having so much money into so few peoples' possession starting to do wonky things to the economy. If you go over the limit you either have to:
A: Give it to charity
B: Give it up to the government
Or C: Reinvest it into your company (such as bonuses for your workers)
I'll say it again, having so much money concentrated into so few hands is making the economy dysfunctional. Not to mention, a lot of it gets sent offshore, taking it out of the US economy permenantly.
Hmm... it's like the expression "Too big to fail." When so few people have a gigantic portion of the economy in their pocket, it amplifies the risk of the economy. Since that one entity has so much of it, his mistakes will also thus be amplified. I conjecture that if income distribution were more equal it would disperse some of the shock of economic recessions/depressions.
Edit: It's just an hypothesis from a lay-person. I could be completely wrong. Someone who knows economics might know
Too big to fail comes as result of economies of scale. As long as it better to be bigger, bigger will be the trend. I'm not sure we even WANT to fight economies of scale.
No one has ever said a person is too big to fail, just a company. (lololol companies are people!)
I think we should follow this corporate personhood goosery to a logical end.
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
I liked the quote "Too big to fail, too big to exist" from some senator. I think it should apply to both people and companies. There certainly should be an upper limit.
I think we should follow this corporate personhood goosery to a logical end.
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
Could you imagine taxing the yearly income of Apple or Microsoft at, say, 50~60%?
Because that would be fucking hilarious.
Alright and in this next scene all the animals have AIDS.
I got a little excited when I saw your ship.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
I think we should follow this corporate personhood goosery to a logical end.
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
Actually, a lot of "companies" are taxed at individual rates right now. That is how pass through entities like Partnerships and LLCs work. Hell, it is even technically how c corps worked before the bush tax cuts lowered dividend rates to the capital rates (except that there is an extra level of taxation at the corporate level too, which is probably born by consumers in the form of higher prices). Your plan would really just require constant dividends, and stop companies from being able to hold cash, which would make them more susceptible to failing.
I think we should follow this corporate personhood goosery to a logical end.
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
Actually, a lot of "companies" are taxed at individual rates right now. That is how pass through entities like Partnerships and LLCs work. Hell, it is even technically how c corps worked before the bush tax cuts lowered dividend rates to the capital rates (except that there is an extra level of taxation at the corporate level too, which is probably born by consumers in the form of higher prices). Your plan would really just require constant dividends, and stop companies from being able to hold cash, which would make them more susceptible to failing.
.....I.... there aren't words. The corporate rate is higher than the individual rate, which is why so many companies are using passthrough entities, so matching individual and corporate rates would remove a large amount of that chicanary. In fact, for the actual small businesses (not just businesses with a small number of owners) they should see a lightening of their tax burdens.
Remember, taxes only come in on profits, not revenue, so there is no reason for companies to fail due to a new tax plan, unless their executives are trying to suck every last dollar out before jumping and taking their golden parachute, which means boards will actually have incentive to tie executive pay into the health of the company, not just its current quarterly report.
While there are a number of companies that have stock option that have a set yearly rate of return for dividends, well, dividends are only paid on profitable years, so there is again no problem there.
We face a conundrum. The argument of the wealthy versus the poor has been going on for some time. In particular, the lead up to the Athenian Civil War occurred because Landowners were perceived with contempt by the majority. As they lived in a Democracy, they simply voted to help themselves to the landowners possessions. This was simple theft made legal by the Tyranny of the Majority(Which most of my American friends who specialize in constitutional matters or history would probably be aware of was considered a Very Bad Thing by their founding fathers).
I think we should follow this corporate personhood goosery to a logical end.
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
Actually, a lot of "companies" are taxed at individual rates right now. That is how pass through entities like Partnerships and LLCs work. Hell, it is even technically how c corps worked before the bush tax cuts lowered dividend rates to the capital rates (except that there is an extra level of taxation at the corporate level too, which is probably born by consumers in the form of higher prices). Your plan would really just require constant dividends, and stop companies from being able to hold cash, which would make them more susceptible to failing.
.....I.... there aren't words. The corporate rate is higher than the individual rate, which is why so many companies are using passthrough entities, so matching individual and corporate rates would remove a large amount of that chicanary. In fact, for the actual small businesses (not just businesses with a small number of owners) they should see a lightening of their tax burdens.
Remember, taxes only come in on profits, not revenue, so there is no reason for companies to fail due to a new tax plan, unless their executives are trying to suck every last dollar out before jumping and taking their golden parachute, which means boards will actually have incentive to tie executive pay into the health of the company, not just its current quarterly report.
While there are a number of companies that have stock option that have a set yearly rate of return for dividends, well, dividends are only paid on profitable years, so there is again no problem there.
The corporate rate is higher than all but the top marginal rate for individuals, but corporations are able to take significantly more deductions than individuals. If you moved corps and other forms of companies completely to the individual tax system (which is what I took the proposal to be) then it would represent a massive increase in effective tax rates. This increase in taxes (remember, no expensing capital expenditures, no depreciation, no deductions for interest paid on debt) absolutely would be enough to push some companies from black to red.
I said companies would basically be required to dividend out their cash instead of holding cash reserves because I am assuming that under a system like this there would be something analogous to the dividends received discount to prevent double taxation on dividends sent up to shareholders (otherwise all corporate profits would be subject to tax twice at ordinary individual income rates, which could lead to a marginal tax rate approaching 100%) and this would basically require all profits to go directly to shareholders to avoid confiscatory tax rates on the money.
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Sir Landsharkresting shark faceRegistered Userregular
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
Please consider the environment before printing this post.
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
The situation in Luzerne is not an isolated one. As funding falls and cases continue to flood the system, many already-stressed defender programs across the country are being pushed to the very brink of collapse. And with little hope of state or federal action to remedy the problem, a small but growing number of defender offices are rebelling, suing states and counties over excessive caseloads that their attorneys cannot handle without violating their clients' constitutional right to effective representation.
To handle the caseload, Olexa rises before dawn five days a week and works weekends and late into the night, reviewing police reports and tapping out briefs on his laptop while watching TV with his girlfriend, Anne Marie. He shuttles regularly between Hazleton, where a local magistrate arraigns the newly arrested, and Wilkes-Barre, where the public defender's office, main county courthouses and the county jail are located.
Olexa handled nearly 260 cases last year, with more than half of them felonies -- mostly assaults and robberies and the more serious drug charges. The rest of his clients face misdemeanors, which in Pennsylvania can bring a jail or prison sentence of up to three years. He also files his own appeals, a complicated, time-consuming process. The American Bar Association recommends that full-time public defenders handle no more than 150 felony cases in an entire year.
Olexa's caseload far exceeds those standards, but there's a twist: he technically works only part-time for the county. Like the majority of attorneys in the public defender's office, his salary of about $30,000 is based on the pretext that he carries only half the workload of a full-time attorney, and can earn a second income by taking on private clients. In reality, Olexa works a grueling schedule simply to keep pace with the constant influx of county cases and squeezes in private clients whenever he can, often by working through the weekends.
Nope, a union wouldn't help them one bit. Cuz you know, we have laws and stuff, or something...
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
It's Friday. Being amused would be fun.
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
The solution cannot be to push down the successful. The solution must be to raise the less successful. Make education more prevalent, encourage learning real skilled trades, raise the economic output of the country as a whole.
Remember that the definition of "supply-side" has nothing to do with partisanship and is a technical property of a model
ronya on
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
It's Friday. Being amused would be fun.
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
The solution cannot be to push down the successful. The solution must be to raise the less successful. Make education more prevalent, encourage learning real skilled trades, raise the economic output of the country as a whole.
Remember that the definition of "supply-side" has nothing to do with partisanship and is a technical property of a model
So you're saying the thing avowed supply siders are against is actually supply side
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
It's Friday. Being amused would be fun.
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
The solution cannot be to push down the successful. The solution must be to raise the less successful. Make education more prevalent, encourage learning real skilled trades, raise the economic output of the country as a whole.
Remember that the definition of "supply-side" has nothing to do with partisanship and is a technical property of a model
So you're saying the thing avowed supply siders are against is actually supply side
This confuses me
But i am dumb sometimes
People who are, say, avowedly Christian are as theist as people who are avowedly Muslim.
If you believe that macroeconomic malaise is due to shortfalls in productivity, then you have a supply-side model of macroeconomics, be it because you ascribe the shortfall to taxes or insufficient education in "real" trades.
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
This is more appropriate to a few pages back, but I just wanted to comment on how amusing it is to see certain posters unironically advocating supply-side solutions to today's economy.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
It's Friday. Being amused would be fun.
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
The solution cannot be to push down the successful. The solution must be to raise the less successful. Make education more prevalent, encourage learning real skilled trades, raise the economic output of the country as a whole.
Remember that the definition of "supply-side" has nothing to do with partisanship and is a technical property of a model
So you're saying the thing avowed supply siders are against is actually supply side
This confuses me
But i am dumb sometimes
People who are, say, avowedly Christian are as theist as people who are avowedly Muslim.
If you believe that macroeconomic malaise is due to shortfalls in productivity, then you have a supply-side model of macroeconomics, be it because you ascribe the shortfall to taxes or insufficient education in "real" trades.
I thought the traditional defintion of supply side was low productivity due to barriers to entry.
In other words, there are not enough supplies (be it in material or labor) to permit the productivity. This is why they're against regulation and taxation - they believe those things encumber the supply chain by making materials and labor cost more.
Your definition is so broad it basically includes everyone, to my reading. You're saying people who believe productivity isn't high because there is no demand for it are supply side adherents.
It excludes demand-side models, which is exactly the dichotomy one is aiming for here. The intuition of a demand-side problem is there being stuff but not the purchasing power for it. The intuition of a supply-side problem is the reverse - not enough stuff to purchase. Why isn't there 'enough' stuff? Because people aren't making it. Why they aren't making it is something that can then be sensibly cut down into partisan solutions.
The 'supply' in 'supply side' is about aggregate supply and aggregate demand, not literal labour and other supplies for producing things (although barriers to their entry is obviously one component).
To idly speculate, I think your missing the entire universe of demand-side solutions speaks of the poor ability of left-wing economists to popularize what, exactly, they are advocating.
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
e: here is a archetypically "pure" demand-side policy - the Keynesian hole-digging exercise. Borrow or print to pay people to dig holes and pay people to fill them back up. Insofar as it improves welfare at all, it does so by increasing demand. Here is a pure supply-side policy: we perceive that the private company Standard Acme Oil Co. is extracting oil inefficiently. We, the state, buy it from the owner at market price and propose to do it differently, re-investing the saved costs wholly into sovereign wealth funds invested overseas. By definition domestic demand does not change and the only improvement in welfare in having more oil to go around.
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
I'm assuming we can say both at the same time and have some sort of hybrid model?
And what about "we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages so that they can consume and invest more stuff"?
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
I'm assuming we can say both at the same time and have some sort of hybrid model?
And what about "we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages so that they can consume and invest more stuff"?
You can have a hybrid model. This does entail a degree of compromise. Stimulus-funded infrastructure projects are typically acknowledged to be bad at increasing demand in a hurry. Yet if you want demand-side in the medium term and supply-side in the long term, they're the way to go.
But what you mention in your second sentence is not a hybrid model, I think... it's just a supply-side one. You propose to push out the production frontier, and then Say's law does the rest. The dis-equilibrium is being identified and solved as a supply-side problem. If this is confusing, it's probably because we are not being very rigorous here.
ronya on
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JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
It excludes demand-side models, which is exactly the dichotomy one is aiming for here. The intuition of a demand-side problem is there being stuff but not the purchasing power for it. The intuition of a supply-side problem is the reverse - not enough stuff to purchase. Why isn't there 'enough' stuff? Because people aren't making it. Why they aren't making it is something that can then be sensibly cut down into partisan solutions.
The 'supply' in 'supply side' is about aggregate supply and aggregate demand, not literal labour and other supplies for producing things (although barriers to their entry is obviously one component).
To idly speculate, I think your missing the entire universe of demand-side solutions speaks of the poor ability of left-wing economists to popularize what, exactly, they are advocating.
Your argument here is basically you think supply side is so all solving that even people that are calling themselves supply siders on a national scope, and saying they're against tax progression, are really just wrong and don't know what they mean, and by your broader definition of the word, anyone who wants to buy or sell anything is a supply sider, and so supply side is good and liberals don't even know what they want and you might even say they're really fighting...against themselves?
What's ignorant about supply side economics in practice is they lead to a slowing system as the energy in the system - economic activity - becomes wealth. A supply side economy is a cooling planet, in geological terms. If you're proposing some sort of system where barriers to entry are low, and wealth is kept in sensible circulation, we're probably on the same page, but every circulatory measure proposed is being shot down as a barrier to entry right now.
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
I'm assuming we can say both at the same time and have some sort of hybrid model?
And what about "we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages so that they can consume and invest more stuff"?
You can have a hybrid model. This does entail a degree of compromise. Stimulus-funded infrastructure projects are typically acknowledged to be bad at increasing demand in a hurry. Yet if you want demand-side in the medium term and supply-side in the long term, they're the way to go.
Aren't stimulus-funded infrastructure projects suggested as a way to boost demand during a downturn though (once monetary policy has reached it's limit)? Or is there some other mechanism that's supposed to increase short-term demand?
But what you mention in your second sentence is not a hybrid model, I think... it's just a supply-side one. You propose to push out the production frontier, and then Say's law does the rest. The dis-equilibrium is being identified and solved as a supply-side problem. If this is confusing, it's probably because we are not being very rigorous here.
I think I get what you are saying. You are identifying the issue as a lack of supply of "trained labour" (or whatever term you wanna use I guess) and using tax money to increase that supply.
Not quite sure where Say's Law comes in here to be honest. Are you saying the creation of that new pool of labour creates the desire for that labour to be exchanged for goods/money? I thought Say's Law implied that the supply of labour would create demand for itself and I would have thought the labour was meeting some existing demand for more trained labour.
A lot of people who call themselves 'supply-siders' as a political identity are idiots and let's leave it at that. Quite often you can see them bandying about the notion of deficit-funded tax cuts (see Bush, GW, administration of), which should make exactly zero sense in a neoclassically supply-side framework, since a denial of demand-side policy generally entails a Ricardian equivalence of some sort, where revenue via deficit or tax has the same effect.
I am content to duel with the economics being forwarded here, which I assume is done so in good faith, although of course that is an assumption which is frequently false on a national scope outside the forums. So, yes, I think it is fair when to point out that how macroeconomics divides up policy approaches into "demand-side" and "supply-side" types differs from how macroeconomic policy is typically arrayed in modern US politics. This is not a fault unique to liberals. It is a fault endemic to the exercise of politics.
I noted in [chat] that - not terribly long ago - American liberals advocated supply-side solutions and American conservatives identified demand-side problems; the year was 1965 and Lyndon B. Johnson and a jointly Democratic Congress were busy funding education (and Medicare, and Vietnam, and...) over the screams of the fading, but still dominant, Rockefeller Republicans of excessive demand and therefore inflation. I hope I may take it as given that five decades of hindsight have validated both the sensibility of increasing education funding at the federal level and the concerns over the full-employment deficits accumulated in the era? Policies must find champions somehow and inconsistency in party loyalty is a far lesser sin that inconsistency in one's advocated outlook at any given point.
As for 'sensible circulation' - well, there is nothing intrinsically wrong with this view. It's basically any monetarist-flavoured outlook. But I should probably point out that wealth can circulate very easily in highly unequal societies, between very wealthy individuals and between very poor individuals. You should outline your macroeconomic model more precisely.
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
I'm assuming we can say both at the same time and have some sort of hybrid model?
And what about "we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages so that they can consume and invest more stuff"?
You can have a hybrid model. This does entail a degree of compromise. Stimulus-funded infrastructure projects are typically acknowledged to be bad at increasing demand in a hurry. Yet if you want demand-side in the medium term and supply-side in the long term, they're the way to go.
Aren't stimulus-funded infrastructure projects suggested as a way to boost demand during a downturn though (once monetary policy has reached it's limit)? Or is there some other mechanism that's supposed to increase short-term demand?
But what you mention in your second sentence is not a hybrid model, I think... it's just a supply-side one. You propose to push out the production frontier, and then Say's law does the rest. The dis-equilibrium is being identified and solved as a supply-side problem. If this is confusing, it's probably because we are not being very rigorous here.
I think I get what you are saying. You are identifying the issue as a lack of supply of "trained labour" (or whatever term you wanna use I guess) and using tax money to increase that supply.
Not quite sure where Say's Law comes in here to be honest. Are you saying the creation of that new pool of labour creates the desire for that labour to be exchanged for goods/money? I thought Say's Law implied that the supply of labour would create demand for itself and I would have thought the labour was meeting some existing demand for more trained labour.
Print money, hand it out. Generally, do things which put income out there fast rather than carefully. You may recall the phrase "shovel-ready projects", which was bandied about quite a bit in 2009. The thing about infrastructure is that you spend quite a while sitting around doing necessary assessments and design and preparation and all that work takes a while. Yet you can't dispense with environmental statements, they are something you have to do. So that limits the nature of infrastructure projects in increasing demand now.
As for Say's Law: yes, the supply of labour creates the demand for itself. For more effective workers to earn higher wages - higher marginal productivity to actually translate into higher real wages - you are implicitly invoking this understanding, that the additional stuff they make will be able to find buyers and therefore these workers will actually be able to bargain their equilibrium wage up.
Yet you can't dispense with environmental statements, they are something you have to do. So that limits the nature of infrastructure projects in increasing demand now.
No it does not. Demand does not imply physical products only. The question is only whether or not the government is paying them to do it. If they are, its a demand side solution. The demand side effects of government spending occurs regardless of what they pay for[so long as they are paying for something]
There is a bit of a disconnect between the arguments for short term adjustment compared to arguments for long term growth. And probably a lack of understanding about the model which is causing your technical points to go over their heads. But i don't think that your technical points hold much merit compared to what is(or should be) mutually understood to be the point. Maybe i didn't read the thread as deep as i ought to have. But it seems like you are talking to points not being raised.
That is, the argument that spending on teachers is good is not because spending on teachers will fix the shortfall in GDP. The argument that spending on teachers is good is because more productivity is better. In addition since any spending on anything will decrease the shortfall in GDP we might as well spend it on something that is good.
This is not a "supply side" solution, in the technical model sense, or in the political sense. We tend to view government spending as demand side(in the technical model sense), regardless of whether or not that spending is on things that will long term modify productivity in the same way that a stochastic increase in investment due to shifting spending habits would be a demand shock and not a supply shock even though an increase in investment should ceteris paribus increase productivity(and/or the Capital Stock and therefore increase the PPF) in the future. This is true regardless of whether or not the solution if offset with tax increases or not.
Edit: A supply side framework operates on the understanding not that we can increase the PPF by taking action [such a position is basically nonsensical in the model, if the PPF can be increased by taking action then its not the PPF], but that there are policies which are preventing us from achieving the PPF, policies that are keeping laborers from getting jobs and from companies from being efficient. This is a wildly different notion than suggesting that we will fix a shortfall from potential GDP by increasing potential GDP
RE: Wealth Concentration and RBC. Can you explain how that works? Because i can see a demand side explanation to wealth concentration causing business cycles to be stronger, but I cannot see an RBC explanation. An RBC explanation would have to account for why wealth concentration causes productivity/technology level/the amount of people who want to work/the amount of productive capital to change faster than it would otherwise.
But that doesn't make much sense for why that would happen.[on top of the obvious "why do these things fluctuate negatively in the first place in a normal pattern" problem that RBC has]
However an argument that business failures push bond holders to move to safer bonds and this shortage of bond supply causes a sharper decline [as bigger businesses have larger and more systemic effects when each one fails] does make a lot of sense and that is 100% a demand side explanation.
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
Not necessarily. They could be arguing that differences in consumption/investment behavior will create a more stable financial system. Which would be a demand side argument.
You can have a hybrid model. This does entail a degree of compromise. Stimulus-funded infrastructure projects are typically acknowledged to be bad at increasing demand in a hurry. Yet if you want demand-side in the medium term and supply-side in the long term, they're the way to go.
But what you mention in your second sentence is not a hybrid model, I think... it's just a supply-side one. You propose to push out the production frontier, and then Say's law does the rest. The dis-equilibrium is being identified and solved as a supply-side problem. If this is confusing, it's probably because we are not being very rigorous here.
There is no disequilibrium in the "supply side" explanation of the shortfall as modeled by RBC. If there was a disequilibrium then the solution [to push out the frontier] would not make any sense since we are explicitly not on the frontier by nature of being at a disequilibrium [so expanding the frontier would no longer dictate fixing the problem]. Granted, if there is not a disequilibrium RBC still doesn't make any sense [because if we could expand the frontier and this would increase GDP then we would have to have a reason why this should work during a recession but not a boom]
Edit: Lets be a bit more specific. We can say that we are in a recession due to supply side reasons. This can come from either government policy which makes it impossible for us to reach the frontier due to blockages between capital and labor. Or it can come from a real shock to productivity, capital, or labor.
But we can't have it both ways. We cannot have a "supply side" explanation to the shortfall that says we are in disequilibrium [I.E. we aren't making it to the PPF] because of something that happened to the PPF. Furthermore if a reduction in the PPF was our cause then we cannot spend more to move the PPF out, just as if a disequilibrium was our cause then we cannot move the PPF out in order to fix it, we can only fix the thing that caused us to go below the PPF due to supply issues.
Arguments for spending imply that :
1) We have an actual shortfall and not a real reduction in productivity/capital/labor
2) The shortfall is caused by something other policy blockages between capital and labor
The situation in Luzerne is not an isolated one. As funding falls and cases continue to flood the system, many already-stressed defender programs across the country are being pushed to the very brink of collapse. And with little hope of state or federal action to remedy the problem, a small but growing number of defender offices are rebelling, suing states and counties over excessive caseloads that their attorneys cannot handle without violating their clients' constitutional right to effective representation.
To handle the caseload, Olexa rises before dawn five days a week and works weekends and late into the night, reviewing police reports and tapping out briefs on his laptop while watching TV with his girlfriend, Anne Marie. He shuttles regularly between Hazleton, where a local magistrate arraigns the newly arrested, and Wilkes-Barre, where the public defender's office, main county courthouses and the county jail are located.
Olexa handled nearly 260 cases last year, with more than half of them felonies -- mostly assaults and robberies and the more serious drug charges. The rest of his clients face misdemeanors, which in Pennsylvania can bring a jail or prison sentence of up to three years. He also files his own appeals, a complicated, time-consuming process. The American Bar Association recommends that full-time public defenders handle no more than 150 felony cases in an entire year.
Olexa's caseload far exceeds those standards, but there's a twist: he technically works only part-time for the county. Like the majority of attorneys in the public defender's office, his salary of about $30,000 is based on the pretext that he carries only half the workload of a full-time attorney, and can earn a second income by taking on private clients. In reality, Olexa works a grueling schedule simply to keep pace with the constant influx of county cases and squeezes in private clients whenever he can, often by working through the weekends.
Nope, a union wouldn't help them one bit. Cuz you know, we have laws and stuff, or something...
Its pretty shitty since this story isnt exactly unique and there are a bunch of law students and recent grads that would kill to work at a non-profit (like the Innocence Project) or for the Public Defenders but cant because the institutions lack the funds. Its hard to even get unpaid internships at these places since they have so few lawyers doing all the work that they cant afford to have a lawyer monitor a law student. But its hard to convince the public to pay for things like this, partially because of an aversion to taxes and partially because a lot of people have a 'fuck the guilty' mindset (despite the defendant not actually being guilty of anything until a verdict is rendered against him).
Re: infrastructure. The conventional wisdom is the tradeoff between legislative speed and precision, so to speak, isn't it? If you helicopter drop cash, you don't care whose heads it lands on.
It is quite true that spending to make environmental statements is, itself, demand-creating, but the point is that all the spending on the concrete and rebar and construction labour will have to wait until the statements come in for you to pick which projects actually pass whatever long-term cost-benefit analysis. IAPW states maintain schedules of infrastructure projects that would be beneficial at different interest rate and time schedules, but in practice they don't, because there's a lot of surveying and democratic approval to acquire for each project and all of that takes time.
Re: PPF. I daresay that anybody more left-wing than Murray Rothbard would accept the notion that states provide certain public and private goods that are, for a variety of reasons, ideally provided by states and no other entity. If states don't do these, then you're not on the PPF. At some point achieving efficiency actually requires action by agents, and one of these agents is a modern infrastructure-providing state.
Yes, it's possible to conceptualize all deviations from the PPF as generated by restrictions and any manner of long-term investment in public goods, but this leaves the curious question as to why you and I, forumers who I posit are indeed safely to the left of Murray Rothbard, describe things like publicly-funded primary education as Obviously Good Ideas at all. Don't we agree that it does, in fact, increase potential output?
Re: RBC and concentration. It's very easy. A typical intuition goes like this. Off the top of my head, the sales of the top 100 firms account for 30% of GDP in the US. That's huge - the GFC only knocked off 5% of GDP! The reason RBC models have to scrape to find plausible across-the-board technology shocks is because idiosyncratic firm-specific productivity shocks should average out, but if they don't average out at all, then suddenly it is really easy to fit sources of volatility. Concentration amplifies idiosyncratic shocks.
It is true that TBTF and flight to safety would be a demand-side explanation.
Not necessarily. They could be arguing that differences in consumption/investment behavior will create a more stable financial system. Which would be a demand side argument.
This is possible, but I submit that advocacy of tax-funded redistribution does not generally come packaged with envisioned changes in financial regulation. Usually the goal is to redistribute wealth endowment in a direct manner. The topics are distant enough without invoking aggregate C and K along the way, it's like arguing that building national highways would cause changes in consumption/investment behavior that will create a more stable financial system. Well it'll certainly cause some changes in consumption/investment behavior, and there are some changes in consumption/investment behavior that would enhance stability, so it's certainly possible... but really, now. Come on.
There is no disequilibrium in the "supply side" explanation of the shortfall as modeled by RBC. [...]
True. Strictly speaking disequilibrium is a demand-side concept and the phrase "we can do things to increase potential output" is internally contradictory. For consistency's sake with demand-side terminology, though, I think it is best to conceptualize states as economic agents, so that there is some price at which it should 'sell' policies (via a cost-benefit analysis or whatever) - but states don't necessarily respond to prices, so the 'market' for these publicly-provided goods remains in disequilibrium. This renders the antisymmetry in demand-side and supply-side policy obvious.
Re: RBC and concentration. It's very easy. A typical intuition goes like this. Off the top of my head, the sales of the top 100 firms account for 30% of GDP in the US. That's huge - the GFC only knocked off 5% of GDP! The reason RBC models have to scrape to find plausible across-the-board technology shocks is because idiosyncratic firm-specific productivity shocks should average out, but if they don't average out at all, then suddenly it is really easy to fit sources of volatility. Concentration amplifies idiosyncratic shocks.
The problem that RBC has fitting firm specific and broad technology shocks is the same problem, because we don't have a factor for productivity except as we measure by virtue of the model, if we solve the system assuming equilibrium we produce the desired shocks. That is to say that since the system has a solution, any fit we find, being the solution will of course be a "surprisingly" good solution. Its akin to doing a regression on two data points and then being utterly surprised when your SSE=0
If we say that idiosyncratic shocks turn out to simply be not add up to zero then we have a problem because they're no longer idiosyncratic. If they're not idiosyncratic then the solution to the system of equations which gives us the non-idiosyncratic shocks cannot tell between the firm specific and the non-firm specific shocks. If we solve the system, the sum of the idiosyncratic shocks that are different than zero will appear exactly as if they were non-firm specific shocks.
What this means is that "fitting" productivity shocks, at a firm or national account level, is simply an exercise in really bad science. Given any collection of national account vales you can give a fit of productivity shocks that will look suitably like the overall data pattern because there is a necessary spurious correlations between the solution to a system and the structure of the system itself.
The intuitive explanation is "why does real productivity/capital/labor fall for any reason and why does it do so cyclically" and the answer to the above is "well there is no good reason to believe that real productivity/labor/capital should by cyclical". The specific answer to the people who don't do the fitting of productivity, but instead use unit root hypothesis solutions to make their case is "well in this case what was the event that caused the real reductions in productivity/labor/capital when we have no reason to believe any fell and the measures of what we have show the opposite of your conclusions"
Usually the goal is to redistribute wealth endowment in a direct manner
If the goal is to redistribute wealth endownment in a direct manner then its demand side. If the goal is to make it easier for less wealthy people to get jobs its supply side.
I mean, by virtue of changing the marginal taxation rates we should probably say its supply side since the marginal taxation changes should have some effect on supply if marginal taxation rates have any effect on supply.
But the supposed reason for why it would be better doesn't hinge on the nation being overall more productive[or even individually more productive]; the supposed reason for why it would work is that rich people would have less money to fuck things up with. [paraphrased] And/or not arguments to efficiency at all, but arguments that wealth concentration itself causes harm to others. I.E. arguments slightly outside the scope of what we're discussing.
Re: infrastructure. The conventional wisdom is the tradeoff between legislative speed and precision, so to speak, isn't it? If you helicopter drop cash, you don't care whose heads it lands on.
Yes, but that isn't what the thread was talking about really.
It is quite true that spending to make environmental statements is, itself, demand-creating, but the point is that all the spending on the concrete and rebar and construction labour will have to wait until the statements come in for you to pick which projects actually pass whatever long-term cost-benefit analysis. IAPW states maintain schedules of infrastructure projects that would be beneficial at different interest rate and time schedules, but in practice they don't, because there's a lot of surveying and democratic approval to acquire for each project and all of that takes time.
True, but its still demand side. Even if the immediate effects on demand are muted due to how we expect people to react. Its just demand side in the next term.
Yes, it's possible to conceptualize all deviations from the PPF as generated by restrictions and any manner of long-term investment in public goods, but this leaves the curious question as to why you and I, forumers who I posit are indeed safely to the left of Murray Rothbard, describe things like publicly-funded primary education as Obviously Good Ideas at all. Don't we agree that it does, in fact, increase potential output?
We do indeed agree that it in fact increases potential output, but the solution to the social planners problem WRT optimal government spending does not imply that government spending is not demand side just as the solution to the market demand for investment does not imply that peoples investment decisions are not demand side.
I mean, we do agree that peoples consumption and investment decisions are demand side right?
True. Strictly speaking disequilibrium is a demand-side concept and the phrase "we can do things to increase potential output" is internally contradictory. For consistency's sake with demand-side terminology, though, I think it is best to conceptualize states as economic agents, so that there is some price at which it should 'sell' policies (via a cost-benefit analysis or whatever) - but states don't necessarily respond to prices, so the 'market' for these publicly-provided goods remains in disequilibrium. This renders the antisymmetry in demand-side and supply-side policy obvious.
This would be an entirely novel* way to look at the government for which we would have to not only rewrite the entire system, but it would render our conception of "supply side" and "demand side" moot. I mean, since the government was "selling policy" every policy would be supply and there would not be anything the government could do on the demand side since it was essentially a firm "selling" a product.
Such a framework probably would not be helpful since we would have to ask why the organization with the authority to tax was "selling" policy with the price being the tax it extracted?
*novel with regards to our framework, i am sure its not actually new
I step away from the thread for a few days because of travel and now it's a discussion on RBC models? Shoo, shoo to the [Economy] thread with you.
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
I don't know the strategy or larger picture. I'm hoping someone can chime in on that. To me, it's looking like the NLRB is baiting SCOTUS and I've updated the thread title accordingly. Here's a short article from The Chronicle of Higher Ed.
Re: RBC - well, yes, of course if you posit that shocks are "really" idiosyncratic that the onus is on you to start digging out firm-specific indices, not solve for unknown firm-specific shocks and shove the entire error there to give an arbitrary fit. That would be bad science, indeed.
I hope you at least agree that as a theoretical matter, dropping the presumption of "averaging out" productivity is more justified when production is concentrated among fewer firms. This is a general point. When the top 0.1% by income receive 50% of all capital gains - from a randomly Googled WSJ headline - we are reliant on a relatively small number of people to be doing capital investment well. So characterize the result as volatility in the marginal productivity of capital and there you go. Alternatively you can dangle nominal rigidities all over this essentially real shock and then you have a flight to safety demand-side recession atop it.
True, but its still demand side. Even if the immediate effects on demand are muted due to how we expect people to react. Its just demand side in the next term.
Yes, but it generates less demand than just tossing the money out in bales, and we accept the relatively lower hike in demand for supply-side reasons.
This would be an entirely novel* way to look at the government for which we would have to not only rewrite the entire system, but it would render our conception of "supply side" and "demand side" moot. I mean, since the government was "selling policy" every policy would be supply and there would not be anything the government could do on the demand side since it was essentially a firm "selling" a product.
Well, no. In an economy with no state, no G and T, it's still possible to have distinguishably demand-side and supply-side problems. There could still be instances where potential output is shocked (earthquakes being the classic example) or where effective demand fails to exhaust actual output (rational nominal rigidities, etc.).
I step away from the thread for a few days because of travel and now it's a discussion on RBC models? Shoo, shoo to the [Economy] thread with you.
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
What's the basic principle against unionizing everyone and everything unappointed by the board of directors, anyway? They're all labour, innit?
I step away from the thread for a few days because of travel and now it's a discussion on RBC models? Shoo, shoo to the [Economy] thread with you.
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
What. How the flying fuck can a court prevent unionization?
I step away from the thread for a few days because of travel and now it's a discussion on RBC models? Shoo, shoo to the [Economy] thread with you.
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
What's the basic principle against unionizing everyone and everything unappointed by the board of directors, anyway? They're all labour, innit?
Managers ally themselves with capital as much as possible. They try to be representatives of capital rather than labour. I think it is an effective strategy overall, but any manager who steps out of line will discover very quickly that they are labour with more money and reduced rights. It depends on the given society whether that money will get you what you want when you have no other protections.
I figure I could take a bear.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
I step away from the thread for a few days because of travel and now it's a discussion on RBC models? Shoo, shoo to the [Economy] thread with you.
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
What's the basic principle against unionizing everyone and everything unappointed by the board of directors, anyway? They're all labour, innit?
Managers ally themselves with capital as much as possible. They try to be representatives of capital rather than labour. I think it is an effective strategy overall, but any manager who steps out of line will discover very quickly that they are labour with more money and reduced rights. It depends on the given society whether that money will get you what you want when you have no other protections.
Also, certain people like professionals are considered to have more bargaining power than other employees, so theoretically, they don't need to bargain collectively. In a world where hospitals offer doctors form contracts and lawyers work for firms at a fixed salary with no contracts, I would say this isn't really accurate anymore. . .
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
At the risk of raising the ire of the thread, why do private university professors need collective bargaining rights? I did my undergrad at a private school, and while that certainly isn't a widespread investigation full of depth and breadth, but it seemed to me that the professors had a pretty good deal.
This is an honest question, so I'd like honest answers please.
Well at the (catholic) private university I attended for three semesters, one of my former professors there at one time sent a "letter to the editor" of a newspaper criticizing the pope for saying condoms don't help prevent AIDS. A bishop that was on the board of the university got butthurt about it and wanted him gone. He had just been approved for tenure, and was also the director of the university's honors college. The former was put on hold, the latter was lost, and it looked like the university administration was going to try and give him the boot (over a fucking letter to a newspaper mind you).
Now this didn't happen fortunately, because students (myself included) threw a shit towards the administration and had several petition campaigns to show how many students favored having him around. The university also does receive federal funding to a certain degree, so granted this incident didn't hold much water to have him get the boot. The fact remains however that his career at the university was at stake cause some bishop on the board was crying crocodile tears over a senior professor daring to speak his own mind through traditional avenues of discourse.
Also no offense but "my professors at private college/university seemed to get a good deal!" is a load of naive horseshit of an opinion to direct towards private school professors not being able to receive collective bargaining rights. Professors (save for maybe an elite lucky few) should never be considered "management."
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Too big to fail comes as result of economies of scale. As long as it better to be bigger, bigger will be the trend. I'm not sure we even WANT to fight economies of scale.
No one has ever said a person is too big to fail, just a company. (lololol companies are people!)
it suffers from all the flaws of real business cycles though
Tax corporations at the individual level, and put in place the higher tax brackets that are needed.
Also, treat each revenue stream as its own income, and tax capital gains at the same rate as earned income. This will make sure that small investors that are trying to build their 401k etc wont get punished, but the hedge fund managers will have to pay their share of taxes.
MWO: Adamski
Could you imagine taxing the yearly income of Apple or Microsoft at, say, 50~60%?
Because that would be fucking hilarious.
I got a little excited when I saw your ship.
Actually, a lot of "companies" are taxed at individual rates right now. That is how pass through entities like Partnerships and LLCs work. Hell, it is even technically how c corps worked before the bush tax cuts lowered dividend rates to the capital rates (except that there is an extra level of taxation at the corporate level too, which is probably born by consumers in the form of higher prices). Your plan would really just require constant dividends, and stop companies from being able to hold cash, which would make them more susceptible to failing.
.....I.... there aren't words. The corporate rate is higher than the individual rate, which is why so many companies are using passthrough entities, so matching individual and corporate rates would remove a large amount of that chicanary. In fact, for the actual small businesses (not just businesses with a small number of owners) they should see a lightening of their tax burdens.
Remember, taxes only come in on profits, not revenue, so there is no reason for companies to fail due to a new tax plan, unless their executives are trying to suck every last dollar out before jumping and taking their golden parachute, which means boards will actually have incentive to tie executive pay into the health of the company, not just its current quarterly report.
While there are a number of companies that have stock option that have a set yearly rate of return for dividends, well, dividends are only paid on profitable years, so there is again no problem there.
MWO: Adamski
What "Athenian Civil War" are you referring to?
The corporate rate is higher than all but the top marginal rate for individuals, but corporations are able to take significantly more deductions than individuals. If you moved corps and other forms of companies completely to the individual tax system (which is what I took the proposal to be) then it would represent a massive increase in effective tax rates. This increase in taxes (remember, no expensing capital expenditures, no depreciation, no deductions for interest paid on debt) absolutely would be enough to push some companies from black to red.
I said companies would basically be required to dividend out their cash instead of holding cash reserves because I am assuming that under a system like this there would be something analogous to the dividends received discount to prevent double taxation on dividends sent up to shareholders (otherwise all corporate profits would be subject to tax twice at ordinary individual income rates, which could lead to a marginal tax rate approaching 100%) and this would basically require all profits to go directly to shareholders to avoid confiscatory tax rates on the money.
I apologize. I don't see the joke. Could you clarify? Are those certain posters performing an about face on previous ideals they held? Do you feel that supply side solutions are irrelevant? Some third thing I haven't seen?
I love amusement, and I'm hoping this isn't one of those things where one simply repeats what somebody else says in a derisive manner as a means of attacking it without actually identifying a weak point in their statements.
It's Friday. Being amused would be fun.
Pennsylvania Public Defenders Rebel Against Crushing Caseloads
Nope, a union wouldn't help them one bit. Cuz you know, we have laws and stuff, or something...
anybody advocating tax redistribution as a long-term solution is implicitly invoking a supply-side model, really
e: here's one supply-side solution:
Remember that the definition of "supply-side" has nothing to do with partisanship and is a technical property of a model
So you're saying the thing avowed supply siders are against is actually supply side
This confuses me
But i am dumb sometimes
I host a podcast about movies.
People who are, say, avowedly Christian are as theist as people who are avowedly Muslim.
If you believe that macroeconomic malaise is due to shortfalls in productivity, then you have a supply-side model of macroeconomics, be it because you ascribe the shortfall to taxes or insufficient education in "real" trades.
I thought the traditional defintion of supply side was low productivity due to barriers to entry.
In other words, there are not enough supplies (be it in material or labor) to permit the productivity. This is why they're against regulation and taxation - they believe those things encumber the supply chain by making materials and labor cost more.
Your definition is so broad it basically includes everyone, to my reading. You're saying people who believe productivity isn't high because there is no demand for it are supply side adherents.
I host a podcast about movies.
The 'supply' in 'supply side' is about aggregate supply and aggregate demand, not literal labour and other supplies for producing things (although barriers to their entry is obviously one component).
To idly speculate, I think your missing the entire universe of demand-side solutions speaks of the poor ability of left-wing economists to popularize what, exactly, they are advocating.
If your model goes - we move income from top to bottom to enable people, on the average, to consume and invest more stuff, then this is a demand-side invocation of tax redistribution. On the other hand, if it goes - we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages, then this is a supply-side model.
e: here is a archetypically "pure" demand-side policy - the Keynesian hole-digging exercise. Borrow or print to pay people to dig holes and pay people to fill them back up. Insofar as it improves welfare at all, it does so by increasing demand. Here is a pure supply-side policy: we perceive that the private company Standard Acme Oil Co. is extracting oil inefficiently. We, the state, buy it from the owner at market price and propose to do it differently, re-investing the saved costs wholly into sovereign wealth funds invested overseas. By definition domestic demand does not change and the only improvement in welfare in having more oil to go around.
I'm assuming we can say both at the same time and have some sort of hybrid model?
And what about "we move income from top to bottom to enable people, again on the average, to become more effective workers than can earn higher wages so that they can consume and invest more stuff"?
You can have a hybrid model. This does entail a degree of compromise. Stimulus-funded infrastructure projects are typically acknowledged to be bad at increasing demand in a hurry. Yet if you want demand-side in the medium term and supply-side in the long term, they're the way to go.
But what you mention in your second sentence is not a hybrid model, I think... it's just a supply-side one. You propose to push out the production frontier, and then Say's law does the rest. The dis-equilibrium is being identified and solved as a supply-side problem. If this is confusing, it's probably because we are not being very rigorous here.
Your argument here is basically you think supply side is so all solving that even people that are calling themselves supply siders on a national scope, and saying they're against tax progression, are really just wrong and don't know what they mean, and by your broader definition of the word, anyone who wants to buy or sell anything is a supply sider, and so supply side is good and liberals don't even know what they want and you might even say they're really fighting...against themselves?
What's ignorant about supply side economics in practice is they lead to a slowing system as the energy in the system - economic activity - becomes wealth. A supply side economy is a cooling planet, in geological terms. If you're proposing some sort of system where barriers to entry are low, and wealth is kept in sensible circulation, we're probably on the same page, but every circulatory measure proposed is being shot down as a barrier to entry right now.
I host a podcast about movies.
Aren't stimulus-funded infrastructure projects suggested as a way to boost demand during a downturn though (once monetary policy has reached it's limit)? Or is there some other mechanism that's supposed to increase short-term demand?
I think I get what you are saying. You are identifying the issue as a lack of supply of "trained labour" (or whatever term you wanna use I guess) and using tax money to increase that supply.
Not quite sure where Say's Law comes in here to be honest. Are you saying the creation of that new pool of labour creates the desire for that labour to be exchanged for goods/money? I thought Say's Law implied that the supply of labour would create demand for itself and I would have thought the labour was meeting some existing demand for more trained labour.
I am content to duel with the economics being forwarded here, which I assume is done so in good faith, although of course that is an assumption which is frequently false on a national scope outside the forums. So, yes, I think it is fair when to point out that how macroeconomics divides up policy approaches into "demand-side" and "supply-side" types differs from how macroeconomic policy is typically arrayed in modern US politics. This is not a fault unique to liberals. It is a fault endemic to the exercise of politics.
I noted in [chat] that - not terribly long ago - American liberals advocated supply-side solutions and American conservatives identified demand-side problems; the year was 1965 and Lyndon B. Johnson and a jointly Democratic Congress were busy funding education (and Medicare, and Vietnam, and...) over the screams of the fading, but still dominant, Rockefeller Republicans of excessive demand and therefore inflation. I hope I may take it as given that five decades of hindsight have validated both the sensibility of increasing education funding at the federal level and the concerns over the full-employment deficits accumulated in the era? Policies must find champions somehow and inconsistency in party loyalty is a far lesser sin that inconsistency in one's advocated outlook at any given point.
As for 'sensible circulation' - well, there is nothing intrinsically wrong with this view. It's basically any monetarist-flavoured outlook. But I should probably point out that wealth can circulate very easily in highly unequal societies, between very wealthy individuals and between very poor individuals. You should outline your macroeconomic model more precisely.
Print money, hand it out. Generally, do things which put income out there fast rather than carefully. You may recall the phrase "shovel-ready projects", which was bandied about quite a bit in 2009. The thing about infrastructure is that you spend quite a while sitting around doing necessary assessments and design and preparation and all that work takes a while. Yet you can't dispense with environmental statements, they are something you have to do. So that limits the nature of infrastructure projects in increasing demand now.
As for Say's Law: yes, the supply of labour creates the demand for itself. For more effective workers to earn higher wages - higher marginal productivity to actually translate into higher real wages - you are implicitly invoking this understanding, that the additional stuff they make will be able to find buyers and therefore these workers will actually be able to bargain their equilibrium wage up.
No it does not. Demand does not imply physical products only. The question is only whether or not the government is paying them to do it. If they are, its a demand side solution. The demand side effects of government spending occurs regardless of what they pay for[so long as they are paying for something]
There is a bit of a disconnect between the arguments for short term adjustment compared to arguments for long term growth. And probably a lack of understanding about the model which is causing your technical points to go over their heads. But i don't think that your technical points hold much merit compared to what is(or should be) mutually understood to be the point. Maybe i didn't read the thread as deep as i ought to have. But it seems like you are talking to points not being raised.
That is, the argument that spending on teachers is good is not because spending on teachers will fix the shortfall in GDP. The argument that spending on teachers is good is because more productivity is better. In addition since any spending on anything will decrease the shortfall in GDP we might as well spend it on something that is good.
This is not a "supply side" solution, in the technical model sense, or in the political sense. We tend to view government spending as demand side(in the technical model sense), regardless of whether or not that spending is on things that will long term modify productivity in the same way that a stochastic increase in investment due to shifting spending habits would be a demand shock and not a supply shock even though an increase in investment should ceteris paribus increase productivity(and/or the Capital Stock and therefore increase the PPF) in the future. This is true regardless of whether or not the solution if offset with tax increases or not.
Edit: A supply side framework operates on the understanding not that we can increase the PPF by taking action [such a position is basically nonsensical in the model, if the PPF can be increased by taking action then its not the PPF], but that there are policies which are preventing us from achieving the PPF, policies that are keeping laborers from getting jobs and from companies from being efficient. This is a wildly different notion than suggesting that we will fix a shortfall from potential GDP by increasing potential GDP
RE: Wealth Concentration and RBC. Can you explain how that works? Because i can see a demand side explanation to wealth concentration causing business cycles to be stronger, but I cannot see an RBC explanation. An RBC explanation would have to account for why wealth concentration causes productivity/technology level/the amount of people who want to work/the amount of productive capital to change faster than it would otherwise.
But that doesn't make much sense for why that would happen.[on top of the obvious "why do these things fluctuate negatively in the first place in a normal pattern" problem that RBC has]
However an argument that business failures push bond holders to move to safer bonds and this shortage of bond supply causes a sharper decline [as bigger businesses have larger and more systemic effects when each one fails] does make a lot of sense and that is 100% a demand side explanation.
Not necessarily. They could be arguing that differences in consumption/investment behavior will create a more stable financial system. Which would be a demand side argument.
There is no disequilibrium in the "supply side" explanation of the shortfall as modeled by RBC. If there was a disequilibrium then the solution [to push out the frontier] would not make any sense since we are explicitly not on the frontier by nature of being at a disequilibrium [so expanding the frontier would no longer dictate fixing the problem]. Granted, if there is not a disequilibrium RBC still doesn't make any sense [because if we could expand the frontier and this would increase GDP then we would have to have a reason why this should work during a recession but not a boom]
Edit: Lets be a bit more specific. We can say that we are in a recession due to supply side reasons. This can come from either government policy which makes it impossible for us to reach the frontier due to blockages between capital and labor. Or it can come from a real shock to productivity, capital, or labor.
But we can't have it both ways. We cannot have a "supply side" explanation to the shortfall that says we are in disequilibrium [I.E. we aren't making it to the PPF] because of something that happened to the PPF. Furthermore if a reduction in the PPF was our cause then we cannot spend more to move the PPF out, just as if a disequilibrium was our cause then we cannot move the PPF out in order to fix it, we can only fix the thing that caused us to go below the PPF due to supply issues.
Arguments for spending imply that :
1) We have an actual shortfall and not a real reduction in productivity/capital/labor
2) The shortfall is caused by something other policy blockages between capital and labor
Its pretty shitty since this story isnt exactly unique and there are a bunch of law students and recent grads that would kill to work at a non-profit (like the Innocence Project) or for the Public Defenders but cant because the institutions lack the funds. Its hard to even get unpaid internships at these places since they have so few lawyers doing all the work that they cant afford to have a lawyer monitor a law student. But its hard to convince the public to pay for things like this, partially because of an aversion to taxes and partially because a lot of people have a 'fuck the guilty' mindset (despite the defendant not actually being guilty of anything until a verdict is rendered against him).
Shits fucked up son.
It is quite true that spending to make environmental statements is, itself, demand-creating, but the point is that all the spending on the concrete and rebar and construction labour will have to wait until the statements come in for you to pick which projects actually pass whatever long-term cost-benefit analysis. IAPW states maintain schedules of infrastructure projects that would be beneficial at different interest rate and time schedules, but in practice they don't, because there's a lot of surveying and democratic approval to acquire for each project and all of that takes time.
Re: PPF. I daresay that anybody more left-wing than Murray Rothbard would accept the notion that states provide certain public and private goods that are, for a variety of reasons, ideally provided by states and no other entity. If states don't do these, then you're not on the PPF. At some point achieving efficiency actually requires action by agents, and one of these agents is a modern infrastructure-providing state.
Yes, it's possible to conceptualize all deviations from the PPF as generated by restrictions and any manner of long-term investment in public goods, but this leaves the curious question as to why you and I, forumers who I posit are indeed safely to the left of Murray Rothbard, describe things like publicly-funded primary education as Obviously Good Ideas at all. Don't we agree that it does, in fact, increase potential output?
Re: RBC and concentration. It's very easy. A typical intuition goes like this. Off the top of my head, the sales of the top 100 firms account for 30% of GDP in the US. That's huge - the GFC only knocked off 5% of GDP! The reason RBC models have to scrape to find plausible across-the-board technology shocks is because idiosyncratic firm-specific productivity shocks should average out, but if they don't average out at all, then suddenly it is really easy to fit sources of volatility. Concentration amplifies idiosyncratic shocks.
It is true that TBTF and flight to safety would be a demand-side explanation.
This is possible, but I submit that advocacy of tax-funded redistribution does not generally come packaged with envisioned changes in financial regulation. Usually the goal is to redistribute wealth endowment in a direct manner. The topics are distant enough without invoking aggregate C and K along the way, it's like arguing that building national highways would cause changes in consumption/investment behavior that will create a more stable financial system. Well it'll certainly cause some changes in consumption/investment behavior, and there are some changes in consumption/investment behavior that would enhance stability, so it's certainly possible... but really, now. Come on.
True. Strictly speaking disequilibrium is a demand-side concept and the phrase "we can do things to increase potential output" is internally contradictory. For consistency's sake with demand-side terminology, though, I think it is best to conceptualize states as economic agents, so that there is some price at which it should 'sell' policies (via a cost-benefit analysis or whatever) - but states don't necessarily respond to prices, so the 'market' for these publicly-provided goods remains in disequilibrium. This renders the antisymmetry in demand-side and supply-side policy obvious.
The problem that RBC has fitting firm specific and broad technology shocks is the same problem, because we don't have a factor for productivity except as we measure by virtue of the model, if we solve the system assuming equilibrium we produce the desired shocks. That is to say that since the system has a solution, any fit we find, being the solution will of course be a "surprisingly" good solution. Its akin to doing a regression on two data points and then being utterly surprised when your SSE=0
If we say that idiosyncratic shocks turn out to simply be not add up to zero then we have a problem because they're no longer idiosyncratic. If they're not idiosyncratic then the solution to the system of equations which gives us the non-idiosyncratic shocks cannot tell between the firm specific and the non-firm specific shocks. If we solve the system, the sum of the idiosyncratic shocks that are different than zero will appear exactly as if they were non-firm specific shocks.
What this means is that "fitting" productivity shocks, at a firm or national account level, is simply an exercise in really bad science. Given any collection of national account vales you can give a fit of productivity shocks that will look suitably like the overall data pattern because there is a necessary spurious correlations between the solution to a system and the structure of the system itself.
The intuitive explanation is "why does real productivity/capital/labor fall for any reason and why does it do so cyclically" and the answer to the above is "well there is no good reason to believe that real productivity/labor/capital should by cyclical". The specific answer to the people who don't do the fitting of productivity, but instead use unit root hypothesis solutions to make their case is "well in this case what was the event that caused the real reductions in productivity/labor/capital when we have no reason to believe any fell and the measures of what we have show the opposite of your conclusions"
If the goal is to redistribute wealth endownment in a direct manner then its demand side. If the goal is to make it easier for less wealthy people to get jobs its supply side.
I mean, by virtue of changing the marginal taxation rates we should probably say its supply side since the marginal taxation changes should have some effect on supply if marginal taxation rates have any effect on supply.
But the supposed reason for why it would be better doesn't hinge on the nation being overall more productive[or even individually more productive]; the supposed reason for why it would work is that rich people would have less money to fuck things up with. [paraphrased] And/or not arguments to efficiency at all, but arguments that wealth concentration itself causes harm to others. I.E. arguments slightly outside the scope of what we're discussing.
Yes, but that isn't what the thread was talking about really.
True, but its still demand side. Even if the immediate effects on demand are muted due to how we expect people to react. Its just demand side in the next term.
We do indeed agree that it in fact increases potential output, but the solution to the social planners problem WRT optimal government spending does not imply that government spending is not demand side just as the solution to the market demand for investment does not imply that peoples investment decisions are not demand side.
I mean, we do agree that peoples consumption and investment decisions are demand side right?
Edit
@Ronya
This would be an entirely novel* way to look at the government for which we would have to not only rewrite the entire system, but it would render our conception of "supply side" and "demand side" moot. I mean, since the government was "selling policy" every policy would be supply and there would not be anything the government could do on the demand side since it was essentially a firm "selling" a product.
Such a framework probably would not be helpful since we would have to ask why the organization with the authority to tax was "selling" policy with the price being the tax it extracted?
*novel with regards to our framework, i am sure its not actually new
In [Labor] related news the NLRB is seeking amicus briefs on the 1980 SCOTUS Yeshiva decision, which excluded faculty at private colleges from organizing because they're management not employees. *eyeroll at SCOTUS* If this ends with the NLRB finding a way to let faculty form unions, we could be looking at a huge win for labor this year. Discuss. And no invoking models unless they're blondes.
I'm pessimistic just from that.
Re: RBC - well, yes, of course if you posit that shocks are "really" idiosyncratic that the onus is on you to start digging out firm-specific indices, not solve for unknown firm-specific shocks and shove the entire error there to give an arbitrary fit. That would be bad science, indeed.
I hope you at least agree that as a theoretical matter, dropping the presumption of "averaging out" productivity is more justified when production is concentrated among fewer firms. This is a general point. When the top 0.1% by income receive 50% of all capital gains - from a randomly Googled WSJ headline - we are reliant on a relatively small number of people to be doing capital investment well. So characterize the result as volatility in the marginal productivity of capital and there you go. Alternatively you can dangle nominal rigidities all over this essentially real shock and then you have a flight to safety demand-side recession atop it.
Yes, but it generates less demand than just tossing the money out in bales, and we accept the relatively lower hike in demand for supply-side reasons.
Well, no. In an economy with no state, no G and T, it's still possible to have distinguishably demand-side and supply-side problems. There could still be instances where potential output is shocked (earthquakes being the classic example) or where effective demand fails to exhaust actual output (rational nominal rigidities, etc.).
What's the basic principle against unionizing everyone and everything unappointed by the board of directors, anyway? They're all labour, innit?
I mean, outside the Soviet Union.
Managers ally themselves with capital as much as possible. They try to be representatives of capital rather than labour. I think it is an effective strategy overall, but any manager who steps out of line will discover very quickly that they are labour with more money and reduced rights. It depends on the given society whether that money will get you what you want when you have no other protections.
Also, certain people like professionals are considered to have more bargaining power than other employees, so theoretically, they don't need to bargain collectively. In a world where hospitals offer doctors form contracts and lawyers work for firms at a fixed salary with no contracts, I would say this isn't really accurate anymore. . .
This is an honest question, so I'd like honest answers please.
Now this didn't happen fortunately, because students (myself included) threw a shit towards the administration and had several petition campaigns to show how many students favored having him around. The university also does receive federal funding to a certain degree, so granted this incident didn't hold much water to have him get the boot. The fact remains however that his career at the university was at stake cause some bishop on the board was crying crocodile tears over a senior professor daring to speak his own mind through traditional avenues of discourse.
Also no offense but "my professors at private college/university seemed to get a good deal!" is a load of naive horseshit of an opinion to direct towards private school professors not being able to receive collective bargaining rights. Professors (save for maybe an elite lucky few) should never be considered "management."